AARP, the Proposed Legislation & What has the Government Done???

Currently, we have a government that is determined to tell us what they think we should have regardless of what we feel we need and want.

The proposed legislation should be called... HEALTHCARE FINANCE REFORM, since this is its real intention. Ultimately though, this will eventually result in a ‘reform’ of actual healthcare services whereby rationing standards will be set.

In essence the real truth is that the proposed government plan will render the 'grandfathered plans' insolvent. Therefore, no one will be able to keep the 'grandfather' plans for more than a few years. One fact that may elude much of the American public is that whenever an insurance carrier, for any reason, discontinues the process of issuing new policies on a line of coverage (this is true whether such cessation of business is arranged by choice or by legislation) this causes that plan, or line of insurance to fold.

This is because the primary premise of insurance, 'the law of large numbers' is thus violated. This mathematical law of risk management basically states that the larger the number of homogenous units the more predictable the incidence of loss. The insurance company is thus forced into a death spiral whereby they are longer collecting enough premiums to cover plan losses. Rhetoric aside, under the proposed arrangement, the government is deliberately intent on shutting down the health insurance industry.

The other day, I watched the AARP 'Town Hall' meeting with President Obama. Since many of the questions that I had were not addressed, I wrote to Barry Jackson, one of AARP's public relations representatives asking specifically what the issues are that AARP is officially committed to accomplishing. Mr. Jackson sent the following reply to me regarding AARPs position as follows:
What is AARP fighting for in health reform?
1. Stopping insurance companies from charging older Americans unaffordable premiums because of their age.
2. Ending the practice of excluding people from insurance because of pre-existing conditions.
3. Holding down health costs and making insurance coverage more affordable for all Americans.
4. Making prescription drugs more affordable by narrowing the Medicare doughnut hole, bringing generics to market faster, and allowing Medicare to negotiate better drug prices.
However, since Mr. Jackson failed to respond specifically to the issues, I replied with the following responses on each of these issues and inquired further as to what AARP's position would be on these possible solutions.
AARP Mission Statement 1: Stopping insurance companies from charging older Americans unaffordable premiums because of their age.
As a risk management professional, for years I have said that this aspect of the system does need to be addressed. Health insurance policies do need to be 'composite', not age rated, whereby everyone is assessed an average age base premium for a particular plan of benefits across the board. However, this can only be accomplished if it is mandated that EVERYONE purchase health insurance. Right now, the largest segment of uninsured U.S. citizens is under age 35. Many of these are uninsured simply because they simply do not 'want' to spend 'any' money for health insurance. As these people see it, they are merely 'playing the odds' that they likely will not need to utilize healthcare services any time soon, so why spend the money. 1. If they are able, but not working, or are only working part-time... it should be arranged for these persons to earn healthcare premium credits through providing community service work.2. If they are working full time, but their earnings are insufficient. Arrange for a subsidy assistance program based on need.
- However, by no means should anyone EVER be rewarded for bad behavior. People should be assessed premium and/or care penalties for deliberate choosing to engage in activities which are detrimental to their health. For instance, those who use tobacco, abuse alcohol or drugs, and those who are obese should pay higher premiums. If these are indigent, then these should receive NO subsidies from tax collections.

- In addition, those persons choosing to abuse illicit drugs should be left on their own to acquire and pay for any extra care resulting directly from their course of conduct until these persons choose to change their lifestyle and to live in accord not abusive to society. The only assistance these persons should possibly receive is that which might provide them the proper guidance, counseling, and education to make to correspondingly conform. (These programs could be funded by the government legitimatizing and controlling the current illegal narcotics trade whereby taxes could be collected and thus used to combat this moral issue.)

