Sunday, July 8, 2012

Sewing a Silk Purse Out of the Sow's Ear of the SCOTUS Health Care Decision

Actual Silk Purse Made Out of Sow Ears at MIT in 1921*
Now that the Supreme Court has ruled on the constitutionality of Obama Health Care, maybe it is time to think about what to do ‘next’ instead of crying over spilled milk (if you were against it) or gloating about it (if you were for it)

Remember this important fact as we head down this next phase of the health care debate with all your brains and all your might:

You are already 'paying' for the 44 Million+ uninsureds right now through your taxes (if they go to the emergency room and use Medicaid to get treatment); through higher premiums individually or at work (through cost-shifting by the hospitals and doctors from treating the uninsureds for free and then making your bills go higher as a result) and for 85% of all the Medicare costs of your parents and grandparents with your general fund tax dollars over and above what you are paying for in your payroll taxes each pay day.

The chances of Obamacare now ever being '100% repealed in toto' by both the US House and the US Senate in the same session is slim to nil. The chances of a '100% repeal' ever getting to a President Romney, if elected, for his veto is next to zero as well.


There is not a Republican in Congress alive today who will vote to repeal the two major provisions already in force: 1) no exclusion for pre-existing conditions (which is what insurance is supposed to be in place to provide for in the first place) and 2) young adults being able to stay on their parents’ health care plans til age 26.

Maybe when all of these young grads find a job, that provision can be revisited. But for now and the foreseeable future, forget about repealing '100% of everything now in law under Obama Health Care Statutes'.

It ain’t gonna happen. Some parts, maybe.  Amendments and improvements (hopefully), possibly.  Total repeal of the law as currently written in law, highly unlikely.

Another reason is that until and unless the GOP gets over 60 votes in the US Senate, and Mitt Romney does in fact win the White House this November, it is very difficult to see how enough Democrats will cross over to support full repeal of Obamacare.  Maybe Claire McCaskill of Missouri, Joe Manchin of West Virginia and Jon Tester of Montana, all of whom are catching major heat for this bill might cross over one day but the Republicans only hold 47 seats in the Senate today and would need to pick up 10 seats this fall to get in striking distance of 60.

Can it 'happen'.  Yes.  Will it happen?  'Probably not' this year. And probably not in the next several elections unless the people of this nation make a decided turn to the right and return to concept of limited government we have not seen in decades.

'Repeal Obamacare!' has a certain ring to it, sort of like 'Remember the Maine!' (does anyone today?) and 'Remember the Alamo!'

It is great politics and great political theater. It has the added benefit of being able to galvanize and motivate millions of people with just one 2-word slogan that fits nicely on a bumper sticker or TV ad. Just look at the $100 million Mitt Romney and the Republicans raised in June. $4.2 million of it in the 24 hours after the SCOTUS decision was issued.

'Politics is politics' and certain amounts of exaggeration, hubris and vinegar is necessary to get elected.

But 'making public policy' is an entirely different process that moves in iterative processes 'based on current law now in place'.  Not on what you 'think it should be' or 'oughta be' 'if only.....we had the right people elected or a majority of people just like me now serving!'

That is the way The Founders wanted it to be...slow and sure and deliberate where no faction or party or person got to act like a king or queen and dictate what happens in our democratic republic.

President Obama and the Democrats have come the 'closest' to having total unfettered power in 2010 when they passed Obamacare with their massive Democratic majorities at the time.

They lost all those margins (and the House) in 2010 just a brief 8 months later, remember?

The reason why no one should be gloating about the SCOTUS decision if you supported the Obama health care package is because now we really have to get serious about cost-controls and dealing with ALL of the upwards cost-drivers in the health care system that the Obamacare legislation failed completely to address. 

The failure of the Obama health care legislation to seriously address any of the real underlying cost-drivers in American medicine today is akin to putting a canvas cover over the top of Mount St. Helens the week before it completely blew its lid in 1980.

You know what they are:  tort reform; malpractice insurance reform; reducing duplicative medical practices; third party payment for health care coverage; full tax deductibility for corporate-sponsored health care plans, especially Cadillac plans for unions; defensive medical practices on the part of overly-cautious physicians and medical facilities…the list goes on and on and on and on.

Short of everyone losing 25 pounds this summer; stopping smoking completely; seriously reducing their intake of beer and alcohol and walking or exercising briskly for at least 1 hour per day, these cost factors still have to be addressed or else we are never going to get a handle on exploding medical costs in general and Medicare/Medicaid and the VA/federal military health care system in particular. 

Ever.  Not with this current existent form of ObamaCare or versions 2.0, 3.0 or 10,000.0 well into the 23rd century. If the American Republic can solve its debt conundrum by then, that is.

