The Health Insurance Black Hole

Point of No Return

The Health Insurance Black Hole

By: Larry Walker, Jr.

Tweet

@CoachChic to @larrymwalkerjr Tell me: If Obama wants us to buy-into a healthcare package, why not just give us what congressmen get? I’m serious here.

Facts

With more than 1.8 million civilian employees, (1) the Federal Government, excluding the Postal Service is the Nation’s largest employer. The U.S. Postal Service employs an additional 636,000 (2) full-time employees.

Politicians and Federal employees receive the country’s best care – at taxpayers’ expense. While over 46 million Americans (disputed) remain uninsured and millions more underinsured, members of Congress receive health-related services that many in the U.S. will never see.

Representatives and Senators alike receive some of the best health care benefits in the country, much of it paid for with taxpayer dollars. Yet these same members seem unable – or unwilling – to extend similar protections to the rest of America.

Federal Employees Health Benefits Program

As soon as members of Congress are sworn in, they may participate in the Federal Employees Health Benefits Program (FEHBP). The program offers an assortment of health plans from which to choose, including fee-for-service, point-of-service, and health maintenance organizations (HMOs). In addition, Congressional members can also insure their spouses and their dependents.

Not only does Congress get to choose from a wide range of plans, but there’s no waiting period. Unlike many Americans who must struggle against precondition clauses or are even denied coverage because of those preconditions, Senators and Representatives are covered no matter what – effective immediately.

And here’s the best part. The government pays up to 75 percent of the premium. The government, of course, is funded by taxpayers; the same taxpayers who often cannot afford health care for themselves.

Self-only Estimates (Georgia Rates)

For non-Postal Employees, let’s use the federal government’s Georgia rates for Humana’s Standard Plan for self-only coverage. The total monthly premium in 2009 is $373.75. The amount paid by the employee is $93.44. The amount paid by taxpayers is $280.31 (3).

For Postal Employees, let’s use the federal government’s same Humana Standard Plan for self-only coverage. The total monthly premium in 2009 is $172.50. The amount paid by the employee is $23.29. The amount paid by taxpayers is $149.21 (4).

Click Image to Enlarge

Family Estimates (Georgia Rates)

For non-Postal Employees let’s use the federal government’s Georgia rates for Humana’s Standard Plan for Family coverage. The total monthly premium in 2009 is $859.67. The amount paid by the employee is $214.92. The amount paid by taxpayers is $644.75 (3).

For Postal Employees let’s use the federal government’s same Humana Standard Plan for Family coverage. The total monthly premium in 2009 is $396.77. The amount paid by the employee is $53.56. The amount paid by taxpayers is $343.21 (4).

Summary

Depending on the plan, and the State, the costs vary widely, but at the minimum, using Georgia’s insurance rates, which are among the lowest nationwide, taxpayers are on the hook for somewhere between $7.1 billion and $16.5 billion annually. Based on the rates in other states I think it would be safe to double these amounts. So let’s say it costs taxpayers between $14.2 billion and $33.0 billion per year to subsidize health insurance premiums for Federal Employees.

Again doubling the Georgia rates, health insurance subsidies for the 535 members of Congress cost taxpayers between $3.6 million and $8.2 million annually. To me this is a Black Hole. We pay for our own health insurance, and then we turn around and pay 75% of the cost for federal workers. Members of Congress and the Executive Branch need to start pulling their own weight. Especially since all they seem to be doing lately is spending money that we don’t have.

The Answer

Option 1: How much would it cost if the Congress were to grant the same health insurance plan that government workers enjoy, to the alleged 46 million uninsured?

If the government paid 75% of the premiums for the uninsured, the minimum cost to taxpayers would be somewhere between $154.7 billion and $355.9 billion. Since Georgia rates are about half of what they are in most States, the average is more reasonably, between $309.4 billion and $711.8 billion. Using the high-end figure of $711.8 billion, that’s about $2,372 per capita, annually.

Option 2: How much would it cost if Congress were to grant all 300 million of us access to the same 75% subsidized plan enjoyed by government employees?

The cost to taxpayers would be just over $1.0 trillion at Georgia rates, or more like $2.0 trillion nationwide. Using the high-end figure, again, $2.0 trillion is about $6,727 per year, per capita.

Thus it is unlikely that the nation could afford to offer all American’s access to the same kind of taxpayer subsidized health care which Federal employees receive. With the government paying 75% of the premiums, it would cost taxpayers around $2.0 trillion, or $6,727 per citizen, per year. And then we would still be responsible for 25% of the premiums.

As a Georgia resident, although my monthly premiums would only be perhaps $93.44, my taxes would increase by potentially $6,727 per year to subsidize everyone else. Thus, it would wind up costing me $7,848 per year, or $654 per month. For a family of four, the cost would be roughly $2,616 per month ($654 * 4). The average cost nationwide would be double the premium or $747 per month for individuals, and $2,990 per month for a family of four. Now that’s just outrageous.