- In the event someone's situation is such that they do not have the means to pay for their health coverage, consider the following...
AARP Mission Statement 2: Ending the practice of excluding people from insurance because of pre-existing conditions.
This can only be accomplished if a pool was created for 'uninsurable' individuals that all insurance carriers were mandated on a per capita, (share and share alike), basis to participate in. All premiums collected for these individuals would be used to fund the pool. The insurance carriers would be reimbursed a modest fee on a per claim basis for processing. The insurance companies would process and pay the respective claims. Each insurance carrier would receive a corresponding reimbursement from the 'pool' for each claim it pays. Any pool deficits would be remunerated the following year on a per capital tax assessment on every insured person the following year to assure pool solvency. Any pool excesses collected would be held in reserves being carried over for the following year with no further premium assessments being made unless the pool actually experiences a deficit.

AARP Mission Statement 3: Holding down health costs and making insurance coverage more affordable for all Americans.
There are a number of steps that must be implemented to accomplished by...
Step 1: A complete reform of the current PPO system. 15% to 20% of all insurance premiums paid by U.S. citizens are funneled directly to the mega-hospital conglomerates which own virtually all of the PPO (Preferred Provider Organization) networks. Insurance companies must pay 'access fees' (generally calculated as a percentage of premiums collected) to be assured the guarantee of the 'PPO network' pricing of medical services. This is tantamount to extortion.
- Insurance companies are usually phenomenal at predicting the incidence of claims. However, unless an insurer knows what the cost of such claims will be, they can in know way estimate what premiums should be assessed to maintain operational solvency. The cost of services must be tied to some fixed index so that coverage costs can be properly assessed and policy coverage correlated accordingly.
- Unfortunately, to accomplish the setting of service costs, and thus to assure profitability, some insurers have simply chosen to design policies which define set 'limits' on their payment for specific services according to an internal 'policy schedule'. This has been the worst nightmare for many consumers who were unwittingly sold on a 'reasonably' priced major medical policy, only to find that the plan by their insurance company left them facing unlimited liabilities and substantially limited the liability of their insurance company. In my opinion, this is not only unethical, but immoral. The public needs to be able to buy health coverage with confidence. The public should be protected by any such plan by legal definition. Any health plan should be defined, advertised, and boldly stated (on both the insured ID card as will as on the face of the policy) as a 'Limited Liability' plan. Furthermore, any such plan should NOT be qualified as a recognized qualified participating health plan for any health insurance purchasing mandate purposes.

- What can and should be done in this regard is the creation of a published medical service provider expense basis. Such a basis should be determined by an annual study that would compile and publish the actual average national payment made for each respective medical CPT (Current Procedural Terminology) service. (Medicare already has payment schedule which could currently be used as a basis index.) Once the service cost basis is chosen, a system of service charge tiers could be designed to accommodate the needs of both the medical providers and the insurance carriers. Medical service providers could annual elect which participation tier they choose to participate in and thus would agree that their services charges shall be bound to not exceed the level of their chosen tier.

For example, medical services providers could annually choose their own participation tier accordingly to the following tier schedule:

Provider Tier
Medical Providers
I
Choosing to charge fees 25% below the Basis
II
Choosing to MATCH their charges to the Basis
III
Choosing to charge fees 50% above the Basis
IV
Choosing to charge fees 50% above the Basis
V
Choosing to charge fees 75% above the Basis
VI
Choosing to charge fees 100% above the Basis
VII
Choosing to charge fees 125% above the Basis


Insurance carriers could thus offer policies that would pay in accordance with each tier of coverage while the consumer would choose to elect the level of medical care provider access they are willing to pay for.

Furthermore, each medical provider it should be legally mandated that each provider prominently display their elected participation tier. Potential patients could therefore know if their policy would cover all the charges.
Insurers would be required to design the premium structure of the plans they offer in accordance with each tier and to honor the payment provisions of each tier.

