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October 8, 2010

The Law of ‘Intended’ Consequences

Joe Charlebois

On March 9, 2010, Speaker of the House of Representatives Nancy Pelosi assured us that we need to pass the healthcare legislation so we can learn what’s in the bill. She was speaking in defense of the soon-to-be-passed healthcare legislation. She could have been giving us a lesson of what the Law of Unintended Consequences actually means.


She stated:


“You’ve heard about the controversies within the bill, the process about the bill, one or the other. But I don’t know if you have heard that it is legislation for the future, not just about healthcare for America, but about a healthier America, where preventive care is not something that you have to pay a deductible for or out-of-pocket. Prevention, prevention, prevention—it’s about diet, not diabetes. It’s going to be very, very exciting.


“But we have to pass the bill so that you can find out what is in it, away from the fog of the controversy. Furthermore, we believe that healthcare reform, again I said at the beginning of my remarks, that we sent the three pillars that the president’s economic stabilization and job creation initiatives were education and innovation – innovation begins in the classroom – clean energy and climate, addressing the climate issues in an innovative way to keep us number one and competitive in the world with the new technology, and the third, first among equals I may say, is healthcare, health insurance reform. Health insurance reform is about jobs. This legislation alone will create four million jobs, about 400,000 jobs very soon.”


Once in place we will all be covered. Children with pre-existing conditions will be covered. Seniors would still be able to choose their own physicians.


Now that the bill has passed we are learning a lot about what the Speaker was speaking of. This is how it will affect the most vulnerable.


Seniors: Will see their options dwindle as insurance companies that offer Medicare Advantage Private Fee for Service Plans start to pull their products from the marketplace. Why would they do this? Reimbursement for charges will be reduced to a point of non-profitability for these companies. Already insurance leaders Coventry and WellPoint are dropping their plans affecting over 500,000 members. These half-a-million will now be left to seek coverage from other carriers or be forced into a PFFS Medicare Advantage Organization (MAO), where only certain providers will participate, thus restricting physician choice.


Part-time and Contract Employees will be affected as the companies who offer Limited Medical Benefit Plans will either need to be granted a waiver from government agencies or outright cancel these “Mini-Meds.”


Mini-Meds, as they’re called, are healthcare plans that have low daily or annual policy limits that allow for basic needs care. They are not set up for catastrophic events but rather allow for standard and preventive care without causing severe financial distress.


They are limited by their very nature and are not the end-all-be all solution to the uninsured population, but they are benefits provided by companies who would rather provide limited coverage than not provide any coverage at all. The current healthcare legislation requires that companies spend 80-85% of premium costs on benefits. These plans are typically far away from this requirement which means that either a waiver must be granted or the plan will be discontinued.


Kids Only Plans will be affected by the fact that companies are dropping “kids only plans” throughout the country. Very few state governments have the authority to require insurers to offer these types of plans. What is the result? These families are left to fewer and fewer choices and potentially higher rates.


Now that we see what’s in the plan, I’m not so sure I am as excited as Speaker Pelosi was back in March.


As opponents predicted, there will be less competition, higher costs and less choice.


Was this what was intended?


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