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Can You Believe This? Health Savings Account Threatened By The “Taxpayer Assistance and Simplification Act

Stanley Feld M.D.,FACP,MACE

The House of Representatives passed a bill called the “Taxpayer Assistance and Simplification Act” last week that will essential destroy Health Savings Accounts and the quest for consumer independence from the government’s control of the healthcare system. I have criticized HSAs in the past because they only give consumers partial control and not full control of their healthcare dollar. If you do not use the money you lose it. In my opinion this creates a perverse incentive that does not stimulate wellness. It stimulates potential abuse. Patients keep the money they do not spend with my Ideal Medical Savings Account. The MSA would increase incentives for wellness and decrease abuse, because if patients abused the system they losing their own money.

“Democrats have made affordable health care a mainstay of their election agenda, but apparently only if you’re willing to get insurance through the government. Witness their stealthy assault on Americans who prefer the private-sector option of Health Savings Accounts.”

No one in the Democratic Party dominated House of Representative nor the Democratic Party’s presidential candidates seem to understand the government can not afford to have a government dominated system. It is also clear they do not trust patients to pursue their vested interest.

“The House passed legislation on Tuesday, the mis-named “Taxpayer Assistance and Simplification Act,” that contained the awful provision that would throw a mountain of paperwork at Health Savings Accounts.”

<President Bush sent a note to congress stating that he would veto the bill if it contained the anti HSA provision. I do not think the Senate will accept the provision either. The frightening thing is the lack of understanding by the Democratic Party of what is necessary to Repair the Healthcare System.

“A key player here is Ways and Means Health Subcommittee Chairman Pete Stark, whose main purpose in politics is to give the U.S. a government-run health-care system. He is a known opponent of HSAs – once comparing them to “weapons of mass destruction” – because they introduce more individual choice into the health-care marketplace.”

“Mr. Stark and his friends want to impose the same bureaucratic overhead even on spending that consumers do with their own money. The Senate should stop this one dead in its tracks.”

I thought Pete Stark finally understood the folly of his thinking. He trusts neither physicians nor patients. I was misled by his comments in Forbes magazine when he admitted he made a mistake with his Stark Laws.

“This week, the House passed legislation that included a provision to require every HSA transaction be reviewed and verified as a legitimate medical expense. Democrats say this is to ensure that consumers are using their tax-free withdrawals for a knee replacement, rather than a new iPod. In reality it adds a layer of bureaucracy that could sharply reduce the appeal and cost savings of HSAs.”

Presently the healthcare insurance industry administers these health savings accounts and does not permit misuse to occur. Maybe the only way the Democratic Party can reach its goal of government controlled single party payer healthcare system is to destroy HSAs?

“Pushing for the provision was a company called Evolution Benefits, which has patented a system for the substantiation of health-care expenses. Evolution’s lobbyist, John McManus, was the former staff director of the Health Subcommittee under Republican Bill Thomas.”

Unfortunately, this is how the government works. It is influenced by vested interested other than the people it is suppose to represent. Republicans are furious at John McManus, a former Republican congressman’s staff director now a lobbyist.

“Liberals claim HSAs are insurance for the “healthy and wealthy,” but there’s little evidence this is true. “

There is no evidence that HSAs are only for the healthy and wealthy. It is a potential mechanism for the government to subsidize insurance for the poor and not so poor to promote patient responsibility and stimulate a substantial reduction in cost and increase incentive for citizens to improve healthcare habits. All congress has to do is pass a law saying everyone automatically will be insured using a community rating system and pre tax dollars.

“The high deductable insurance permits the insured to open an HSA and make an annual contribution up to $2,900 for an individual in 2008, which he can use to pay for ordinary health needs. Savings not spent in any given year can build up tax-free for medical expenses. HSAs also give consumers more reason to care about prices, bringing much-needed market discipline.”

A family contribution is over $5,000 in 2008.

“ In any case if people cheat on their HSAs, they are only cheating themselves.”

I wonder how many congresspersons really understand the problems in the healthcare system and what will motivate the people they represent?

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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Health Savings Accounts For Poor Tested: Another Well Intended Program To Fail

Stanley Feld M.D.,FACP,MACE

President Bush keeps trying. I do not think he really understands the difference between poverty and unaffordability in America today. If he did his goal would be affordable healthcare insurance for all.

“The popularity of health savings accounts for the poor will be put to the test in Indiana under a program approved Friday by the Bush administration. Under the plan, someone making $20,000 a year could get health coverage for about $19 a week.”

Sounds good. However, the devil is in the details.

“Bush has long pushed health savings accounts as a way to slow the rising cost of medical care and extend basic coverage to the uninsured.

Under the Indiana program,eligible residents can pay up to 5 percent of their incomes into state-subsidized “Personal Wellness and Responsibility Accounts” that cover their initial medical expenses up to $1,100. Once that deductible is reached, private insurance purchased by the state kicks in.”

I have no quarrel so far. I see a few problems and questions. One problem is $1,100 does not get you much health coverage at retail prices. Private health insurance is still in charge of reimbursement and not a partner with the patient. What is the type of healthcare insurance coverage after $1,100? What are the co-pays? Only a few patients will have money remaining in their health savings account. There is nothing mentioned about giving patients incentives to stay well and potentially accumulate money for retirement.
Eligibility is limited to adults with incomes below twice the federal poverty level. The poverty level is now $10,210 for an individual and $20,650 for a family of four.

