In the October 21, Wall Street Journal the Democratic governor of Tennessee, Philip Bredesen, wrote a very thought provoking article on some of the unintended consequences of the new PPACA / ObamaCare. He does an excellent job in outlining what could happen with the state of Tennessee employees under the new health reform law.
His argument is their state could save a substantial amount of money if their employees opt out of the employer plan (in this case, the state of Tennessee plan). One problem with his assumption is if all employees go into the exchange and the premiums continue to rise in the exchange that cost will ultimately come back to the state to make up.
However, in the short-term, the governor makes a good argument for savings by moving employees to the exchange. Remember I said short-term. Long-term this is not a sustainable solution.
Tennessee: call Massachusetts and ask them how their health program is doing now that it has been in place for awhile.
Editorial Writer Joe Rago on GOP plans for health-care reform.
It was reported the week that the U.S. Justice Department and Michigan Attorney General Mike Cox has filed an antitrust lawsuit against Blue Cross and Blue Shield of Michigan alleging the insurer's contracting methods with hospitals are creating higher prices and fewer choices for health coverage in Michigan. It is interesting to note that the Blues' policies cover about 60% of the commercially insured population in the state, a portion that reflects about nine times as many residents as are covered by the next largest competitor. The lawsuit states that it contracts with 22 hospitals, representing 45% of the state's tertiary beds, hospitals and are required to charge as much as 40% more than the rates negotiated with the Blues.
Most likely we will see more of these lawsuits filed throughout the United States. There is tremendous pressure with each to allow greater competition, especially when staring at the insurance exchanges that will be coming in the near future. How this will help control the cost of healthcare is clear … it won’t. If you removed most favored nations clauses it will allow the provider groups to raise their prices, in this case, for Blue Cross Blue Shield members. Logic would say provider prices would come down since they wouldn’t have to cost shift to other payers to make up the difference for losses sustained with the Blue’s contracts. Do you think the providers are going to reduce their rates? Most likely not. The favored nation clauses will go away and prices will increase for the Blue’s members. Those in the non Blue’s program will still see higher prices and not much will change.
Trying to develop contracts based on patient volume and patient mix will no longer work in today’s environment. We must get to a rational payment system that is based on “cost up” approach that looks at benchmarking like facilities with full transparency. The providers need to make money. The employers need to control the rising cost of care. The employees can only afford so much out-of-pocket charges. These three competing dynamics can only be solved with a different approach. The past approach is not working and we continue to put lipstick on the pig in hopes that it will get better.
Recently an article appeared in the Wall Street Journal where McDonald's is considering dropping their health coverage for the more than 30,000 employees who have enrolled in their program. Most of the employees are covered under a mini med program and with the new health reform act PPACA that was passed now is considering doing away with this plan. Due to the requirements for medical loss ratio and the restraints put on mini med plans, McDonalds is faced with a critical decision and has asked HHS for a waiver. It was granted. Now HHS is granted other waivers to employers.
We are entering a very interesting period of time as the renewal rates are hitting the employer market and many of the requirements of PPACA are starting to take effect. With that said one of our clients shared and op-ed piece that appeared in Investor's Business Daily and raises some very interesting points.
Check out this great editorial from Investor's Business Daily about The Unraveling of ObamaCare
. In the light of day this bill that lawmakers signed without reading, is being revealed as an "unaffordable fraud."