Consumers and employers would then be given a choice as to what medical tier level they wish to purchase coverage for. For example, if the insurance purchaser were to choose to purchase a plan limiting insurance carrier expenditures in accord with tier III providers, then the insured could be assured of a limit on their personal liability for all providers up to and including tier III providers. However, if the insured under such a plan chose to seek the services of a tier V, VI, or VII provider; then the insured would knowingly assume the additional responsibility of the tiered costs differential themselves and would have to make arrangements and negotiate with the respective medical service provider themselves.

Although the medical provider would be bound to their chosen tier for a year, it should be permissible that medical service providers could at any time request to be assigned to a lower expense tier; but that they could only elect to select a higher participation tier once per year. In addition, EVERY service provider would be mandated to publicly post which tier level they are currently participating in.

Step 2: A reformation of the pharmaceutical industry. This should include a restructuring of patent protections (in a manner that would assure not only that a pharmaceutical company remains profitable; but that would encourage the proper research and development of innovative products and services) and a complete overhaul of the FDA (which has degenerated into a morass of bureaucrat inefficiency and neglect that is more focused on assuring that their realm of government is well funded than in protecting the U.S. public). In addition, this reformation should include advertising reform. It is horrifyingly abhorrent that the pharmaceutical giants are permitted to spend untold billions of dollars to make promotions directly to the U.S. public on controlled (and often hazardous) substances. As tobacco companies have been restricted from this activity for years; so too should pharmaceutical companies. ANY drug requiring dispensation by a qualified physician should NEVER be advertised or promoted to the general public.

Step 3: Reform of the medical malpractice industry. I have heard absolutely nothing being expressed about this insidiously huge expense. Nuisance charges account for about three quarters of the medical malpractice settlements and awards paid. In most instances, the amount of such a claim is less than $15,000.00 and is settled 'out' of court. The vast majority of these 'nuisance' cases have no real valid basis whatsoever. These claims are simply paid because the cost of the defense litigation is far more expensive than paying the settlement demanded. I find it very interesting that generally when someone makes a 'threat' demanding money it is called 'extortion'; but when a tort attorney makes such a threat, it is called 'litigation'. It is absolutely essential reform be made in the way insurers determine malpractice premium assessments.
- Most insurers providing medical malpractice coverage to physicians also provide similar coverage for the tort attorneys, called E&O (Errors and Omissions) coverage. Reason tells us that since tort attorneys are dedicating to driving costs higher through litigation that they too should be in some measure held accountable. It is totally unjust and completely reprehensible that the entire expense of such 'litigation' is dumped entirely on physicians. Tort attorneys need to experience a 'taste of their own medicine' in accord to the number of cases they file and/or settle. To put this in perspective, medical malpractice for certain specialist physicians averages well over $100,000.00 per year. Even your average family physician pays about $12,000.00 per year. E&O insurance coverage for tort attorneys can be as low as $1,500.00 per year; but generally averages around $3,000.00 per year.

- This needs to be addressed in a manner such that, unless a case has real merit, it would not be financially advantageous for an attorney to pursue the case. There are a significant number of 'ambulance chaser' attorneys that focus almost exclusively on cases of dubious merit for a quick settlement. (Unfortunately, many of these attorneys, not really being very adept at their craft, often will eventually slither into the arena of politics where the 'real' money is.)
- In cases whereby negligence and incompetence do lead to significant bodily harm, the physician does deserve to be punished. In such cases, it would not be proper to place a cap on monetary awards to the plaintiff. However, if it is clear that such harm is not of a permanent nature, it would be reasonable to set certain legal maximum.

AARP Mission Statement 4: Making prescription drugs more affordable by narrowing the Medicare doughnut hole, bringing generics to market faster, and allowing Medicare to negotiate better drug prices.
- This cannot be accomplished without a complete reformation of the pharmaceutical industry. Including as previously specified, a redesign of the laws governing pharmaceutical patent protections and advertising.