I looked up the actual eligibility criteria on their web site. I was curious to know if eligibility meant people making $41,300 a year would be qualified for the plan. The answer to this frequently asked question was;
The Healthy Indiana Plan (HIP) will provide health insurance for uninsured adult Hoosiers between 19-64 whose household income is between 22 – 200% of the federal poverty level (FPL), who are not eligible for Medicaid. Eligible participants must be uninsured for at least 6 months and cannot be eligible for employer-sponsored health insurance.

I was confused after reading this statement because of the absence of definitions. I asked the web site the following question.

Does this mean that people with a family of four making up to $41,300 a year can be eligible for this plan?
This feedback I got was as follows.

“The Healthy Indiana Plan (HIP) will provide health insurance for uninsured adult Hoosiers between 19-64 whose household income is between 22 – 200% of the federal poverty level (FPL), who are not eligible for Medicaid. Eligible participants must be uninsured for at least 6 months and cannot be eligible for employer-sponsored health insurance.”

The reply did not clarify a thing.

The eligibility limit is better than Medicaid but not as high as necessary to make it affordable. Moises would qualify in Indiana. He does not qualify in Texas. He makes $22,000 per year. An illness would destroy him and his family financially. He can not afford nor does he qualify to buy private insurance as an individual.

The limits for being qualified to receive benefits should be at least $50,000. The benefits packages should be developed by the insurance industry. The deductible must be higher than $1,100. Six thousand dollars is a realistic in order to provide patients with the appropriate incentive. It should be the Ideal Medical Saving Account formulation. It should be bought by citizens through the insurance industry on a competitive basis. It should not be run by the government as a single party payer. It should be subsided by the government for those who qualify for subsides. If the government finds that the insurance industry is taking advantage of patients or providers it should intervene and disqualify that insurance company from participating in the program. Patients of higher income should pay more for insurance than lower income people.

A mechanism for means testing should be developed. People below a certain income should receive government subsidies. Subsides should be regressive with lower income people receiving a higher subsidy than higher income people. The price of the insurance should be affordable and emphasize reward for good health, and prevention of disease. Both patients and providers should receive adequate incentive to achieve this goal. The Ideal Medical Savings Account could include both low income families and high income families. The high income families would pay a means tested surcharge to a certain amount.

“The waiver in Indiana is the first of its kind for the Medicaid program, a state-federal partnership that provides health coverage to the poor and disabled.”

The punishing criteria for eligibility for Medicaid still exist. On close study I have concluded that the Medicaid program is a way the state can obtain a subsidy from the federal government. The criteria for eligibility is simply too restrictive.

“Indiana officials said they’ve already received inquiries from more than 1,000 people interested in applying.
This sound bite implies impending success of the program. I think it is a long way from success.
The program will be monitored closely because of the philosophical divide among lawmakers about the value of health savings accounts for the poor. Many say such accounts work best for healthier and higher-income people with low medical expenses.”

The enemies of Health Savings Accounts have an excuse to react negatively. I believe that most lawmakers do not understand the goal of Health Savings Accounts. They also do not understand that Health Savings Accounts are a bastardize form of Medical Saving Accounts to keep the healthcare insurance industry in control and accumulate unconscionable profits

“Judith Solomon, senior fellow at the Center on Budget and Policy Priorities, said she doubts that many people making $10,000 a year can afford to pay $500 for health insurance. She said that about 50,000 people lost Medicaid coverage in Oregon after that state got permission to raise insurance premiums to $20 a month.”

“You can say it’s better than nothing, but I just don’t see how many of those folks will be able to afford it,” Solomon said.

Judith Solomon is absolutely correct. People making $10,000 dollars can barely afford to put food on the table or a roof over their head. So many well intended programs are built to fail.

“This is a big step forward that will lead to approximately 120,000 uninsured Hoosiers having the peace of mind of health insurance,” said Indiana Gov. Mitch Daniels, a Republican who once served as Bush’s director of the Office of Management and Budget.

I believe Governor Daniels should check to see how many of these 120,000 uninsured are living under the poverty level. I would guess less than 50%. It is fun to listen to Governor Daniels’ advertisement. , He makes a false promise and a false hope with false information.
If the state and federal government really wanted to do something they should expand the eligibility level to $50,000 a year. They should subsidize the Ideal Medical Savings Account with the incentive for patients’ to accumulate money in their retirement fund if they spend their healthcare dollars wisely.

Healthcare programs such as the Indiana program continue to appear and are destined to fail. The consumer must force lawmakers to get serious about Repairing The Healthcare System.

The opinions expressed in the blog “Repairing The Healthcare System” are mine and mine alone.

Stanley Feld M.D.,FACP,MACE

Healthy Indiana Plan: http://www.hip.in.gov

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Administrative Costs: Difference between the Medical Savings Account System and the Present System

Stanley Feld M.D.,FACP,MACE

In my view none of the published estimates of administrative costs to the healthcare system are correct. The latest estimate of administrative costs to the healthcare system was $150 billion dollars. I bet this estimate is only half of the administrative costs. The estimate represents only the costs the insurance companies add on to their insurance premium calculation. It does not represent the cost to the physicians to process each claim.

