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Our Massive Word ‘Omelet’

Broken Healthcare Concept Image Of Plaster On Egg

The present ‘State’ of our healthcare law

“Words are like eggs dropped from great heights; you can no more call them back than ignore the mess they leave when they fall.”  Jodi Picoult, Salem Falls

Words have a great impact – especially in their tone and intent. If only it was as easy to “Say what you mean and mean what you say.”

I’m sure that MIT professor, Jonathan Gruber, would agree.

The health and well-being of our massive healthcare law boils down to six measly words, “an Exchange established by the State.” The Patient Protection and Affordable Care Act (PPACA) resulted in 381,517 words, yet, at least 30 times that number, or 11,588,500 words, are now final regulations for Obamacare – and growing. Each word representing an intentional ingredient – much like in preparation of a souffle or an omelet.

On March 4, the U.S. Supreme Court heard arguments on the legal case of one of the most contentious laws in our country’s history. The justices began hearing the arguments in King v. Burwell, a case that defines whether the language in PPACA allows qualified Americans in up to 37 states (currently using the federal exchange) to receive federal tax credits for purchasing health coverage.

As we know, the Internal Revenue Service has clearly interpreted PPACA to allow subsidies in ALL states, regardless of the exchange being state-based or federal-based. Plaintiffs who challenge the IRS interpretation say the language in the law is quite clear, as found in [section] 1311 of PPACA. Within this section of the law, it clearly says that premium tax credits are based on premiums for plans offered through “an Exchange established by the State.” – the now-famous six words.

It is not my intent to offer legal views, due primarily to the fact that I have no legal expertise. But the implications on how the Supreme Court will eventually rule (most likely in late June) will greatly determine whether millions of Americans lose subsidies because they reside in states with federal exchanges. Because Iowa uses a quasi-federal and state exchange (known as a ‘Partnership’), Iowans who qualify for premium relief would no longer receive this assistance if tax credits are invalidated by the Supreme Court. It is estimated that about 38,000 Iowans currently receive subsidies.

Under this scenario, Iowa would need to develop its own state-based exchange within the allowed period – yet to be determined. In addition, the political ‘shot clock’ would, in essence, be reset to re-establish new strategies to undo an pivotal portion of this landmark healthcare law.

It’s anyone’s guess on what that new omelet may look like…let alone how it may taste.

Stay tuned…

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Walter and Max – Moments of Truth

The Truth and ACAOn April 17, one of the architects of the Affordable Care Act (ACA), Democratic Senator Max Baucus of Montana, lectured Health and Human Services Secretary Kathleen Sebelius over the implementation snafus of the ACA and that he sees a “train wreck” coming if the administration does not do a better job implementing and communicating its features.
Almost immediately after learning this, I thought of Walter Cronkite and the mythical “Cronkite Moment.”
On February 27, 1968, CBS News Anchor Walter Cronkite offered on-air that the U.S. war effort in Vietnam was going nowhere and suggested negotiations to get us out of the war. Keep in mind, Walter Cronkite was the most trusted person in America during that period. President Lyndon B. Johnson (LBJ) supposedly shut off his television and muttered something similar to “If I’ve lost Cronkite, I’ve lost middle America.” (Perhaps a few other colorful words were included along with this quote!)

Now, 45 years later, our current president might be losing support from a key ally in his own party. Baucus, chair of the Finance Committee, who was instrumental in helping author the ACA, drilled Sebelius on whether federal exchanges will be ready this Fall and provided umbrage about “The administration’s public information campaign on the benefits of the ACA deserves a failing grade…you need to fix this.” 

Baucus continued his honest assessment by saying, “People generally dislike what they don’t understand. I hear from the people on the ground in Montana that they are confused about the new health care law. People are worried about the impacts…I don’t see any results.”
Much like LBJ, President Obama might have had a similar feeling when Baucus made his blunt sentiments known to the public. The clock is ticking on the many key reform measures that will affect most all Americans in the months and years ahead. Each generation has its own defining moments – both good and not-so-good. How will the “Baucus Moment” impact this and future generations?