In summary, it is essential, when considering the issue of healthcare financing that all facets of the system be carefully considered. Each respective problem has its own issues. It would not be wise to 'throw the baby out with the bathwater' as the saying goes and simply destroy everything in hopes that something better could actually emerge as a result.
It is imperative to preserve every virtue while diligently working to mitigate every fault. For this purpose, it would be wise to seek out counselors with knowledge, insight, and experience from all sectors of the system to work together for solutions. It is also wise to permit those of other systems to express their experiences and frustrations so as to avoid the problems of others. Often, one finds their own problems are blessings in comparison.
Moreover, to use an analogy, the more the President explains regarding his proposed legislation, the more clearly I understand that EVERYONE will only get a Yugo even if they're charged and pay for for a Lamborghini.

The primary problem with heath care financing issue is that for too many years, legislators have been intent of playing every party in this debate against one another in the name of campaign financing. Catering to the pressures of lobbyists, of special interest groups, and of partisan demands has compelled most legislators to seek the protection and the power of their party. In the process, the interests and the welfare of the American people have been totally jettisoned.

When established, the premise of the government of these United States was to 'serve and protect' the people. For centuries now, this has been the motto of both the U.S. law enforcement agencies and the military forces. The Bill of Rights was specifically designed with this in mind. These rights were set forth as principles to follow. As a result, this nation prospered. Sadly, government has now decayed to the point whereby governance is no longer determined by principle. Today, governance is largely determined regardless of what is right or of what is wrong, by precedent. Principles create an equitable platform whereby justice proves to be a constant. Precedents on the other hand, permit and promote a system whereby justice is relative. When justice is relative, all that exists will be the futility of inequity.

Too many legislators seem to have lost sight of the purpose 'to serve and protect'. It is truly astounding, that we face powers from within government that desire to attack the citizenry and to seek self interests. These powers seek to destroy industries, to invalidate both the Constitution and the Bill of Rights, and to hold as objects of contempt the citizenry of these United States.
I am writing you in hopes that reason might actually prevail. It has been said that 'no man is an island'. We are all dependent upon one another. This is especially true economically. When those governing lose sight of this fact, then the Constitutional guaranty of the ability to 'pursue happiness' will fade into a distant memory.
The general welfare of the American people is under attack. If the healthcare legislation of the current administration is enacted there will be an initial loss of over one half million jobs in the health insurance industry alone. The medical industry will lose at least another seven hundred fifty thousand administrative jobs.
Following this, many of your independent physicians, nurses, and other medical care providers will find themselves out of work in spite of a shortage because they will be unable to meet their expenses. In addition, the mega-hospital conglomerates will, in the name of profit restrict the hiring of many of these out of work independent care providers. The question is. how far will this go?
I have heard nothing from legislators on either side of the isle indicative of plans to increase the tax base. This leaves me to wonder, is it now the agenda of the United States government to deliberately impoverish its citizenry? Is it the plan of the government to create a huge welfare state whereby power is assured by the ability to deny the citizens basic services?
As a Congressman, when has one of your fellow legislators suggested to you the giving of a tax credit to employers for increasing the number of (tax paying) employees on payroll?
For instance, consider if every employer that had an average of ten or more employees were be granted a tax credit for each new (non-related) employee they put on payroll whereby:
1. The total number of employees averaged an increase of at least one full employee over the prior twelve month period.
2. Credit given was dependent upon actual wages paid for each the additional position up to $20,000.00 each (i.e. - An employer may hire two additional part-time employees earning $10,000.00 each, but would only receive credit for one. Likewise, if an employer hired a new employee earning $40,000.00 over the year, the employer would still only receive a tax credit of $20,000 for that one employee. However, if the employer were to hire two additional employees each earning $20,000.00; then they would receive a full $20,000.00 tax credit for each employee.)

In their desire to implement a government run plan, one must consider this as would a business owner, or as an investor (since this would in effect require significant capital ‘investment’ by ALL taxpayers). The first question that should be considered is:

Has there ever been any program the ‘government’ has managed that has not plunged deeper and deeper into an abyss of debt???