So while the political process plays itself out, and the presidential and congressional elections are being fought tooth-and-nail, we thought we would throw this idea out there in the open for everyone to think about so that perhaps, just maybe, we can build on this recent SCOTUS decision, and perhaps ill-advised legislation in the first place but now current US federal law, and move ahead in a bipartisan way to cover all of our fellow citizens with catastrophic health insurance coverage and solve two crucial parts of our collective health care dilemma at a minimum:

Decouple health care from employer-based systems once-and-for-all and help cover up to 44 million uninsureds so the cost of covering them won't be added to the rest of us through higher private insurance premiums or our personal income taxes 

Everyone knows that we have a serious problem in America with uninsured people. Some of it is due to finances, although the poorest citizens are already covered by Medicaid and every senior citizen is covered by Medicare whether they need it or not. (We don’t think Bill Gates or Warren Buffett ‘need’ to be ‘entitled’ to one dime of taxpayer-supported health care assistance; drop every ultra-millionaire and billionaire from the Medicare rolls tonight!) 

Think about it. It is sort of like paying for college educations: if you are fabulously wealthy or sadly poor, you basically are ‘covered’ either by wealth or scholarships and financial aid based on need. The middle-class, once again, gets squeezed by the financial problems of not being able to buy their own health insurance on their own. 

Middle-class workers who are either self-employed and can't afford comprehensive coverage today or work for firms that can't afford paying for comprehensive health care because they will go out of business if they do. 

We can more narrowly identify the uninsured people as workers who: 1) are employed but not covered at work or individually; 2) unemployed people who have exhausted their COBRA benefits or ability to continue to pay for health care insurance coverage; and 3) many people, mostly young, who think they are invincible and immortal at age 25 and don’t need or want to pay for health care out of their salad days ‘salaries’ at the beginning of their careers, assuming they can find a job in this desultory economy.  

We had 4 young staffers in the congressional office in which I worked in 1985 or so who did not participate in the fairly affordable congressional health care plan. 'You are only paying us $17,000/year, Mr. Hill, to work here, remember? DC is an expensive place to live in in case you haven't noticed yet! I am living with 5 other guys in a seedy townhouse and eating at every reception on Capitol Hill every night just to not starve to death!' 

At any one time, taken as a snapshot, there could be as many as 44 million uninsured’ people in America. Depending on economic conditions at the time, it could be as low as 30 million or as high as 50 million. 

Think of young people going from job to job or college to a job; they might be in a transition where they have yet to qualify for any health care coverage at the new job. 

Anyway, the big stink in this whole thing is the ‘tax’ issue that the Supreme Court has now officially declared as the law of the land which the Obama Administration wants to be known as a ‘penalty’. 

It is now officially and irrevocably 'current law' in the United States. All of the CBO baselines that previously 'estimated' its impact are now 'official baselines' of projections of future revenues and expenditures. 

Which could allow for some clever 'problem-solving' if we could get everyone to concentrate on fixing the 2 big problems just identified above and stop trying to gain more 'political advantage' by hurling political invective at each other. 

The ‘tax’ (penalty) will be assessed in 2014 when a person or company does not have a bonafide health insurance plan, again, as ‘approved’ by the 10,000 new federal regulatory agencies set up in Obamacare. (slight exaggeration but not by many) 

This tax is ONLY currently applicable for companies that have 50+ employees. For now. 

It is not unreasonable to expect that the limit will gradually go down to companies with 40+; 30+; 20+; 10+ employees and then anyone in the work force in the next decade, is it? 

If you have 50+ employees and currently provide no health insurance to your employees, you will pay a $2000/employee 'tax' plus a large 'tax' (fine) of about $40,000 to the government on April 15 each year on top of your other corporate taxes. (Don't hold us to the precise details of this yet; Obamacare is such a Rube Goldberg contraption that we don't have a firm grasp on all the particulars....and neither did Congress when they passed it in 2010) 

This is the sword of Damocles threat that is scaring many people to death which proponents of Obamacare just do not seem to 'get' for some reason. Paying a $140,000 new 'tax' to the federal government annually because you couldn't afford to provide health care coverage to your workers in the first place is probably the difference between staying in business and laying those 50+ workers off and closing your doors. 

At the very minimum, it is a very real reason why employers are so hesitant to hire any excess new workers nowadays. If you can get by with 49 workers now and not be subject to the Obama Tax Hike, then why hire employees #50, #51 up to #100 in 2012? 

However, given that Obamacare has now been deemed 'constitutional' by the Supreme Court decision, and scored by CBO under previous assumptions, let’s look at the ‘taxes (nee ‘penalties’) and see what could conceivably happen in coming years with businesses who are currently providing health care coverage to their employees: 

-$695 for an individual if you don’t have your own health care coverage 
-$2000 per employee if a company has over 50 employees. 