One more thing. Baucus, a senator since 1978, just announced yesterday (April 23) that he will not seek reelection in 2014.

And, that’s the way it is…
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Health Care Snow Globe Continues…

David P. Lind BenchmarkIn May, 2010, I posted a blog on the website of Jensen Consulting making an analogy between a snow globe and the newly-created Affordable Care Act (ACA).  Recently at lunch, almost two and one half years following the passage of this mammoth law, I was asked by a colleague what insight I had on the ACA. I responded by using the snow globe analogy…which continues to be very relevant in 2012 and beyond.

Below is the blog written over 30 months ago.

Imagine, if you will, living in a snow globe for many years. I know, this lifestyle sounds very limiting (if not downright corny!). Such an existence would most likely result in familiarity with your surroundings, including most events and activities, possibly generating some boredom. A snow globe life also allows for a more consistent and a relatively predictable world for all others who live with you in this globe.

Then, without much notice and beyond your control, the snow globe is picked up by an external, ‘omnipotent force’ who proceeds to shake the living daylights out of the globe, rocking your world to its core. After numerous violent shakes, the snow globe is set back down on the table … upside down! You find yourself in a mountain of snow, feverishly digging out of the suffocating mess to view the new arbitrarily created terrain. Your environment now looks frighteningly foreign. In fact, it remains a blizzard for the unforeseeable future, most likely for years to come.

The above analogy fits appropriately for all employers, insurance companies, health care professionals, benefit consultants and countless other individuals and entities who are (or will be) affected by the recently passed health care reform law. Also known as The Patient Protection and Affordable Care Act (PPACA), the provisions within PPACA are massive in scope and will require extensive clarification and regulation by the various governmental agencies, including state agencies. Some provisions, such as the Small Business Federal Health Care Tax Credit and the Early Retiree Reinsurance Program will take place in 2010. The extension of coverage to employees’ adult children up to age 26 and the elimination of lifetime dollar limits on medical insurance plans will take effect for plan years beginning on or after September 23, 2010. Many other provisions will apply in 2011, 2012 and in 2013 … too many to list in this particular blog.

But the year 2014, will most closely resemble the ‘upside down’ analogy of the snow globe. New rules will require insurers to accept every individual or employer who applies for coverage, which is not a bad thing, but there will be additional associated costs with this. The new law establishes state-run health exchanges, which will act like purchasing cooperatives for individuals and small businesses with up to 50 employees. An individual mandate will go into effect, which means that anyone caught without health insurance faces only a $95 penalty, but this fine will get bigger every year, maxing out at the greater of $695 or 2.5 percent of a person’s taxable income in 2019. Employers with 50 or more employees that elect not to provide health insurance coverage will face a $2,000 fine per employee if an employee receives subsidized coverage from the federal government. The employer penalty may look attractive, especially when the average annual premium in Iowa, based on our 2009 Iowa Employer Benefits Study©, is $4,440 for single coverage and $11,556 for employees who have family coverage. In other words, why would larger employers offer health coverage if paying the penalty is a cheaper option? The specifics of the above provisions are extremely complicated and convoluted, if not problematic to administer. Since the government would subsidize much of the health insurance cost for low-income workers available through the exchanges, the incentives for retaining an employer plan could very well erode altogether. (2011 Study data is found here).

With all legislation, there are both intended and unintended consequences.  But with this colossal law, a clear understanding of the intended and unintended consequences will not come for many years. Reform will certainly include more of the currently uninsured within the insured ranks, but we really don’t know at what additional cost. In my opinion, this legislation has not addressed the fundamental issues of rising health care costs, which means that health insurance costs will continue to increase at unabated rates. The snow will continue to fall for quite some time, requiring all of us to keep our shovels close by.

After reading this blog now, I realize that the snow continues to fall while we look to replace the shovel with a snow blower.

Hmm, it appears we all live in a perpetual health care snow globe.