My estimate for the administrative cost to the physician for each office visit is $35- $40. The physicians’ administrative costs include the cost of physicians’ time to complete the paper work for each encounter as well as the cost of back office personnel for processing each claim to completion. Many claims are adjusted by the insurance company and disputed by the providers. The claims are then resubmitted for another round of non medical value added costs. The total cost to the system could represent $300 billion dollars. Three hundred billion dollar savings can go a long way to reducing insurance premiums to manageable and affordable levels. I could also go a long way toward increasing accessibility to care.

A few weeks ago I wrote about economists declaring that we can afford the cost of our excellent healthcare system. I blasted the concept as ridiculous. The economists ignore the inefficiencies and not medical value added cost to the system.

This week an article appeared titled “Running on Empty: Healthcare As the Engine of the Economy by Brian Kleeper and Alian Enthoven.
“Healthcare insiders know that the industry’s rosy prospects can continue only if its funding remains stable. Most also acknowledge that the dollars are not likely to flow as they have in the past.
The reality into the foreseeable future is that healthcare–at least beyond a narrow definition of “basic care”–will remain a voluntary buy. In fact, there’s every indication that group purchasers are quietly abandoning the market. A wealth of recent data shows that healthcare cost growth is pricing corporate and governmental purchasers out of the market for coverage.
Reports from the Kaiser Family Foundation and the Department of Commerce’s Bureau of Economic Analysis show that, between 1999 and 2004, premiums–the point where costs converge from throughout the healthcare continuum–grew 5.5 times general inflation, 4.0 times workers earnings and 2.3 times the growth of business income.”

Please recall that much of the increase also results from a faulty DRG system. The present system reimburses on hospital charges and not hospital costs. The DRG system contributes to the engine of the inflationary medical costs.

“The numbers are spectacular. And purchasers are responding. In September 2006, another Kaiser report on employer health benefits showed that, between 2001 and 2006, the percentage of employers offering coverage plummeted from 68 percent to 61 percent, a 10.3 percent drop over five years or a 2.1 percent annual erosion rate. During the same period, the percentage of employees with coverage dropped from 65 percent to 59 percent. Data from other sources show that certain workers–those in the private sector, service workers, retail employees–were particularly vulnerable to losing coverage.
Meanwhile, Florida’s Office of Insurance Regulation released data showing that, between 1996 and 2004, 132,000 small employers (with 50 or fewer employees) stopped offering health coverage. This represents a 53 percent drop, while enrollees in small group plans fell by 760,000 individuals (42 percent, or 5.25 percent annually). The state’s population grew by three million during this period.”

As fewer and fewer people have health insurance coverage there is less and less premium dollars in the system. At present we have 46.7 million uninsured in America, 80% of whom would buy affordable insurance if they could.

Jon Lowder’s blog entry of November 10, 2006 nailed the problem. There are precipitous enrollment drops and an increasing uninsured population.

“These precipitous enrollment drops make sense, particularly when you compare the scale of healthcare cost to earnings. The actuarial firm Milliman calculated that the total coverage costs for a family of four averaged $12,214 in 2005. But one-quarter of the nation’s workers made less than $18,800, and one-third of its families made less than $35,000. How can mainstream Americans stay in a game that’s stacked like this?”

“Most people understand the healthcare crisis in terms of its human costs: more uninsured people and underinsured people and more frequent cases of personal bankruptcy. But an equally daunting problem is that losses in coverage translate to reductions in the system’s financial inputs. This means fewer dollars are available to buy healthcare services and products.”

The situation is ominous. Nonprofit hospitals may be able to finesse shrinking revenues through cutbacks in staff, equipment or programs. But for publicly traded companies like Pfizer, United Healthcare, Medtronic or HCA, the drops in funding must negatively impact margin, stock price, market capitalization and credit.”

Worse, healthcare is 1/7th of the economy and 1/11th of its job market. If this sector develops a large demand-resource mismatch and becomes financially unstable, the disruptions could cascade to and destabilize others sectors, threatening the national economic security.

Many people who follow the healthcare crisis know all of this. Unfortunately the public is not aware of much of it. We only realize that health insurance cost more and more. We have discussed much of this previously.
However, no leader has the courage to step forward and do something about it. I have emphasized much of the leadership can be exerted at the state level by state boards that license the insurance industry,hospitals and physicians. No one has organized the people to protest. The excuse is that the healthcare system can not be fixed. It is impossible to control physicians. I believe all these excuses are smoke to cloud the solution. The facilitator stakeholders are simply holding on to what they falsely perceive is their vested interest.

“A theory of limits applies here. In a voluntary market, healthcare purchasers–employers or taxpayers–will tolerate only so much cost growth. Then they’ll recede. It is preposterous to believe the well won’t run dry.”

All of these pricing mismatches and excess non medical value added costs can be eliminated by permitting the patient to be in control of their healthcare dollar and selling pure insurance that is fairly priced. The ideal Medical Saving Accounts system represent pure insurance in the form of high deducible health insurance and motivation for the patient to become an informed consumer.