Even if we could afford to give all Americans the same health insurance benefits hoarded by Congressmen and Senators, this still would not address the problems of rising annual health care costs, doctor shortages, rationing of care, lack of competition across state lines, undocumented workers, portability, unemployment, delinquent taxpayers, the recession, Medicare, Medicaid, the National Debt, the Budget Deficit, …etc….etc….etc…

Once again, I would conclude that it’s probably best to make some reforms to the current system, and not attempt any kind of radical ‘fundamental’ changes. However, one thing we can and should do right away is end the notion of taxpayer subsidized health insurance premiums for Federal Employees. We have to pay for our own insurance and then for 75% of theirs? This can and should end immediately, starting with the Black Hole – Congress, and the Executive Branch.

~A penny saved is a penny earned~

RT @CoachChic Again to my dream: That every American have on the tip of his/her tongue, “You design it, then join us!”

RT @CoachChic @HeavenandHealth My plan: Have pols design a healthcare plan, then join us in it. Fair enough?

RT @CoachChic Ya know, some of the most complicated problems have really simple solutions. 🙂

Sources:

  1. http://www.bls.gov/oco/cg/cgs041.htm

  2. http://www.federaltimes.com/index.php?S=4265826

  3. http://www.opm.gov/insure/health/rates/nonpostalhmo2009.pdf

  4. http://www.opm.gov/insure/health/rates/postalhmo2009.pdf

  5. http://public-healthcare-issues.suite101.com/article.cfm/health_care_for_the_us_congress#ixzz0RtqtCaVc

Health Insurance Co-Ops vs. Government-Run Health Insurance

* More Honest Debate *

By: Larry Walker, Jr. –

What is a Cooperative (Co-Op)? *

A Cooperative is a business organization owned and operated by a group of individuals for their mutual benefit. A cooperative may also be defined as a business owned and controlled equally by the people who use its services or who work at it.

There are many types of Co-Ops in the United States. I will attempt to address some of the most common cooperatives. If you belong to a credit union, you are already a member of a Co-Op. My electric and natural gas utility company is an EMC, another word for Co-Op. In the insurance industry, Co-Ops are called Mutual Companies, or Mutual Legal Reserves.

Credit Unions are owned by their members. When you join, you must establish a share account and maintain a minimum balance. Your share account is your capital investment in the company. You are paid ‘dividends’ on your savings and checking accounts. Dividends are your share of the Credit Union’s profits. A Credit Union offers benefits for its members such as preference on home and automobile loans.

An Electric Membership Corporation (EMC) is a service cooperative owned by those who receive its services. There are nearly 1,000 electric cooperatives in the United States. When the EMC makes a profit, those profits are shared with customers through credits to their electric bills, or lower rates.

Health Insurance Co-Ops

Health Care Services Corporation (HCSC) is the largest customer owned health insurer in the United States.

  • HCSC operates the Blue Cross and Blue Shield plans in Illinois, New Mexico, Oklahoma and Texas, employing 17,000 people and serving more than 12.4 million members – 38% in national employer plans, 32% in large local employer plans, 10% in small employer plans, 10% in individual plans and 10% in government plans.

  • HCSC is the fourth largest health insurance company in the United States and the largest customer-owned health insurer. In 2008, the company’s gross revenue totaled $39.9 billion (considering all subsidiaries which are not included in the chart below in accordance with GAAP).

  • HCSC is the most financially secure health insurer in the United States, with a rating of AA- (Very Strong) from Standard and Poor’s, Aa3 (Excellent) from Moody’s and A+ (Superior) from A.M. Best Co.

  • HCSC retains full or joint ownership of a number of subsidiary companies, including Fort Dearborn Life Insurance Co., Dental Network of America, MEDecision, Availity, Prime Therapeutics and RealMed.

If the HCSC model is the type of Health Insurance Co-Op being discussed in Congress, then I am a fan. Yes. Here is an idea that would have strong bi-partisan support. We can agree on Health Insurance Co-Ops. In my opinion Co-Ops are in line with the purest sense of Capitalism. On the other hand, if Congress is talking about some kind of partially Government owned, or Government controlled entity, then I am not in favor.

In fact, I would like to join HCSC, or a similar Co-Op, but unfortunately it only operates in 4 states, and none of the health insurers in my state are co-ops. Fostering increased competition by allowing insurers to operate in all states would be an improvement.

The Plan

So if America wants to convert its health insurance industry to Co-Ops, the question is how? Obviously, it would be unfair, and foolish, to force the existing insurers out of business, so how do you get them to convert?

I am a proponent of Binary Economics. Under Binary Economics, the only role of Government in private enterprise is to offer interest-free loans through its central bank. Existing publicly traded insurers will need to buy back all of their stock in order to make the conversion to mutual companies. Interest free loans from the Government will facilitate this conversion. The loans will be paid back over the long-term out of the profits of the insurers. Once the loans have been paid, the insured will be able to participate in a larger share of company profits. Profits will be shared with policy holders either in the form of dividends, or lower insurance rates.