The 'rational man theory' might argue the following points for a successful business now offering health care coverage to their 50+ employees:
‘Let’s see: I can keep my 51 employees on the company health care plan and pay roughly $5000 per single unmarried employee in health care premiums and $12,000/year for a married employee with 2 children.
However, I didn't get to be a successful businessman because I am a dummy. I can count and add and subtract so I am going to drop health care coverage for all of my employees and just pay the $2000/employee ‘tax’(nee ‘penalty’) and save about $325,000 to my bottom-line per year (assuming half the employees are single and half have a family of 4)'
Those 50 employees, and the president of the company as well, would then go into the exchanges to buy their own health care coverage, presumably at affordable rates, but this time, it will be out of their own pockets, not paid for by the employer any more. 

Here’s where things could get tricky, but within the realm of possibility given that cooler heads can prevail with reason and persuasion: 

One of the major problems we have in modern American health care (aside from 100 others) is that employee health care coverage needs to be decoupled from the workplace. 

As it stands today, most employees pay the weekly premium from their weekly paycheck and assume they have paid for health care coverage in full. 

Nothing could be further from the truth. They may pay for 25% of the full premium, 50% tops. The company pays the bulk of the health care bill every month and has done so for decades. When you do not pay the full cost of a product or service, you tend to not shop for the best deal and/or use more of that service, don’t you? 

Test yourself the next time Ben & Jerry’s has a ‘Free Ice Cream Cone Day! Chances are you will drive around town to get as much ‘free’ Ben & Jerry’s ice cream as you can possibly eat in one day. Just because it is 'free'. 

Here’s the 'de-coupling’ that many experts have been calling for for decades: 

 "Rational businessmen and women are going to add up the massive amounts of money they could add to their bottom-line on an annual basis and start refusing to offer any health care coverage at all from the corporate level once these exchanges are set up."

We think there will be a veritable flood of Biblical proportions of corporations opting to pay the 'tax' (penalty) of $2000 instead of continuing to pay 5 times that amount for health care coverage for a family of four for any of their employees. Way in excess of what CBO 'conservatively' estimates will be 32 million 'dumpees' into the exchanges in the next 10 years. 

Their bottom-line will thank them. And so will the federal treasury once more profits are exposed to taxation plus the corporate deduction for health care is driven down to zero in effect because it will be used less and less as time goes on. 

This $2000 ‘tax’ (penalty) per person should be used to do the one thing that should have been done with every health care plan since the beginning of employer-sponsored and paid-for health care plans during the wage-and-price controls of World War II: 

‘Be put in a ‘lockbox’ and used only to help people pay for catastrophic health care coverage in the exchange’ 

A 'real' lockbox.  Not the goofy one on SNL when Darrell Hammond played Al Gore in the 2000 elections.

That is what everyone really is looking for, isn’t it? Peace of mind and protection against a ‘catastrophic’ illness or accident causing all of your life savings to be drained away in an extended hospital stay or complicated operations and therapies. 

For a young person below the age of 30, the actuarial cost of a pure high-end catastrophic health care plan only could be as low as $25/month. Maybe $50/month tops. 

For the one $2000 ‘tax’ (penalty) payment by this employer for one single employee, anywhere from 4-10 other young uninsured and uncovered people can be provided full or partial payment for catastrophic health coverage, depending on their need and economic situation. 

The simplest thing would be to just enroll them directly into a catastrophic plan and offer them a payment voucher based on income and need that can only be redeemed at Lloyd's of London or General Reinsurance or some subsidiary thereof. 

This, however, seems to be too simple for the people who concocted the Rube Goldberg of all Rube Goldberg plans in Obamacare. A clever amendment in the next Congress, however, could establish it. 

The one thing that can not be done under this scenario is provide comprehensive health coverage comparable to current BCBS standard plans. There is not enough money to do so as it is today. 

Shouldn’t that be up to the individual to decide for themselves how much extra insurance coverage they want to pay for out-of-pocket on a monthly basis and not their employer or the government? 

In addition, the employer might start thinking: 
'Hmmmm, you know, I might not drop all of my employees off the company plan until I find out if my competitors are keeping their plans intact for their employees. After all, I sure don't want to lose them to my competitor, do I?
So I guess I might pay my employees some more in wages so they can buy their own catastrophic health insurance in these blasted exchanges, maybe disburse half of those new-found bottom-line annual savings to my employees to keep them happy and here with me where I want them to be.’
There are complications galore having to do with what to do with the companies under the 50+ limit who can’t afford to cover any of their employees as well as the larger companies that are not currently providing any health care coverage either. 

In both cases, forcing the employer to pay $2000 per employee in a ‘tax’ (penalty) would most likely be the difference between staying in business or filing for bankruptcy. 

And who really needs or wants to put more people out of work nowadays, huh?

This moment in our political history might be like the split second when a running back in football sees a slight opening in the offensive line before him and if he can just squeeze through it, he can run all the way to the endzone untouched. 

The 'endzone' in this case is: 1) catastrophic health care coverage for everyone in America and 2) a decoupling of insurance from the business world so they can get back to making widgets and gadgets which they do best and get out of the health care-providing business once and for all.

Think about it some today.  Isn't that what we all really want? 

* Read about how the MIT scientists actually made this silk purse our of 100 pounds of sows' ears in 1921:

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