The cost of processing claim could be eliminated completely. The service claims could be adjudicated instantly with a credit card. Thousands of diverse businesses adjudicate claims on purchases instantly daily at a low cost. The use of credit cards to pay for Medical Savings Accounts could provide an instant savings of 150 billion dollars to costs in the healthcare system. The losers will be the non competitive insurance company. The winner will be the bright flexible company that puts the system in place.

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The Difference in Philosophy Between Medical Savings Account and the Present System

Stanley Feld M.D.,FACE,MACE

Let us assume that everyone wants the best Healthcare System possible. I have proposed an effective Medical Savings Account system as the backbone to repairing the healthcare system. Many stakeholders would disagree. Their vested interest would be disrupted by a change in the system. However, the system has to change to a self repairing system because the existing system is so dysfunctional. It hardly works anymore for the most important stakeholder the patient.

The difference between the MSA and the present managed care fee for service model is both philosophical and technical. The philosophy difference deals with respect for the consumers (patients) ability to make wise medical choices. The technical component is the ineffective manner information technology is used presently and should be used in the future.

Presently, to control the costs in the system we pass laws and rules and regulation to limit usage and abuse of the system. In turn, we need larger bureaucratic institutions to administer the new rules and regulations. The result is a tremendous waste and an increase in utilization of non value added resources, resulting in increased cost. The increase in cost leads to an increase in healthcare rationing. The resulting fall out is the increasing number of uninsured patients. The result is a further increase in healthcare costs to society. Rather than controlling the perverse incentives the system creates, the increase bureaucracy stimulates more perverse incentives. Individual self interests continue to spend other peoples’ money, while bureaucratic institutions like the government and the insurance industry continue to make more rules and regulations to block the individuals’ self interests.

The Medical Saving Accounts system creates a system that provides incentive for individuals to become prudent purchaser of health care services in a price transparent environment. Individuals’ having control over their own health care dollar will be prudent and only purchase services that are needed and worth the price. They are spending their own money, or money awarded to them, and not other peoples’ money. The right amount to spend is their choice as long as the prices reflect the real costs of medical services. The government, the employers and the insurance industry would need to negotiate charges from their real costs in a transparent environment.

The result of negotiating charges on the basis of costs creates a need for innovative thinking by insurance companies, hospitals and physicians. The competitive medical market place of consumer driven healthcare forces the hospitals, insurance companies and physicians to realize it is in their vested interest to lower price, improve quality of care and improve communications with the patient in order to survive.

If we develop this system, the healthcare system would become self repairing and cost efficient.

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The Ideal Medical Savings Account System

Stanley Feld M.D., FACP, MACE

Medical Savings Accounts for our discussion are tax free trust accounts that are funded by the employer, the self-employed, and the government for the employee, or the Medicare or Medicaid beneficiary. The Medical Insurance provided by the employer, the self employed, or the Medicare or Medicaid beneficiary in addition to the MSA trust account is a high deductible insurance plan. The rating on the high deductible insurance should be community rating without exclusions for preexisting illness.

The deductible is $6,000. The MSA contribution will be $6,000. If the patient does not spend the trust accounts money in the current year that money accumulates tax free until retirement. In the case of Medicare the money accumulates tax free until used at the beneficiaries discretion or is deposited in the beneficiaries’ estate. At that time the rules for traditional IRA’s apply.

It is mandatory to have insurance and the premiums will be subsidized by the government for persons that qualify. Price transparency by the insurance industry, hospitals, and physicians is also mandatory. It is the responsibility of all parties to aid the patient to become an educated consumer. If they want to purchase an unnecessary or inflated medical care product it is their decision and not the insurance industry or government’s decision. The patient pays the inflated price and not the insurance industry and the government.

This is the basic formula for the Medical Savings Accounts. It is important for this system of insurance not be contaminated by modifications made by stakeholders in order to benefit their vested interest. The formula creates a system of insurance that compels the patient to be an informed consumer. It also compels the stakeholders to be competitive for the patients’ healthcare dollar.

The result will be lower prices and increased quality. The advantages to stakeholders are obvious. It would foster individual ownership of the healthcare dollar with individual responsibility for the healthcare dollar. The result would be lowering the cost of health insurance with a high deductible. People would no longer face premium increases resulting from wasteful medical care decisions made by others. This is the famous restaurant effect discussed earlier. It would also lower the administrative costs of adjudicating bills. The charges would be adjudicated at the point of service serving to lowering the cost of insurance further.

Patients would have a vested self interest to avoid unnecessary costs because the result would be additional savings for the patient in their Medical Savings Trust Account. Also, MSAs would eliminate the barriers for the purchase of insurance by the temporarily unemployed. Patients would create a competitive medical marketplace with their individual purchasing power. We will see this happening right now with the Wal-Mart $4 generic drug policy.

The high deductible insurance would be true insurance and not the “managed cost insurance” we have presently. Managed cost insurance simply angers every stakeholder in the system. Patients would now have incentive to think about as well as learn about the risk of certain lifestyles and the need for lifestyle changes to prevent the complications of chronic diseases. The patient by avoiding the complications of chronic diseases with be earning money in their own Medical Savings Trust Account that would continue to grow tax free until retirement.

All of these incentives are free market incentives. None of the incentives force the patient to have certain behaviors. It is in their vested economic interest to make appropriate lifestyle changes and wise medical care decisions.

With pure Medical Savings Accounts the Healthcare System will be in a position to self repair.