Interest free loans are not hand-outs, or bailouts. The money gets paid back. Granting interest free loans would be a much better use of taxpayers money than the current foolishness being promoted by certain ‘linear’ thinkers (right and left). The World is not flat. In fact, most good ideas come from outside of the box.

Reforms I can believe in:

  1. Conversion of the Health Insurance Industry to Co-Ops

  2. Tort Reform

  3. Fostering Interstate Commerce for increased competition

  4. No denial for preexisting conditions

  5. Tax Incentives for those paying higher premiums due to preexisting conditions

  6. Tax incentives for purchasing health insurance

  7. Portability of policies

Reforms I don’t believe in:

  1. Making health insurance mandatory

  2. Taxing employers who don’t offer insurance

  3. Expanding Government-Run health care

  4. Excessive Government Regulation

  5. Triggers

click images to enlarge

Sources:

http://www.hcsc.com/about-hcsc/overview.html

http://www.investopedia.com/terms/m/mutualcompany.asp

http://en.wikipedia.org/wiki/Co-op

http://www.waltonemc.com/mycoop/

https://blackandcenter.blog/2009/09/02/government-run-vs-private-health-insurance/

Mopping Up After Obama – HSA’s and Energy Credits

More Honest Debate

Can the Federal Government outsmart itself?

Health Savings Accounts (H.S.A.’s) either work, or they don’t work. The government came up with a great plan, but failed to promote it. That’s what our government does. They solve a problem, and then come back in a couple of years and solve it again. We are seeing it with health care, as well as with energy policy.

Health Savings Accounts are a great idea. I have had one for over three years and have been satisfied with the program. Since I am in control of the spending, I don’t always take the doctors advice about redundant tests and follow up appointments. Since I have to pay for those tests and appointments I make sure that I really need them before making the appointment. If it wasn’t coming out of my pocket, I would be less inclined to question, and more inclined to take every redundant test, and make every redundant follow up appointment, whether I felt I needed it or not. Don’t you dare give me something that works, and then threaten to take it away because the rest of society hasn’t caught on. Either health savings accounts work, or they don’t. And if they do, then the government had better get to the business of promoting them.

Speaking of energy policy, I’m a bit disgruntled that, after spending over $10,000 in home energy improvements, the federal government through a cap-and-trade tax now thinks that wasn’t good enough and they want to raise the cost of energy, thus negating any long-term savings I may have hoped to gain. Either the energy tax credits worked, or they didn’t work. Make up your minds. We got the message already and most Americans have incorporated energy savings mechanisms through the free market. Now the message seems to be that Americans have failed to get the message so now the Government will take over and force energy savings down our throats. So will the Government reimburse me for what I have expended in following its previous advice?

Seems to me that Barack Obama and his left-wing cadre certainly don’t have the best interests of this American at heart. And, well, if the majority of Americans feel the same way, then I would venture to say that Obama doesn’t have the best interests of America at heart.

Obama Scores a Zero on Health Care Reform

Bombs on the Fundamentals

Barack Obama’s main argument and the key to his whole presidency seems to be this idea that health care reform will lead to economic recovery. However, what Obama has failed to do is to convince the American public, and mainly conservatives, that it was our present health care system that caused the economic recession of 2007. His failure to convince an intelligent public has caused him to score a big fat zero on fundamental logic.

Obama: “We must lay a new foundation for future growth and prosperity, and a key pillar of a new foundation is health insurance reform.”

Conservatives: We believe you create jobs by keeping taxes and regulation low, and litigation at a minimum. Americans succeed when government puts in place positive policies that encourage more freedom, and more opportunity.

Most of us were under the impression that the recession was caused by the failure of our financial system as specifically related to the housing market. We believe that our economy failed due to a combination of easy money, lax mortgage regulations, and the crash in home prices. We also believe that the problems that caused the housing/mortgage crisis have yet to be resolved.

Instead of focusing on the main problem, the one that actually caused our economy to buckle, along comes Barack Obama with the false premise that it was the lack of health care reform that caused the recession. American’s are however, unable to connect the dots. Some key questions are as follows:

  1. How did the lack of health care reform cause the present recession?
  2. How will health care reform lead to economic recovery?
  3. How do you define economic recovery?
  4. Why did Fannie Mae lose another $15 billion in the 2nd Quarter of 2009?
  5. How will passing ‘untested’ (unread) legislation restore America’s confidence in a broken federal bureaucracy?

It is precisely Obama’s inability to answer the above questions that has American’s like myself so ticked off. Instead of recognizing and focusing on the real crisis, Obama has created a make-believe crisis, and he is proposing a make-believe solution.

Will the Obama brand of make-believe health care reform help delinquent consumers pay their bills? Will it keep real interest rates down? Will it create jobs? Will it encourage more freedom and opportunity? Will it balance the current budget deficit?

When Obama can come to the table with a logical argument regarding his proposed government take over of the health care industry, I will be glad to sit down with him, and have a serious conversation. Until then he can look forward to more questions and more dissent.