America's Best Business Practices

A 2003 Harvard study concluded that 50% of all bankruptcies were related to medical costs. 75% of the 50% had health insurance. In a 2007 newsletter by the Arizona Hospital and Healthcare Association, it was estimated that one in five Arizonans were uninsured. Similar to putting trust in government to successfully run a new program (can you say cash for clunkers?), we have a false sense of trust in the current insurance industry. Do we believe they will drive the changes needed to reduce healthcare costs and cover uninsured/underinsured Americans?

There is a not-for-profit organization that listened to small business owners and individuals about their healthcare needs. The organization then went out and solicited insurance programs that provided small business and individual protection.

The products that resulted from this search provide participants the largest healthcare network in the US, a national program that offers continuity of coverage in every state, and guaranteed renewable (unless you fail to pay the premiums). When the largest network of providers was created, the members experienced an average decrease in premiums of 6%. This plan is insulation from healthcare reform that:

- will not be subject to the luxury tax
- you will not need to change insurance when you change jobs
- The plans will not be subject to change and cancellation if your employer adjusts their plan
- It is completely portable with no re-rating should you move to a different state

Participation by citizens is the only way to affect change. We need to take responsibility upon ourselves to maintain momentum and change our focus. We need to direct our energies towards solutions and away from blaming the government. We need to begin the process of rebuilding this country without relying on government. “If momentum can shift to private sector resilience, the people will prevail in spite of government involvement” (THauer, 2009).

Our legacy is only as strong as our commitment and actions to better society for future generations. By acting with passion, motivated by a common good, we stand a better chance of turning this ship away from governing by crisis. A book we are all familiar with “The Boy Who Cried Wolf” seems to be an appropriate assessment of current government policy-making. In the spirit and remembrance of the 50th anniversary of “Harold’s Purple Crayon”, maybe we should look upon the creativity of the individual. Only by embracing positive solutions that can be acted upon quickly will we be able to avert continued policy miss-management. This not-for-profit organization is offering a solution that will not require government approval.

Our forefathers forged a new country in spite of its government, are we ready to put forth the same effort?

I am not sure which not for profit that Tom Hauer is referring to involving health care. I am aware of a couple of different not for profits that have been formed through associations or industry trusts over the years. Some have been successful and other less so and had to be acquired or disbanded.

It is interesting that this information is coming out when the White House needs help for healthcare from the people generating jobs and in the biggest position to loose with higher taxes and overhead (oh, my goodness, small business).

If someone did a historic analysis I would not be surprised to see similar numbers as those in the study.

There are insurance industry solutions that could be implemented to make health care more affordable that do not involve “collusion” or “extortion” as alleged by some administrative personnel.

The proposals by the White House and the Congress mean new businesses could end up paying 50% of salary in taxes and benefits. This is an incentive? The incentive is to look for loop holes that exclude benefits or the penalties included in this legislation.

Jeffrey, I am afraid you are simply parroting the insurance industry’s “selling points”. I have spent 30 years fighting with insurance companies to pay claims and approve coverage for conditions that were originally denied. Consider where your premium dollars go.

Insurance for the most part is not purchased, it’s sold by insurance agencies who employ agents that actual call on clients at their homes or businesses. Often the agent may recommend 3 or 4 plans from different companies. Each has their own set of forms, marketing materials, and fine print. The process is confusing for most, and after you decide, they ask for your entire health history, and after your paperwork is completed (usually 5 or 6 forms and disclaimers) are sent to a regional service center for review, and then to home office for underwriting.

In underwriting you can be approved, declined, rated up or have a rider excluding coverage for an ongoing condition (the one you need care for).
That’s if your lucky.

Most companies do “after the fact” underwriting, meaning coverage is approved, you pay premiums, however, at time of claim, the company will go over the answers in your application with a fine tooth comb. Anything missed and you can bet the claim will be denied, and your policy may be canceled.

Have you ever fought with an insurance company over a denied claim? I hope you have a lot of time to kill.

All of the functions mentioned could be and are eliminated under Medicare (for example).

Sales commissions can run from 5% to 30% depending on the markets. This does not include management, support staff, rent, equipment, utilities, payroll taxes or benefits. It adds up.

No one is paid to sell Medicare. There are no applications, health statements, underwriting, or marketing materials. Doctors and hospitals wont be bothered with patient health statements from insurers, and administration will be greatly reduced.

Let’s not forget that insurers are public companies, whose executives are paid obscene salaries and stock options. shareholders receive dividends, and the amounts paid to lobby congress over the last 10 years are in the billions (with a B).

But your right Jeff, premiums will climb by 50% in the next few years …. if we do nothing.

Jeff,

You raise some valid points. The cost of administration of insurance is expensive and would get more expensive under a public option.

Bruce,

I have spent the last 25 years working for individuals and companies that did not fully understand the policies that were agreed upon.
My start was personal involving over a million dollars worth of cancer bills that were overwhelming to the spouse of the cancer victim.

In my experience, the average consumer only gains insurance knowledge after there is a need for services. I spent many years designing programs based on the needs and demographics of the individuals that were to be covered. The programs changed over time to accommodate changes to member needs.

In my state, the Medicare program provides basic benefits, and leaves a big gap with other necessary services that are then purchased separately. The Medicare supplements are sold through independent producers or through companies. This system is working, to a point. As in many industries, there are some bad apples.

We can all agree that there has been considerable waste both in the public and private sectors. One sticking point for me is that government programs do not change or go away. We’ve known there are problems with Medicare, but no solutions have eliminated the problems. The current solution is to cut funding. Does that eliminate waste and fraud? No, it means providers will accept less Medicare patients. The current public option does not give me confidence that the government will run healthcare more efficiently. California is a good example. The governemnt cuts have limited access to services for many MediCal patients.

I believe we are at a point where we are all called to action. In the short term, there are alternative insurance solutions that are based on educating and helping the member.

If my comments are interpreted as selling for the insurance industry then that is wrong. I believe strongly in the open marketplace. The insurance industry and the public have limitations based on geography. This limits options.

The rules for underwriting are specific to each company and to the overall acceptable loss levels that are actuarially calculated. This dictates the company’s performance in the health insurance marketplace. The marketplace has contracted over the years with a few providers “re-branding” one or two companies health care solutions as their own.

We built a consortium solution in the 1970s for unions, associations and not for profits that involved 15 insurance companies, national options and simplified underwriting that was successful and profitable. We used a shared risk formula. It worked.

We did not have a division devoted to handling government paperwork and operated with an expedited claim form for service. All companies paid into the trust.

We never had to dip into reserves. Our average increase in premiums was 5%. When we loaded an association based on age or medical information for the group the rate was guaranteed for two years not one year and never had to change a rate.

If you study the payroll allocation tax studies from Brookings and others you find that there are significant cost differences if Congress is willing to look at rational solutions. If they continue political solutions, we pay the price.

The AMA, health insurance industry, chiropractic associations and others (too many to list here) have all done studies over the past 15 years on the cost components involving medical care and insurance. The conclusions are always the same:
–legalese (frivilous malpractice suits, etc)
–government regulation and compliance
–pharmaceutical costs (higher R and D and FDA approval costs versus other nations slowing implementation)
–billing formulas from Medicare and Medicaid that reduce payment and collections from these patients.

If these costs could be cut nationally then health care costs would drop by 30 to 50% and change the position that the healthcare industry takes in underwriting.

This is a round robin discussion. The government has no interest in a total solution so it must come from the private sector and public to keep American business in business.