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Medical Saving Accounts for all Insurance Products for all Patients

Stanley Feld M.D.,FACP,MACE

If we as a society do not become innovative about healthcare delivery, medical care in this country will deteriorate.

The Medical Savings Accounts described in the last posting can be utilized as a motivational tool for patients. A true Consumer Driven System can have a positive impact on cost and quality. I hope to demonstrate that total cost will decrease and quality of care will increase.

With 46.7 million people uninsured, America has a problem. I estimate that 30 million people can afford to pay the true cost of a high deductible insurance. The cost of insurance to an individual not in a group plan is not tax deductible. The group plans are tax deductible to the employer.

A simple change in the tax law would correct this. Additionally, if an individual has a preexisting illness, presently the insurance industry can elect to refuse offering a policy, rate the premium or exclude that illness from the insurance offered. The insurance industry can not do that in a group plan. If they have a group with many patients at risk they can try to raise the premium.

The insurance premium for individuals should be the same as corporate rates. The insurance rates should be transparent in order to shop for rates. The rates should also be calculated as a community rate rather than as and individual rate. A fifty year old male with hypertension, high cholesterol and moderate obesity is at increased risk for a myocardial infarction and the need for chronic cardiac care. In the present system he would be refused an individual insurance policy. If he could get one any care related to his heart disease would be excluded.

A simple regulation mandating community rating would correct the problem of discriminatory rates and ratings. In the Medical Saving Account System, the 55 year old patient would be guaranteed a high deductible policy which could be purchased with after tax dollars.

The system could be set up so that patient could apply and receive state or federal subsidy. This simple change could cure our Medicaid problem. The Medicaid system presently spends more per patient than it would cost the government using an effective Medical Savings Account system. The Medical Saving Account system would also encourage patient compliance. The patient would not longer be a burden to the state because costs could decrease.

The key is motivating the patient to be responsible for his care. He would be in control of purchasing his care and to adhering to the care recommended. There have been many pilot programs rewarding expectant mothers on Medicaid. If the mothers participated and fulfilled their obligations for prenatal care, the fetal and post partum complication rates fell dramatically. The neonatal and post partum care costs plummeted. The reward of some pilots was simply free formula for the first year of the infant’s life.

Consumer driven responsibility for one’s medical care is an invigorating concept to patients long abused by a hierarchical bureaucratic power seeking healthcare system. The power should be given back to the consumer.

One can see how the system could work in Medicare patients. The government subsidizes the insurance of people over 65 years old. Constantly, the government must raise the insurance premium the elderly pay. Ninety percent of Medicare’s payments are for the complication of the chronic diseases. If the system were set up to reward the elderly for effective self management of their chronic disease many unnecessary costly complications could be avoided. The patients could be motivated by the money accumulating in their Medical Saving Account. Since they are retired they could use the unused trust money as a supplement to their Social Security. More on the mechanism of the various plans in the future.

Will it work? Absolutely!!

We will see “Patient Power” in action when Wal-Mart rolls out the $4 per month for generic drugs nation wide. The elderly will force their physicians to order generic drugs. The CVS and Walgreen will also be forced to decrease the cost of their generic drugs. The Medicare Part D fiasco will evaporate. There will be no need for Medicare D. It will be cheaper to buy the medication from Wal-Mart. The price of brand name medication will decrease because of the price competition. Adherence to medication regimes will increase because patients can once again afford their medication.

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Slowly But Surely :Trump Is Quietly Reforming Healthcare


Stanley Feld M.D.,FACP, MACE

Since congress did not want to help President Trump repeal Obamacare and fix the healthcare system, he decided to quietly repair the healthcare system by himself. He has no choice. Obamacare will self-implode and disappear.

President Trump has kept his steps toward healthcare reform under the radar. It is all published and there for everyone to see.   

President Trump is hoping that after the 2020 election he will have a friendlier congress. A congress that wants to do something to help him help American consumers of healthcare obtain affordable healthcare.

Consumers need relief from the Obamacare disaster. Obamacare has caused increased dysfunction on top of an already dysfunctional healthcare system.

Obamacare has caused a previously unaffordable healthcare system to become more unaffordable.

I hate to say it. I predicted Obamacare would fail in 2010. Basically Obamacare did not align stakeholders’ incentives.

I explained why Obamacare was failing in each subsequent year of its passage.

http://stanfeld.com/?s=Obamacare+will+fail

 I also offered my concept of repair of the healthcare system with my ideal medical savings accounts.

President Trump has taken important steps to repair the healthcare system. He has brought back the power of “Associations.”  Associations now have the ability to negotiate with healthcare insurance companies and sell healthcare insurance to its members.

In addition, Associations now have the ability to offer its members healthcare insurance at pre-tax dollars. This is a very big deal. Previously individuals seeking individual insurance had to pay for that healthcare insurance with post-tax dollars.

https://www.modernhealthcare.com/article/20181110/NEWS/181109905/early-association-health-plans-defy-fears-offer-comprehensive-benefits

Instantly, healthcare premiums are effectively reduced to consumers by 20-40% using pre-tax dollars. This make present premiums more affordable.

Associations are growing very rapidly as final rules are being created to make their healthcare insurance available. The significance of Associations has been largely ignored by the mainstream media. 

