I'm Back!

I have been watching from the sidelines while the various parties have fought it out over healthcare reform. I had ideas about better ways to approach the problem, but this process degenerated into a political battle versus an answer in the best interest of the long-term for everybody. Both political parties can take credit and are at fault for the result after a “Battle Royale”.

Democrats adopted a win at all costs approach. They took an ideological view that providing broader access to healthcare was a moral obligation; lots of long-standing agendas crept into the final bill. With victory in sight, the Democratic leaders became more arrogant and went for the kill. Unfortunately the long-term realities of the bill were ignored for the sake of the “greater good”. The experts were ignored and shouted down. We will see a major transfer of wealth to pay for this bill like we have never seen. But greater access to healthcare for all was achieved with the introduction of health insurance exchanges. Individuals who had no way to purchase health insurance now could. And we are not talking about emergency care in a hospital setting.

Republicans realized they couldn’t win so they stopped making constructive suggestions. In seeing defeat early, they reverted to “no” for everything. Branding the mandate for participation in the new plans as socialism did make headway on public opinion, but didn’t make the bill better. If the Republicans use the November elections as a reversal referendum, they will lose again—at least in the minds of many Americans.

We are now in the position to try and take the good and fix the bad in this legislation. The original bill was over 2,500 pages long. Now comes the hard work with an anticipated 100,000 pages of regulations expected to be drafted. Hopefully the middle ground will fall back to the three legged stool of issues in our present healthcare system: access, cost control, and quality.

But we won’t have to wait too long for the regulations because the law kicks in soon. Interim high risk pools are coming in mid-June. The effective date of the initial reforms is 9/23/10. Any employer with a plan year following that date will need to incorporate the elimination of pre-existing conditions for children, elimination of lifetime maximums, coverage for those under age 26 on a parent’s plan, mandated coverage of preventive care, external review processes for employer health plans, a $250 senior subsidy to plug the Medicare part D subsidy, and the banning of canceling insurance for individuals. Some of the major health plans have already implemented the last item.

Here are some of the other plan highlights. By 1/1/11, small businesses will be eligible for tax credits and temporary reinsurance will be available for early retiree medical plans (to persuade companies to still offer the coverage until the exchanges are put in place). For 2011, employers will need to show the value of their plans on employee W-2 forms and offer a voluntary government long-term care plan to employees. Those employers with more than 200 employees will move to auto enrollment for healthcare. And over the counter medications will be eliminated from FSA and HSA accounts.

In 2013, a $2,500 cap will be put on flexible spending accounts. What might be an indicator of things to come is the introduction of new taxes for those earning over $200,000 as an individual or $250,000 as a joint filers (0.9% of wages and 3.9% of unearned income). The elimination of the medicare part D tax exclusion (which was originally put in place to encourage employers from keeping their retiree prescription coverages when part D was introduced) has already prompted companies to take GAAP charges for the anticipated future liability changes. For a couple of weeks the White House and Congress viewed this as a political statement by companies until someone reminded them of accounting rules—pretty scaring that this was unanticipated.

So while the target is still moving as the details of round one get sorted, who are the anticipated winners and losers?
(See my next blog entry to find out)