Mandated Coverage

1
Mandated Coverage

• Whats the big deal?

2
The circular argument on mandated coverage

• In a free society you cant dictate what people
  should spend their hard earned money on or
  dictate prices
• You cant insure some risks if everyone isnt in
  the game (at all times)
• If everyone is in the game (forcibly), you have
  lost another liberty

3
We have 47 million Uninsured /-Why?

• Pundits would have you believe it is because they
  cant get coverage or they cant afford coverage
  as the only two answers
• Some are in transition and short timers in this
  status
• Some are eligible for other forms of aid
  (Medicaid) yet do not sign up
• Some simply choose not to be covered and allocate
  their resources to education, building a business
  etc.

4
But there are millions who do fall into a tough
category

• Chronically in need, fall prey to pre-existing
  conditions clauses
• Cant be U/W because the individual market CAN
  deny a person
• Rates are such that it becomes unaffordable with
  other legitimate expenses
• Last credible survey estimated the true problem
  closer to 15 million and not 47 million
• 15 million is still a big number and a lot of
  misery if you are in this group.

5
Why Insurers Underwrite

• In three words mitigate their risk
• By having rules they can actually run a
  predictable business by spreading risk.
• Participation minimums
• Eligibility requirements
• Medical U/W
• Benefit limitations
• others

6
What do insurance companies fear?

• Anti selection or people gaming the system. Put
  another way purchasing insurance only after you
  know there is a need..buy the policy after the
  house is already on fire.
• Govt interference- Being told that they have to
  provide for X with no corresponding risk offset
  (Why insurance companies are OK with mandated
  coverage everyone in the system is a risk
  spreading tool)

7
You cant have your Cake and eat it too

• From a risk management standpoint, if the govt
  dictates that everything under the sun be covered
  w/o any pre-ex, without any U/W and without any
  declineswell, the only possible way to do this
  is by mandating all be in the system. Turns the
  big picture risk into mathematics.
• What insurers cant do and survive, is be forced
  to cover all while you and I can jump in and out
  at will.
• So we either give up some liberty for what some
  think is the greater good or we must maintain
  risk pools with rules.

8
Is mandating coverage possible?

• Politically yes. Enforcement is a whole other
  ball game.
• We mandate auto insurance yet 12 are still
  uninsured
• Cost is the hurdle
• How is this to be enforced?
• Entire new agencies (at a cost) must be set up.

9
Unintended Consequences

• Employers will hire fewer workers
• Some may have to delay or forgo higher education
• Between jobs, no income. Now what?
• Will I still be fined?
• Will I qualify for some new Govt assistance
  program?
• At what cost to the public dole?
• The devil is always in the details

10
Any alternatives?

• Leave the market to its own devices while setting
  up special high risk pools.
• Set the rules to level the playing field, then
  get out of the way.
• Get the patient involved
• Isnt it interesting that the one with the most
  to lose is also the least engaged in ANY
  solution being discussed?

11
The Public Plan Option

• What is it and how does it fit into the equation?
• ?????????????????????????
• Every day it morphs so no one can say at this
  point.
• Who has access to this plan and who doesnt?
• Why insurance companies fear it?

12
Is the fear justified?You be the judge

• Federal Govt speaks about controlling cost
  largely by price fixing Medicare style
  (secondarily by rationing)
• Federal Govt doesnt need to set up reserves
  (and why Medicare is going bankrupt)
• Federal Govt can artificially charge lower
  prices to attract business (bottomless pockets)
• While all this is happening, they mandate how an
  insurance company must operate (what is covered,
  how it is covered and limits most risk mitigation
  techniques)
• If the public plan loses money, and it will, no
  biggie, just add it to the deficit
• All under the guise of KEEPING THE INSURANCE
  COMPANIES HONEST (I CALL THAT IRONICAL HUBRIS)

13
How would you like playing in a game when the
referee is also a player on the opposing team?

• Sound fair?
• This is exactly the situation with a mixed
  socialistic/capitalistic market

14
Medicare, the 800 lb. Gorilla in the room

• 37 TRILLION dollar unfunded liability
• Projected insolvency starting in 2015
• 1965 the projection was by 1990 Medicare would
  cost 10 Billion a year. Reality - 107 Billion
• Today we spend over 500 Billion annually

15
Why no one is talking about Medicare crisis?

• A 10.7 fold miscalculation by 1990
• Price fixing
• Expanded benefits
• New technology
• Increased life expectancy
• 2009 a 40 fold miscalculation (allowing for
  inflation) and this will only grow.
• Conspiracy theory The problem is too big and
  the best way to politically address it is to have
  everyone vested NOW. A public option will
  destroy the private market but once we have
  national healthcare, we are all vested and must
  fix or live with the Medicare issue. I dont
  think this is accidental.

16
Public option

• Long on platitudes, short on validation of
  concept
• Savings come from where?
• Quality assurance by unfunded mandate
• Accessibility with no tort reform and price
  fixing? This defines economic shortages.
• Opinion The public option has two chances of
  passing, slim and none, and slims bags are
  packed.

17
Insurance market reform

• Several areas of need
• Tort reform
• Patient responsibility
• Rating oversight (Where HIPAA is an obstacle
  currently)
• Cross State purchasing (Shadagg Bill)
• Lessen benefit mandates
• Expand on HSAs
• Tax fairness
• Purchasing tax credit (subsidized at a reasonable
  level)
• Stop the cost shifting of Medicare
• Transparency (in pricing, rating, quality)
• Electronic Medical records (?)

18
Questions

• Thank You for your attention