Associations will create competitiveness among healthcare insurers and help individuals, small business and even giant corporations eliminate the need to negotiate and provide healthcare insurance to their employees. It might even help the government’s unsustainable programs such as Medicare, Medicaid and the VA rid itself of these unsustainable programs.

The traditional mainstream media has been busy publicizing the socialist concept of “Medicare for All.”

I have pointed out that “Medicare for All” doesn’t work. It has never worked in a financially sustainable way for many countries. In countries that have socialized medicine consumers are dissatisfied because there are long waiting times and a shortage of the access to medical and surgical care.

Our leftist politicians say socialist medicine has worked beautifully in countries like Sweden, Denmark, Canada, and England to name a few.

I have published the difficulties consumers have had in these socialized medicine countries.

Unfortunately, our leftist politicians are either ignoring the truth or do not know what they are talking about. The traditional mainstream media are simply acting as puppets for our leftist Democratic politicians who want to control the healthcare system.

Everyone knows the larger the bureaucracy the more inefficient the system. The VA healthcare system is a perfect example of this statement.     

“Last week, the executive order was initiated that will empower consumers in the individual healthcare insurance market and those consumers in the small corporations to purchase healthcare insurance through associations. It will allow the employers in small corporations to pay for their employees the healthcare insurance through the Associations with pre-tax dollars.”

“It will level the playing field to enable individuals in both groups to negotiate healthcare insurance premium prices through their associations with the same purchasing power that large corporations have.”

https://www.modernhealthcare.com/article/20181110/NEWS/181109905/early-association-health-plans-defy-fears-offer-comprehensive-benefits

It could also work for consumers working for large corporations. Those employees who are displeased with their corporate provided healthcare insurance coverage can change to association provided insurance.

The new rules can potentially get employers out of the healthcare insurance providing business.

These new regulation has had little coverage in the New York Times, network television or any other mainstream media.

The traditional main stream media have been pushing the Democratic Socialists’ idea of “Medicare for All.”  “Medicare for All” cannot work.

“On Thursday June 20th 2019, the Department of Health and Human Services announced a final regulation that allows businesses to fund employees who buy health insurance on the individual market–something that until now has been illegal.”

 “The U.S. Departments of Health and Human Services, Labor, and the Treasury issued a new policy that will provide hundreds of thousands of employers, including small businesses, a better way to provide health insurance coverage, and millions of American workers more options for health insurance coverage.”

Since this new policy is a President Trump initiative, the elites in the media must have concluded that is a silly policy and it cannot work.

“ The Departments issued a final regulation that will expand the use of health reimbursement arrangements (HRAs). When employers have fully adjusted to the rule, it is estimated this expansion of HRAs will benefit approximately 800,000 employers, including small businesses, and more than 11 million employees and family members, including an estimated 800,000 Americans who were previously uninsured.”

A close study of Health Reimbursement Arrangements (Associations) will make it clear that these numbers are correct. In fact, these estimates might be a gross underestimation of increased number of consumers with healthcare coverage.“Under the rule, starting in January 2020, employers will be able to use what are referred to as individual coverage HRAs to provide their workers with tax-preferred funds to pay for the cost of health insurance coverage that workers purchase in the individual market, subject to certain conditions. … Individual coverage HRAs are designed to give working Americans and their families greater control over their healthcare by providing an additional way for employers to finance health insurance.”

https://www.modernhealthcare.com/article/20181110/NEWS/181109905/early-association-health-plans-defy-fears-offer-comprehensive-benefits

Associations allow everyone to be participants in the large corporation negotiating healthcare market. It allows consumers to avoid the trap of large, bureaucratic and by definition inefficient government control healthcare.

“The HRA rule also increases workers’ choice of coverage, increases the portability of coverage, and will generally improve worker economic well-being. This rule will also allow workers to shop for plans in the individual market and select coverage that best meets their needs. … [T]he final rule should spur a more competitive individual market that drives health insurers to deliver better coverage options to consumers.”

 The new policy empowers individual consumers to shop the market and select the healthcare coverage that best meets the needs of their family.

The insurance industry will not have to comply with the burdens of Obamacare’s regulations for healthcare coverage. They can create new products including medical savings accounts without restriction.

This will create an extremely competitive healthcare insurance environment.

“This is a good example of how the Trump administration is moving forward in practical ways on important issues, empowering consumers and freeing up markets. The Democrats don’t like it, of course. But the new HRA system will be popular with millions of Americans whose ability to access the individual market and exercise consumer choice will be enhanced.”

https://www.modernhealthcare.com/article/20181110/NEWS/181109905/early-association-health-plans-defy-fears-offer-comprehensive-benefits

The only big barrier is that it will make consumers become responsible for choosing their healthcare coverage and be responsible for their healthcare dollars.

I believe most Americans are up for the challenge.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.



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Bernie Sanders’ Proposed Tax Hikes To Pay For “Medicare for All”


Stanley Feld M.D.,FACP, MACE

Nothing is free despite Bernie Sanders and other socialists’ promises. “Medicare for All”is proposed to replace private insurance with government insurance as the single party payer.

The government controls of several parts of our healthcare system. All these parts, Medicare, Medicaid and the VA Healthcare System, are financially unsustainable. All, except Medicare for seniors, are unsatisfying for patients.

