How Would The Proposed Healthcare Reform Affect You?

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Questions and Answers about the Proposed Healthcare Reform Act

Congress continues to debate healthcare reform act at the writing of this column. Conceptually, it is important to understand some of the key components of what is being discussed and how it will affect you. This is the time, if you are so inclined, to write or call you Senators and Representatives.

Some politicians are promoting a “public plan” as an alternative, or in addition to the private insurance that now exists. Some say a public plan would offer people a lower cost way of having insurance, but it is important to understand some basics of how the healthcare and insurance systems now work.

There are currently three examples of a public plan, namely Medicare, Medicaid, and healthcare through Veteran’s Administration. The VA has no competition and is overseen by the government. Recently, the VA released information that 10,000 people in the Southeastern states having colonoscopies and other endoscopic procedures may have been exposed to hepatitis and HIV. The VA knows of 6 of these patients testing positive for HIV, 34 for hepatitis C, and 13 for hepatitis B. If you want more information Google “VA colonoscopy”. While VA coverage is a blessing to many, this is not the quality healthcare most Americans expect.

Medicare is provided to people over age 65 who have worked and paid into Medicare for 40 credits (quarters), been married for at least 10 years to someone with 40 credits, or qualify by disability. What many people do not know is that the Centers of Medicare and Medicaid Services (CMS) sets the Medicare fee schedule for reimbursement for medical expenses incurred. Specifically, CMS states the terms and reimbursements made to medical providers by Medicare. So how does that affect people on Medicare or you?

This affects you in two ways. First, as providers accept lower payments for services to Medicare patients, they “shift” their business costs and charge insurance companies a greater fee for the same service. To see Medicare’s discounted fee, look at a Medicare Explanation of Benefits and see the difference between “Amount Charged” and Medicare Approved”. While insurance companies also negotiate fees, they cannot match the lower fee CMS establishes. So why is it bad if all people have this low negotiated fee? If fees are set lower by a proposed public plan, more people would use this plan for insurance because it should have a lower premium, initially. After a short time, most private insurance companies would not be able to compete and would discontinue offering private insurance. Therefore, all that would exist would be public insurance and providers would no longer be able to shift costs. That would cause providers to have less gross income due to reduced fee schedules paid by the public plan and something would need “to give” for the providers to stay in business. Either fee schedules would need to be increased (more taxes), the patient (you) pay more of your medical expense, care would need to be rationed to save money, or the quality of medical care and providers would decrease.

Secondly, Medicare establishes the norm for treatment. While it was said years ago when Medicare began that Medicare would not stand in the way between you and your doctor, you only need to look at policy like Diagnostic related groups (DRGs) to know that Medicare is controlling our medical care. Foe example, have you ever heard of people on Medicare stating that they have to leave the hospital way too early? DRGs establish the amount of money a hospital will receive for someone who is hospitalized based on their diagnosis. i.e. a person with a broken hip is usually released from the hospital (asked to leave or privately pay the hospital bill) after a recommended number of days.

Medicaid works much like Medicare with 40 – 60% of its funds coming from the federal government and clearly has problems including mis-utilization and late payments to providers for service rendered. In fact some providers are no longer accepting Medicaid patients. In fact “The “Wall Street Journal” op-ed on 4/17/09, Dr. Marc Siegel, an internist at New York University’s Langone Medical Center, writes, “More and more of my fellow doctors are turning away Medicare patients because of the diminished reimbursements and the growing delay in payments.” And the problem “is even worse with Medicaid.”

Another very important aspect of private insurance is the insurance agent. A professional will listen to your personal situation and be able to make recommendations specifically to you. Whether you should have a low deductible plan with a prescription drug card or a Health Savings Account – Qualified High Deductible Plan, your agent can help. What are your options? What company best offers what you need and possibly want? He or she should also be available to assist you with service issues and claims. Your insurance agent should be your advocate. Central Illinois has a large number of quality professional insurance agents.

Some reform will take place, and hopefully it will use history, current technology and sound logic to provide a sensible – dollar practical plan that all can live with.

Written by

Steven A. Buttice is the president of Medical Reimbursement & Management Services, Inc., a firm specializing in issues affecting seniors, including seminars and consultation on Medicare Plans, Long Term Care and other types of insurance, claims issues, and sales/service of insurance products since 1984.

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