SPBA Email Alert – December 28, 2009
Health Reform Insights & Talking Points
By SPBA President Fred Hunt
I feel like the weatherman being asked to give a specific forecast of the weather a few years from today. My forecast is below, but let me save your sanity by first explaining what will be playing out when/if a bill passes. As I pointed out in my last e-mail, there are about 100 factors and processes which can change what you think you see ….even when/if the law is passed, and we all sit with printed copies in front of us and experts analyzing the actual words.
An example arose today. A year ago, the Defense Authorization Act included what seemed like iron-clad wording that would ease and extend government medical care for wounded soldiers. It was crystal clear. However, a year later, the Defense Department has “interpreted” the law to deny many veterans the health services they thought the law promised, especially for Post-Traumatic Stress Disorder (PTSD). The new interpretation decided to limit care only for things that can be proved to have happened during “armed conflict” in combat zones. This move is a blatant way to avoid paying for an expensive group of veterans and leave them uninsured or a burden on employer plans. (This is also yet another lesson for those who think government health care is embracing & caring.)
I mention this new development for two reasons: First, as a heads-up that if this new interpretation stands, your plans may find that costs attributable to PTSD which everyone thought were covered by the clearly-stated law and Congressional intent may well apply to people who left the service after the Oct. 14, 2008 date of the Chu memo which arbitrarily changed the impact of the law. (No need for action yet, since there is an uproar of veterans groups demanding Congress return to its promise.)
My other reason for mentioning this news is that it shows how something you read in any final health reform law can have a very different real-world impact. There is already some conniving going on behind closed doors in Congress to pull off some of these. So, don’t drive yourself nuts to get the final language, and then assume that what you see is what you get.
The actual language of any bill will have hidden zingers. Then, the Congressional staff draft what is called “the blue book”, which are essentially notes to give reg-writers background and “Congressional intent”. The blue book often pictures things differently or with added pieces that you don’t see in the legislative language. Then come the interpretations which the applicable upper-level Agency officials decide to make (like the Defense Department example). Then come the nitty-gritty interpretations as the actual reg-writers create the regs with which we must comply. Zingers can sometimes take a decade to emerge. (If you are growling about the people who influence these interpretations, let me point out that everyone who has attended an SPBA Spring Meeting has shaped law & policy effectively and constructively, and SPBA acts as a reality-check truth squad whenever possible in the rest of the process. Please mark your calendar for the SPBA Spring Meeting April 14-16, 2010 in Washington DC to again steer policies towards common sense.)
So, it is fine to check the Library of Congress official legislative website at http://loc.thomas.gov as often as you want. You can also read and hear all the interpretations, but the absolute specifics of how things would work would evolve over several years. In the case of this law, I think that the legislative tussle will also go on for several years, with each side trying to slip in later what it did not get in this first round, and parts even being negated or repealed.
MY FORECAST:
So, with all those caveats & explanations, let me share my thumbnail sketch of how I think our self-funded employee benefit market will be impacted. (At some later date, I’ll tell you how the attendees of the 2009 SPBA Spring Meeting, and some phenomenal work by several SPBA members steered history and make this a fairly upbeat report.)
Employee benefit plans in general and self-funding were never a target (except, of course, for the hard-core single-payer advocates). So, I think that we will be relatively unscathed (meaning less than could have been, and than many feared). I think most problems will be TPAs & self-funded hit as unintended bystander victims of the punitive measures being thrown at insurance companies. There is nothing designed to subvert your client plans or lure people away.
I THINK THERE WILL BE SOME GOOD THINGS for your client plans. For example, I think:
>>More young & healthy individuals who, today, who opt out of employer plans because they feel they don’t need health coverage will be in the plan because of the direct or indirect pressure to be insured. Some plans suffer badly today from young healthy eligible individuals who decline coverage. Employers will take a more energetic role in being sure their workers are in the plan, because one probable provision would wallop employers with a fine for $750 per-employee fine if even one ends up getting a government subsidy instead of an employer plan.
>>It will be harder for employers to “go bare” and not have a health plan, so that stabilizes and expands your market.
>>The medical cost “discount” headache looks like it will have a path to ending. If there is an insurance exchange, public option or whatever in which the government (federal Office of Personnel Management – OPM – is in the bill) negotiates with doctors & hospitals for a price formula, then I think TPAs and others will adopt that as the de facto Usual & Customary. This is different than basing on the Medicare price, because back-room deals in 1965 recognized Medicare & Medicaid as a special situation helping the old & needy. The new public exchanges would negotiate a presumably-fair price for regular people, so it would be hard for doctors & hospitals to say that a negotiated price for regular people is not fair for your plan participants. The government won’t automatically extend their price to you, but, at last, a credible price list, the same as insurers’, would be available.
>>If the “Cadillac” plan tax remains, cost-efficiency in design & operation of plans will be a gigantic plus. This has always been a forte of TPAs.
>>There will be changes in the health insurance companies. Some markets (such as individual policies) might well become money-losers and be dropped. Insurers may well decide that they want a less-direct role, be it more Stop-Loss or new arrangements with TPAs or whatever. Meanwhile some non-profit Blues and others will get advantages over for-profit insurers.
>>Some SPBA members have told me that they are already spreading the word among current and prospective clients that no matter what happens and how long it takes to unfold, their TPA (as part of a nationwide network of SPBA members sharing insights & experience) will be on the cutting edge of both the visible and invisible developments. With insurers and others facing turmoil within their arena, he says that clients and prospective clients are reacting very positively.
SPBA’s ROLE & GOAL will be to work with you day by day to maximize your options as all this evolves. Unfortunately, in a few days, some SPBA TPA firms will be past-due on their dues & membership renewal forms, and cut off from the services they need. It is a shame. TPAs who pride themselves on processing claims in a few days have failed to process SPBA’s simple form in the past 45 days. Some say “it never arrived”, but it was sent first class mail and not returned. So, if you think it never arrived, do a thorough investigation of your mail room for what else has been lost. For some of the excellent individuals who will be dropped in a week, we will miss you, and we strongly encourage you to arrange to get compliance and industry trend services from somewhere. Sadly, most firms that go it alone lose clients and fade away or end up in deep legal & financial trouble that reflects badly on the whole industry,
For the members who have paid & renewed on time. Thank you, and stay-tuned. This will be an exciting time with both frustrations and the biggest opportunities in decades.
Happy New Year.
Fred