Each year the Medicare premiums and deductibles for seniors have been increased, services have decreased and reimbursement to providers have decreased. It is past the point of being unaffordable for many patients although it has been invaluable for sick patients who could not possibly afford the cost of care without Medicare.

In reality the government owns these healthcare services, but it does not run these healthcare services. The administrative services are outsourced to the healthcare insurance industry. The healthcare insurance industry, in turn, has figured out how to game the system and take advantage of the government and citizens involved in the system.

Additionally, the inefficiency of government bureaucracy intensifies waste and cost. The estimated cost of Bernie Sanders’ “Medicare for All” is thirty -trillion dollars of ten years. Many believe thirty-two trillion dollars over ten years is a low number. It is also over 90% of the United States’ total ten- year budget at present spending.  

 Bernie Sanders has released a set of tax hike options in order to get some of the money to pay for his fiasco.

These tax hikes would hit American families at every income level and businesses large and small. The proposal increases taxes by $16.2 trillion over the next decade, according to an estimate of Americans for Tax Reform.”

This proposal will cover only half of the thirty-two trillion-dollar estimate.

  1. A 4% increase in payroll tax to employees.

“According to Sen. Sanders’ estimates, this increases taxes on American families and individuals by $3.9 trillion over ten years.”

  1. A new 7% increase in payroll tax for employers.

This tax will hinder business growth. It will decrease employment because it will decrease business spending on employees. It will also increase government spending for entitlements. This tax increase will only provide an estimated 3.5 trillion dollars over 10 years. It will probably result in less than 3.5 trillion because there will be less payroll tax to collect.

Please note Bernie’s numbers between employee and employer payroll taxes do not add up. It is pure fiction.

  1. The proposal would ban employer-provided healthcare insurance and repeal the employer deductions for health care insurance. The net result will be increasing taxes on businesses by over $3 trillion over a decade.

     This adds up to an additional 3 trillion-dollar cost to business not necessarily a three trillion-dollar savings.

  1. Bernie Sanders’ proposal would also repeal Health Savings Accounts, which are utilized by an estimated 25 million American families. Health Savings Accounts are a good deal for middle class families earning between $60,000 to $200,000 a year. Health Savings Accounts would even be more attractive if they were changed to Medical Savings Accounts.  

At present roughly half of the Health Savings Accounts are owned by middle class families.

A key element in a successful reform of the healthcare system is to provide health and financial incentives to citizens. Citizens must become responsible for their health and healthcare dollar in order for healthcare reform to succeed.

Bernie’s plan helps people be less responsible for themselves and more dependent on the government.

Isn’t this exactly what the socialists want? Historically socialism always fails.

  1. The tax deduction for cafeteria plans and the medical expense deduction is also eliminated.
  2. Eliminating Health Tax “Expenditures”

n all, Sanders estimates this will increase taxes on families and businesses by $4.2 trillion.

  1. 70 percent Top Tax Bracket for Ordinary Income and Capital Gains Income


This would give America the highest income tax rate in the world.

“ According to the Tax Foundation, a top 70 percent rate for ordinary income and capital gains income above $10 million will raise $51.4 billion over a decade. After accounting for macroeconomic effects, the proposal would actually cost the government $63.5 billion because of the proposal suppresses investment and economic growth.” In reality the income and negative effect to the government are a small number and insignificant to paying for the cost of “Medicare for All.”

  1. 77 Percent Death Tax

“Sanders proposes raising the death tax rate to 77 percent for inheritances.  

     Currently, the death tax applies to estates over $11 million or 22 million per couple. Over 22 million dollars is taxed at a rate of 40%.

      The death tax is, in reality, a double tax. People have paid tax on the money they have saved already. At the time of death, the government taxes them again on post-tax dollars. The tax should really be called a confiscation tax.

      Bernie Sander’s death tax proposal will increase taxes by $2.2 trillion over ten years. This is an insignificant amount compared to what “Medicare for All” will cost.

  1. Wealth Tax
    “Bernie Sanders proposes an annual wealth tax of 1 percent kicking in above $21 million in assets. Sanders estimates the proposal will increase taxes by $1.3 trillion over ten years.”

      10. Bank Tax

         “ Sanders proposes a tax on financial institutions totaling $800 billion over ten years.”

      11.Broaden the Self Employment Tax
Sanders would require business owners to report more of their business income as salary, increasing the amount of self-employment tax owed. This would increase taxes by $247 billion over ten years.

The total increase in taxes would only result in a $16.5 trillion-dollar payment on a thirty-two trillion-dollar bill. Where will Bernie get the rest of the money? He probably figures the government could print the other $16 trillion dollars. If it does it will decrease the value of the tax increases and an overall cost will be higher than 32 trillion dollars.

There is something seriously wrong with socialistic thinking. I do not believe the majority of American will fall for this serious defect in thinking.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.



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Associations Are  Growing

Stanley Feld M.D. FACP, MACE

Any initiative President Trump and his administration presents to the public is criticized as junk as soon as it is presented. It is criticized without any evidence for the criticism because it does not fit into the Democrat’s narrative of “Medicare for All.”

When the Trump administration rolled out the plan to once again let associations sell healthcare insurance plans to its individual and small businesses Democrats charged that these plans would be worthless.