Just as any well managed business will never hire a CEO with a track record of bankruptcies, a prudent investor will assess the risk and would never consider entrusting their life savings to anything remotely as risky as a lottery. And, of course, the difference between investing in a government program and the lottery... "At least with a lottery you have a very slim chance of a return!"

It has been said that…
Gold is the currency of Kings,
Silver is the currency of noblemen,
Barter is the currency of peasants, but
‘DEBT’ is the currency of SLAVES.

From this, it might be concluded that government is selling us all into slavery.

It is indeed disturbing that President Obama should say to anyone inquiring of the details of 'his' plan to “shut up” and to order that anyone opposed to ‘his’ plan to “get out of ‘my’ way”. This sounds very much like it is his desire to choke out the freedom of speech. So now are we not compelled to ask.. "Is this indeed a man that made a solemn oath to defend the Constitution of the United States?"

So far, I have yet to hear any further response from Mr. Jackson, or from AARP.

I have heard the rhetoric that the new plan will be just like Medicare, but for everybody. In researching this matter, it is inconceivable that this can possibly be feasible in any way.

Anyone that supports a single payer health system does not realize what they are backing. Anyone who chooses to believes either the news media or the government without researching the actual facts from all sides of the issues is setting themselves up to be proven both a patsies and fools of the powers that be!

Currently we hear that the administration has been cutting 'deals' with Big Pharma, United Healthcare, and the AMA. In observing these 'sell-out' arrangements over the years, the one thing I am sure of is this...

None of these 'deals' are pursued with ANY intent of pursuing the interests of the taxpaying citizenry of the U.S. It's all about control and power.

Medicare is currently 75% subsidized, and most people still need to obtain a Supplement to assure proper protection. Publicized abuses aside, Medicare does do some things right.

Medicare has forced the insurance industry to provide simple, easy to understand options (at least until several years ago with the recent introduction with the PFFS, so-called 'advantage' programs which really is a re-intro of the Medicare HMO plus Choice programs). As I understand it, although the plans are subsidized through social security deductions and Medicare, any overruns in their claims costs is borne by the commercial insurance carriers.

I do believe that most people generally hate insurance companies. Some of us even have reason to loath certain insurance companies. However, in considering the advantages and the disadvantages, the only system that could possibly be more reprehensible is a government run monopoly.

Under the proposed legislation EVERYONE (Congress exempted of course!) will get the healthcare equivalent of a Yugo. However, for those folks that DO pay taxes, MANY will be forced to pay for the equivalent of a Lamborghini – BUT – they will still only be delivered a Yugo.

(QUESTION: Was ANYBODY really happy driving a Yugo?)

The government of these United States was established on the premise that its purpose, first and foremost, was to serve and protect the people.

The primary problem with heath care financing issue is that for too many years, legislators have been intent of playing every party in this debate against one another in the name of their own agendas, campaign financing in particular. Catering to the pressures of lobbyists, of special interest groups, and of partisan demands has compelled most legislators to seek the protection and the power of their party. In the process, the interests and the welfare of the American people have been totally jettisoned.

It is essential, when considering the issue of healthcare financing that all facets of the system be carefully considered. Each respective problem has its own issues. It would not be wise to 'throw the baby out with the bathwater' as the saying goes and simply destroy everything in hopes that something better could actually emerge as a result.

It is imperative to preserve every virtue while diligently working to mitigate every fault. For this purpose, it would be wise to seek out counselors with knowledge, insight, and experience from all sectors of the system to work together for solutions. It is also wise to permit those of other systems to express their experiences and frustrations so as to avoid the problems of others. Often, one finds their own problems are blessings in comparison.

One of the most reprehensible aspects of the abandonment by the government of citizenry interests is in its failure to protect the people.

