The Expert

Now what?

The largest transformation of health insurance in our nation’s history was passed in March by the Democrats and President Obama. If you are familiar with my previous posts you will know that I am against most of the “reform” that was passed in this law because I know it will increase our insurance premiums substantially and reduce our choice. With that said–what’s done is done. There will be legal challenges and efforts to repeal the law but until that happens–the bill is the law of the land.

I want to make sure you understand the changes and how they may effect you, your family, and your business. This health care law is huge (2700+ pages) and there are many changes–therefore I will be posting a series of articles that inform you of the changes in the order that they take effect.  I will only be posting the changes that effect your health insurance.

IMMEDIATE CHANGES

1) Grandfathered Plans:  If individuals and groups want to keep their current plan –they can do so only if they do not make any changes to their plan.  The only acceptable changes they can make and keep their plan is if they add or delete members to the plan.  So, if you want to change a copay, deductible, coinsurance, etc…even if you stay with the same insurance company, the “new plan” will have to be compliant with the new federal mandates.  This effects all Utahans because over time everyone will make a plan change of some kind and have to purchase a federally compliant health plan with the new federal mandates (even if you don’t want them).  Health insurance mandates add to the cost of the health plan–so this is one way Utahans will pay higher costs. 

2) Small Employer Tax Credits:  Makes available tax credits for qualified small employer contributions to purchase coverage for employees. Begins retroactive for premiums paid in taxable years beginning after December 31, 2009.  In order to qualify, the business must have no more than 25 full-time equivalent employees, pay average annual wages of less than $50,000 and provide qualifying coverage.

The full amount of the credit will be available to employers with 10 or fewer employees and average annual wages of less than $25,000, and will phase out when those thresholds are exceeded. The average wage threshold for determining the phase-out of credits will be adjusted for inflation after 2013. Small employers will receive a maximum credit of up to 50% of premiums for up to 2 years if the employer contributes at least 50% of the total premium cost. The credit would phase out entirely for employers of more than 25 employees whose average annual salaries exceeded $50,000. If you have a business that meets this critera–make sure you contact your CPA and take advantage of this tax credit.  There are some exclusions to the credit.

Employers will not be eligible to use the credit for certain employees, including defined “seasonal workers,” self-employed individuals, two percent shareholders of an S corporation (as defined by section 1372(b), five percent owners of a small business (as defined by section 416(i)(1)(B)(i)) and dependents or other household members. However, leased employees are eligible employees for the credit. Employers receiving credits will be denied any deduction for health insurance costs equal to the credit amount.

To check out my video blog on the subject please see below.  I look forward to your comments and questions. Look for my future posts!

Obama supports reconciliation

Yesterday, President Obama gave his blessing to congress to go ahead with a very controversial strategy called reconciliation to pass the unpopular health care reform bills.  Reconciliation is a tactic that only requires a simple majority of 51 votes to pass legislation.  Currently, the House has passed a version of the health care bill and the Senate has passed another version of the health care bill.  The bill was stalled in its tracks once Scott Brown, Republican of Massachusetts, won Ted Kennedy’s (Democrat) senate seat.  Democrats lost their super-majority and now republicans can filibuster the passage of the bill and democrats now do not have the 60 votes to override a filibuster.   In order to avoid the filibuster the democrats are now planning to resort to reconciliation pass the bill with a simple majority (51 votes). 

The reconciliation strategy is a bad idea for everyone–including the democrats.  Reconciliation is typically used only for budget, spending, and debt-limit bills and was designed so that budgets would be easier to pass in order to keep the government rolling.  Reconciliation has been used in the past to pass contentious bills.  The difference today with this health care bill is that it will fundamentally change 17% of our economy and affect every American’s health care.  For a change of this magnitude reconciliation is a way to thwart the will of the people.  Since November of 2009 every major poll of Americans show that the majority do not support the current health care legislation by a margin of 10+ points.  Another point of concern is that the republicans have been shut out of the process.  Those republicans represent millions of Americans–so in essence those American’s views on health care have not been given their due representation. 

President Obama and the democrats seem willing to face an enormous political backlash by resorting to reconciliation–many will fall on the sword so to speak to do this.  Why?  Why would they do this?  My only explanation is that if they can get this passed–even though they will lose politically–they beleive it will fundamentally change America and will never be repealed (even if they lose control of congress). 

From what I know of the current House and Senate bills–they are not designed to reduce costs.  In fact Utahan’s will see anywhere from a 30% to 50% increase of the bat from this legislation.  Those increases will come from mandating that everyone buy health insurance, guaranteeing coverage without pre-existing conditions, and community rating (premiums of younger go up and subsidize premiums of the older); costs which I am opposed to because they are not good for my clients (this topic will be another blog post).  That increase in health insurance premiums does not include the already burdensome 10% to 15% renewal increases every year due to health care inflation and utilization.   No matter what the politicians say, this bill will not reduce health care or health insurance inflation; but rather, it will increase Federal Government control of your health care and health insurance, increase your taxes as you subsidize other’s costs (even more than you already do), and leave you with less choice as private insurance is regulated out of business. 

I agree that health care reform legislation should start over and focus on reducing the costs of health care, incentivize consumerism, and incentivize better quality rather than federal control of  health care. http://www.youtube.com/watch?v=LnpWEqhyaEM

That’s right, I will be going to Washington DC during the second week in March (about two weeks from writing this) to participate in the “Capitol Conference” for the National Association of Health Underwriters (that sounds boring doesn’t it?). First off, I’ve never been to DC–so I am excited to experience it. Second, I will have the opportunity to personally meet with our Federal legislators including Sentor Hatch, Bennett and Representative Chaffetz. Others in our group will meet with Representative Matheson and Bishop. The purpose of the visit is to inform and educate our legislators on health care and health insurance reform issues. In a nut shell we advocate more choice in the marketplace, reforms that will actually lower costs (which will lower rates!), and all good ideas that will benefit our clients!

Over the next few months I am going to be posting regularly about ideas I think are “good” for the health care and health insurance industry and above all good for all Americans. Let it be clear that I do not believe more State or Federal Government control of our health care/insurance is better. You may have a different opinion and that is fine with me.

This DC trip gives me an opportunity to be an ambassador of ideas. I invite all Utahns (that want to) to write me about their ideas for health care/insurance reform. Email them to me at expert@uthealthplans.com or comment on this blog. I promise that I will personally print the ideas and hand them to your Federal legislators in DC. I would really like to inundate them with ideas. All ideas are welcome (even ones I do not agree with). After all, these guys in DC represent everyone–not just me. When I get back, I also promise to report back to you all on this blog.