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Speaking Of Chaos And Uncertainty

Posted Oct 06 2013 11:14am

Stanley Feld M.D., FACP, MACE

I ended my last blog with,

“President Obama’s goal is to create more chaos and dysfunction in the healthcare system. “

“Only then can the government really step in and say let me help you.”

It is the only reason President Obama told the then Senator Kerry and Congressman Frank not to worry if the final bill does not have a public option.

Kerry and Frank said Obamacare would not work without a public option. The only thing that would work is a single party payer system.

With limited benefit plan, employers would avoid the broader $2,000 per-worker penalty.

It is not clear is whether employers could face a $3,000 penalty per individual for any employee who opts out of the limited benefit plan.

Four problems are being discovered with the health insurance exchanges.

1. If the employee is a low wage employee that refused employer provided insurance he is not eligible for a government subsidy.

2. If the federal government runs the health insurance exchange, the federal government by law is not permitted to provide a subsidy. Only state run healthcare insurance plans can provide subsidies.

Over 50% of the states have refused to run health insurance plans. Therefore people who need subsidies are not eligible in over 50% of the states.

3. The law calls for tax credits and not subsidies. All of a sudden the words “tax credits” have been dropped in discussion. Only taxpayers who earn over $38,000 per year pay taxes. The only way a person can utilize a tax credit is by deducting the tax credit from taxable income.

The government has gotten around this problem by giving the healthcare insurance companies a tax credit in advance and calling it a subsidy for qualified persons.

Those workers who opt out of the employer provider plan for a health insurance exchange plan would not be eligible for a government subsidy. 

A full-time worker earning $9 an hour would have to pay as much as $70 a month for a mid level exchange plan from a health insurance exchange, even with the subsidies, according to the Kaiser Foundation.

At $12 an hour, the workers' share of the premium would rise to as much as $140 a month.

 A $12 an hour worker cannot afford to pay $1680 a year for healthcare insurance.

Mid level coverage is limited coverage. A patient might need a higher-level plan that costs $200 a month or $2400 per year. This plan is out of reach for most patients making $40,000/year.

 "There are going to be many people who will be ill and need a more robust plan,” a health benefit advisor proclaimed.

Currently, only one-quarter of workers eligible for the mini-med plan take it. Ms. Newman said, "We really feel like the people who are not taking it now will not take it then."

There is a huge glitch in the health insurance exchanges’ individual healthcare market. This glitch will make the health insurance exchanges more costly and less attractive to all stakeholders. It will decrease the number of people insured and increase the federal deficit.

These people may be self-employed or seasonal workers with surges of income. They could be part-time workers with several part time jobs. 

Obamacare does not permit cancellation of the health insurance exchange policy because it will mean that people will be in violation of the federal mandate if they do not have insurance. 

The Obamacare bureaucrats realize that people receiving subsidies might have a hard time paying the premiums even if they receive a subsidy.

These people live from month to month. Some have surges in income. Some collect commissions one month and nothing the next month. Most have old cars. They might suddenly need new brakes or new tires. Some might get the flu and have to stay home without pay for a week. There are many reasons low wage earners suddenly have a hard time paying healthcare premiums even if they are subsidized.

Many do not have bank accounts or credit cards. There is no such thing as auto pay in their world.

The Obamacare bureaucrats writing the health insurance exchange regulations are people with nice bureaucratic jobs with steady paychecks. They have no idea how difficult it is to make ends meet for these people each month.

The healthcare insurance industry does not care about these problems. It may provide for a grace period of a week or two. If a healthcare policyholder fails to pay their healthcare policy premium the policy is cancelled in the real world.

In the bureaucratic world of Obamacare the healthcare insurer cannot cancel the insurance in the usual way.

HHS has created through multiple regulations a whole new and very restrictive method of discontinuing healthcare policies that must be followed to a “T” by the healthcare insurance industry.

This method will lead to even more dysfunction in the healthcare system.

HSS has instituted a 90-day grace period for paying premiums only for those receiving federal subsidies from the health insurance exchanges .  

At the end of the 90-day grace period the policyholders must pay the entire three months due. If they could not pay the premium monthly how are they going to pay the three month fee?

Aetna was not so dumb in dropping out of the health insurance exchange system after all.

During the three-month grace period if a policyholder get sick and needs care they will be entitled to care.

Who will bear the financial responsibility for the care? Not the patient.

HHS has decided to split the financial responsibility between the insurance companies and the providers. The insurance company will cover the first month and the hospitals and physicians will cover the next two months.

After three months the insurance company can cancel the insurance.  However people can re-enroll again during the next signup period without penalty.

If one is clever enough a patient can receive 12 months of care and coverage for nine months of premiums without penalty.  

“Along with paying for services during the first month of the delinquency, the insurer must:

1) notify HHS of the non-payment;

2) notify providers of the possibility of denied claims during the second and third months;

3) notify the insured that he/she is delinquent;

4) continue to collect the advanced tax credit on behalf of the policyholder;

5) return the tax credit for the second and third month to the Treasury;

6) issue a termination notice to the insured at the end of the grace period.”

This procedure is a very large administrative burden and potential financial loss because of the federal government's decreases in funding. Most providers and insurance companies will quit participating in the health insurance exchange program.

Rather than increasing affordability and access to care it will decrease access to care and affordability of care. It will create a more dysfunctional healthcare system.

 The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

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