The mainstream media did not publicize the Trump administration’s initiative. The fact that Obamacare has resulted in higher premiums and deductibles for small businesses and individuals has been downplayed by the mainstream media. In fact, we occasionally see articles declaring that the people like Obamacare. Only twelve million people are insured by Obamacare.

It is not true that people like Obamacare. The fact is premiums and deductible are not affordable for many on Obamacare despite the fact that 85% of the enrollees receive federal government subsidies

The fact is that individuals without healthcare insurance and who do not qualify for Medicaid need insurance. They are stuck buying Obamacare insurance because they do not have any other option. Many have had to go uninsured because they could not afford premiums and deductibles. Many have gotten jobs in our excellent economy where the large employers pay for group healthcare insurance.

The associations’ plans were proposed to provide a less expensive alternative to Obamacare by allowing workers and small businesses to pool together to buy healthcare insurance through the association.

An association, like big corporations, has the ability to negotiate with healthcare insurance companies to lower premium prices and deductible. The tax treatment is also favorable.

The association initiative started in January 2019. Early evidence suggests that the initiative is working out — at least for now.

“The administration’s alternatives, known as “association health plans,” have been covering the same benefits that Obamacare plans do, even though they are not obligated to, according to a new analysis by the industry publication Modern Healthcare and another by AssociationHealthPlans.com.”

 

Just like Obamacare plans, the associations’ plans are paying for prevention, visits the doctor’s office and the hospital, emergency medicine, prescription drugs, maternity care, and mental healthcare.

The plans are also covering people with pre-existing conditions, such as cancer or diabetes.

 “In fact, the plans are required to cover all of the above. This is an aspect of their coverage that was not well publicized by the mainstream media, according to Kev Coleman, president of AssociationHealthPlans.com. “That’s something that was lost in the mix.”

 The requirement is part of Obamacare’s regulations. Since Obamacare has not yet been repealed by Congress the rules will remain.

“Officials in the Department of Labor announced new rules for the plans in June, with some of the plans allowed for purchase beginning in September. Since then, at least 28 plans have launched in 13 states, according to Coleman’s analysis.”

Self-employed consultants working out of their homes, plumbers, and massage therapist are joining associations to have the negotiating power of large numbers of people seeking healthcare insurance.

Chambers of commerce and small cities have been forming state trade associations and their employees are joining these rapidly forming associations and enrolling in their insurance plans.

The Nebraska Farm Bureau Federation has 59,000 farmers and ranchers in their association. The associations are similar to what Jeff Bezo,Jamie Diamond and Warren Buffett are planning to do for their 700,000 employees. They plan on selling the insurance across state lines which will reduce the price even further than the 33% reduction the associations are anticipating offering.

The Obama administration had limited the formation of associations selling healthcare insurance. Associations were selling their own plans. They were inexperienced administrating them. Some associations went bankrupt. Large healthcare insurance companies have strict criteria and oversite. Self-run associations are going to take longer than.

Associations are being formed. Outside health insurers have run a few association plans since September 2018. Associations were only allowed to begin running their own plans beginning in January 2019.

Critics complain that the healthcare insurance industry is providing teaser rates to associations now. The critics claim the healthcare insurance companies will eventually raise the premiums. It is a possibility. However, with the increase contributions allowed for Medical Savings Accounts and Health Savings Accounts, association members will have a financial incentive to become a prosumer. Consumers would have incentive to become responsible for their health and healthcare dollars.

A more recent study by the Congressional Budget Office projected that 5 million would be enrolled in the plans each year, 1 million of whom would otherwise have been uninsured. The analysis did not assess how many people on Obamacare would become uninsured.”

The Trump administration plan is truly a disruptive plan to the healthcare industry and government healthcare establishment. The Democrats are terrified because it might work much better than Obamacare and result in a total rejection of “Medicare for All.”

https://www.washingtonexaminer.com/policy/healthcare/uninsured-rate-rises-during-trumps-first-two-years-in-office

“It’s not clear from the Gallup poll whether those who are now uninsured used to have an Obamacare plan or had one through an employer or government program. Other data, from the Department of Health and Human Services, show that the number of people in Obamacare plans has dropped only slightly since Obama left office.”

The problem is that enrollment in Obamacare has not risen while the uninsured has.

The number of people on Medicaid has risen dramatically due to some states accepting  Medicaid expansion. The federal government is due to stop paying over 90% of the bill for Medicaid and transfer the burden of payment to those states. Most of those state have large budget deficits that are only going to become larger.

“The highest increases in the uninsured rate were among women, people living in households with annual incomes of less than $48,000 a year, and adults under the age of 35. The young adults had an uninsured rate of more than 21 percent, a 4.8 percentage point increase from two years earlier. Among women, the uninsured rate increased from 8.9 percent in 2016 to 12.8 percent by the end of 2018.”

People cannot afford Obamacare premiums or deductibles. Associations might provide more affordable options. People working for large organizations presently have healthcare coverage.

Consumers understand how inefficient government-run programs have been. It is appropriate to let the free market give it a try. The formation of associations with appropriate regulations is certainly a free market step as opposed to the Democrats’ Obamacare that has failed. It is clear that government control of medical care is financially unsustainable.

We will see how associations and consumers responsible for healthcare dollars works out.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.



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