Health Insurance Reform

April 13, 2011

Each year in the fall, employees in my firm receive several communications relating to our “Open enrollment period” which is when we can pause and review our selection of benefits, and adjust them based on our own personal current situation.

The paucity of group health insurance options available to me which meet my needs led me again to select UnitedHealth, and they do provide a good array of benefits.

UnitedHealth is a big company. They insure about 33 Million people, and they are the largest health insurer based on revenue, which hit $94.16 Billion in 2010, with reported earnings of $4.63 Billion.

Rising costs (perhaps combined with careful attention to detail and some ‘enhanced cost-sharing’) caused my personal contribution to medical insurance coverage (for my wife and me) to increase by 24% from 2010 to 2011 – from $275 per month, to $341 per month.

Now, don’t misunderstand my position.

I’m glad to be working for a great company which not only pays me to do something I enjoy, but also offers a company-subsidized health insurance plan.

It is my understanding that my contribution is about one-third of the retail rate for this insurance, i.e. if I were retired and continued coverage under the plan, I would be paying about $1,023 per month, or just over $12,000 annually.

That’s a lot of money!

I just read that UnitedHealth Group Inc.’s CEO — Stephen J. Hemsley — received compensation totaling $10.8 Million in 2010, up from $8.9 Million in 2009.

About $1.3 Million of his compensation was salary, which remained unchanged for the fourth straight year. But his performance-related bonus jumped by 74 percent to $3.4 Million in 2010. The value of his stock and options also rose.

He is probably worth every penny of that to the shareholders of UnitedHealth, but not to me.

I would like the option to select from at least one, not-for-profit, public benefit corporation to provide for my health insurance needs. No dividends to pay out to shareholders. No big bonus to the executive team. No stock options to key employees.

When I was younger, we had Blue Cross and Blue Shield. These entities were organized as tax-exempt (not-for-profit) health insurance providers, and I recall being generally pleased with both the cost and the coverage provided.

When President Ronald Reagan signed the Tax Reform Act of 1986 into law, the federal tax exemption for these organizations was eliminated, helping to pave the way to where we are today.

Presently, we are hearing sound bites from Rep. Paul Ryan of Wisconsin and others telling us that they have solutions.

>>> Repeal the “Obama Care” legislation & make significant changes to both Medicare and Medicaid.

Great ideas, but before we repeat the apparent mistakes baked into the Tax Reform Act of 1986 — and possibly other examples since — let’s stop to take a look at what other options might be available to address two important outcomes: (1) reducing costs; and (2) improving outcomes.

I know of two really great things that happened in 1918.

The best was that my Mother was born on November 28. She lived to be 92, sadly leaving us on February 26, 2011.

The second best contribution from 1918 was the creation by Anna M. Harkness — a pioneer female philanthropist — of The Commonwealth Fund, “to enhance the common good”.

The current mission of The Commonwealth Fund is “to promote a high performing health care system that achieves better access, improved quality, and greater efficiency, particularly for society’s most vulnerable, including low-income people, the uninsured, minority Americans, young children, and elderly adults”.

The Commonwealth Fund has commissioned plenty of research on health care and health insurance. As a not-for-profit, public benefit entity, we expect this research is factual and unbiased, and completely outside the political process.

In one recent report, they tell us, “To achieve a high performance health system, health reform must go beyond ensuring affordable coverage to addressing health system changes that will improve outcomes and the quality of care, increase efficiency, and slow the growth in total health system costs.”

We can’t deny that Rep. Paul Ryan is a brilliant guy. Yet, I’m puzzled by his contention that his budget proposal fulfills a moral imperative “to lower Medicare-related costs”.

As he has structured it, overall health expenses would actually increase because people would be required to get care through private plans, which have been proven over and over to cost more than the current system. Seniors and others on fixed or limited incomes would be left to pick up the extra costs.

Ryan’s proposal apparently would convert our current fee-for-service system—in which patients go to any doctor that takes Medicare—to one in which beneficiaries would get a capped annual subsidy to help them purchase private insurance.

Critics of Ryan’s proposed system – some call it a “premium support” model — say it is really just a voucher system where elderly, disabled and otherwise disadvantaged people would appeal to private plans for services.

A great deal of truly objective and non-partisan analysis is needed here before we get into an even more emotional and politically charged debate.

The real question is: Do we possess the decorum, civility and intellectual curiousity to allow for an impartial analysis? Or have we crossed over into the War of the Roses, where no one really knows why we are fighting, but we know which side we are on, and we need to win!

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