law-of-freedom

Here is the message that I sent to the Senators on the Finance Committee (click here for a list of members) and to the Senators from my state.  If you agree, please contact the Senators and tell them which of my suggestions you agree with (feel free to modify to your liking) and add any suggestions of your own.

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Dear Senator,

I believe that the Wyden-Bennett plan (Healthy Americans Act) is superior in several ways to the health care plan currently set for a Senate Finance Committee vote next week (note: I obtained information regarding the plans from the Kaiser Family Foundation's online plan comparison).  I work for an property & casualty actuarial consulting firm and deal with insurance issues every day.  I have examined the Senate Finance Committee bill and made suggestions below that I hope you will review and respond to.  Please let me know what I can do to help support a bipartisan bill that is fiscally responsible, provides universal coverage, preserves free markets, and improves healthcare outcomes.

Sincerely,
Leighton Weese

MANDATORY COVERAGE: The Senate Finance Committee bill provides too many exemptions to mandatory coverage, which means that it is ignoring the cost of people that don't pay for coverage until they get sick, and then get treatment that ends up being paid for by taxpayers.  We must solve this problem honestly and do what is necessary to make sure everyone pays what they can afford to keep the system solvent for all of us.  $750 is not a sufficient penalty for those that fail to get coverage.  It is not actuarially sound (it will not cover the expected costs).

PORTABLE COVERAGE: The Wyden-Bennett bill makes coverage portable, instead of keeping people dependent on their employer's plan.  I understand that Wyden's "Free Choice" amendment, if passed, might bring the Senate Finance Committee bill comparable in this respect.

EFFICIENCY: Wyden-Bennett takes steps to transition Medicaid and CHIP into the new program.  Senate Finance Committee seems to completely maintain Medicaid and CHIP as separate programs.  Why maintain separate programs with similar functions?  This seems duplicative and thus inefficient and wasteful of resources.

BUSINESS TAXES: The Senate Finance Committee plan imposes "new fees on segments of the health care sector: $2.3 billion annual fee on the pharmaceutical manufacturing sector; $4 billion annual fee on the medical device manufacturing sector; and $6.7 billion annual fee on the health insurance sector."  The message to the health care industry is, "Thank you for providing a necessary service.  As a reward, we are going to charge you a lot of money."  If you think certain companies are charging unreasonable prices to make unreasonable profits or because of unreasonable inefficiencies, set standards (using the method I mention in my next point) and regulate companies to keep those standards.  Don't set a precedent of punishing businesses just for existing.

SETTING FAIR PRICES: The Senate Finance Committee bill states that it will "allow rating variation based only on age, tobacco use, family composition, and geography."  I am interested in how you chose these rating indicators.  Is it based on a thorough nationwide statistical analysis of these indicators compared to loss data over an extended period (at least 3 years)?  I think what is needed is a statistical bureau for health insurance that fills the same function that NCCI does for Worker's Compensation.  All insurance companies would be required to submit all claim data electronically to the bureau, and every year the bureau would calculate average loss per policy by region, deductible amount, and a few standard easily measurable risk indicators.  The bureau's statistical analyses would show which easily obtained indicators predict losses most accurately.  All insurance companies would be required to base their rates on these averages losses with reasonable provisions for expenses and profit (the reasonability of these provisions would be determined by regulators).

HEALTH SAVINGS ACCOUNTS: I regret that the Wyden-Bennett bill says nothing about Health Savings Accounts.  I am happy to see that the Senate Finance Committee plan incorporates them.  It mandates four categories of plans, each covering a different percentage (less than 100%) of the benefit costs of the plan, with an out-of-pocket limit equal to the Health Savings Account (HSA) current law limit ($5,950 for individuals and $11,900 for families in 2010).  I support making the Health Savings Account portion (which I assume covers the deductible) mandatory, so that individuals do not fail to set aside money for potential losses throughout the year.  I support making a reasonably high-deductible mandatory so that individuals have an incentive to spend wisely.  Does your plan consider these ideas?  Please explain why a plan would cover less than the full costs of the plan. Is the remaining cost the deductible portion?

WELFARE PAYMENTS: One area in which I do NOT prefer Wyden-Bennett is the premium subsidies to individuals.  Wyden-Bennett provides assistance to anyone above poverty level through tax deductions.  First of all, would this affect the way that payroll taxes are currently calculated?  Because if I have to pay premium month by month, I'm going to need that money now, not through a refund in a year. Secondly, how much is a tax deduction actually worth to someone at the lower levels of income?  I want some numbers, because I don't think someone making 20,000 a year pays that much in taxes to begin with.  They wouldn't be able to get back Medicare and Social Security taxes.  Even if they get to keep the whole 20,000, they will probably still need an additional subsidy to afford insurance.  We need to come up with a balanced answer that makes insurance affordable for everyone, but still requires that they make the necessary sacrifices so that we can all afford coverage and keep our economy solvent in the long run.