IN THE AREA OF HEALTHCARE FINANCING
What Government has done???
1. Government has permitted certain insurance companies to market plans which are deliberately designed to fatten the coffers of the 'so-called' insurer and to defraud the unsuspecting public. Such policies limit the liability of the insurers while place UNLIMITED liability on the insured. [Indeed when legislation has been presented that would at the very least force these companies to clearly DISCLOSE that their plans provide only LIMITED COVERAGE, the insurance carriers (most frequently companies like HealthMarkets) actually PAY the legislators NOT to vote on the legislation (as happened recently in California).]

2. Created a complex framework of both Federal and State legislation (of which some is even contradictory) that is frequently designed to cater to special interest groups, lobbies, and political affiliates.

3. Has created a system whereby citizens...
a) Often have no idea what they are buying when they purchase health insurance.
b) Increasingly pay more as they grow older.
c) who, through no fault of their own, are suffering from unfortunate maladies which the insurers deem too costly to cover.

4. Has created a system whereby the greatest beneficiaries are...
a) The Pharmaceutical industry
b) The Mega-Hospital conglomerates and the AMA (both of which are in collusion). For decades the AMA has restricted the number of persons permitted to enter Medical School in order to LIMIT the available SUPPLY of physicians so that service costs will continue to escalate.) In addition, these are colluding to force the private practicing doctor out of business (which is why doctors have seen their pay reduced year after year for the past 20 years) and into a model whereby every physician will become an EMPLOYEE of a mega-hospital conglomerate (talk about restricting a physicians ability to act in behalf of their patient). Just as insurance companies often try not to cover medical services and procedures to keep from paying claims, hospitals frequently try to cut back on staff and services in order to increase profit.)
c) Unscrupulous (but not all) insurance carriers. Over the years I have had and fought through many claims, and I can say UNEQUIVOCABLY that not all insurance carriers are ethical. Although, it appears that most insurance companies will generally honor their contracts, we, the citizens frequently get kicked in their teeth by not knowing, or understanding what rights the law does give us and what rights the insurance contract takes from us. As an insurance buyer I have to trust my agent to guide me properly has I often have no idea what the insurance company covers, or how they cover it, nor of any limitations inherent in my coverage.

5. Government has frequently enacted legislation that limits BOTH insurance industry competition AND consumer choice.

6. Government has designed a system which ignores the primary premise of insurance, 'the law of large numbers'. This mathematical law of risk management basically states that the larger the number of homogenous units the more predictable the incidence of loss. This is why older individuals pay through the nose even to obtain catastrophic coverage. Roughly half of all uninsured persons in this country are under age 35 and ARE insurable, they simply do not see a need to buy and PAY for something they’re not statistically very likely to need. For an equitable system to work, EVERYONE must participate. Under the proposed legislation this law will ALSO be violated and will force private insurance out of business. Since existing private plans will be ‘grandfathered’ and insurance companies will not be permitted to write any new policies, insurance carriers will be forced into a death spiral whereby they are longer collecting enough premiums to cover their plan losses. Rhetoric aside, under the proposed arrangement, the government is deliberately intent on shutting down the health insurance industry.

What has Government NOT done???
1. Government has not even discussed addressing the factors which ARE really driving up the cost of healthcare.

2. Government has not considered ANYTHING that might make obtaining coverage easier for the consumer. People should be able to purchase their health insurance with the confidence of knowing WHAT they are buying. Insurers are famous for playing ‘shell games’ with their benefits so that people will purchase what they perceive will meet their needs, but in fact, that which is really designed to be most profitable for the insurance company.

3. Government has not considered ANY mechanisms which would force all insurance companies to play on the same field under the same rules.

Can the problems be addressed? Yes.

Will they? Not likely.

Unless the majority of the people unite and draft their OWN legislation in accord with common sense, sound reasoning, and devoid of special interests, and actually force their legislators (regardless of party affiliation) to implement it, it can't possibly happen. The issues will be banned to proposed legislation purgatory along with the 'Fair Tax' and any other reasonable concept that would simplify our lives.

I challenge the legislators to prove me wrong!