Open Enrollment for the Nation

I was able to see some recent figures for health insurance costs for the year 2013, and I have to say I hope companies are doing their open enrollments now - before the election.

If not, many people may be in for a surprise after the election.  Of course, I know a lot of people who support Obamacare who say they don't mind paying more for health care if it means everyone is covered, among other things.  Fine and good, but let's let the People decide if they agree with that as a majority.

Based on the surprise to the increases and changes I've already seen, there may be quite a few Americans that are unprepared for just how much getting everyone covered is going to cost them, especially in light of the promises that came with Obamacare to reduce health care costs.

Health Savings Accounts are taking some of the biggest hits, and it looks like employer support of them could be dropping significantly.  That isn't good news for many who saw it as a good option between being covered and being frugal by cutting overall health care costs yourself and saving money for future health needs.  Costs for the minimum premiums are going up for both individuals and employers, and how contributions to the HSA accounts are accounted for is also causing controversy over whether it really makes sense to contribute much money to them at all.

And if you liked the idea of using Flexible Spending Accounts, the $2,500 contribution limit may really  hamper your plans if you have kids that need braces, or have needs that exceed $2,500 per year.  Unless someone can show me otherwise, this new limit is an "invisible" tax on every dollar above $2,500 that the normal FSA account holders was used to contributing to their accounts in years past.

But it isn't just those costs that have gone up.  Even traditional plan premiums are going up for employers and individuals.

I'd start asking your employer and/or health care provider to get you information about what next year's costs are going to be, before you vote this year.  Once you determine how it will affect you, then cast your vote.

The next few weeks left in the election are America's open enrollment period.  We'd better be ready for what the majority decides it wants.  Because it will be many years before we again have a chance to change our plan as a nation.

Below is some information from the HSA Council on changes being made through Obamacare.

The primary issues of concern for high-deductible plans are that:

• The medical loss ratio formula doesn’t take into account contributions to HSAs.  Many high deductible health plans are accompanied by an HSA, which covers much of the first-dollar costs before the plan’s deductible is reached.  HSA contributions are currently not reflected in the medical loss ratio calculations.
• High deductible health plans may not be able to raise rates fast enough to keep up with rising costs.  High deductible health plans will require larger annual rate increases than typical medical plans because medical inflation will have a greater impact on claim levels than plans with lower deductibles. 
• High deductible health plans have fewer premium dollars to cover their fixed expenses.  Every plan has fixed expenses that it covers with premiums. Since high deductible health plans have lower premiums than other plans, a greater percentage of the premium must be used to pay these fixed expenses.  For example, $400 of fixed expenses represents 40 percent of a $1,000 premium, but only 20 percent of a $2,000 premium and just 8 percent of a $5,000 premium.  Therefore, it is harder for a lower premium plan to keep its non-claim expenses below 20 percent of its adjusted premiums as the medical loss ratio rule requires.
• High deductible health plans have less predictable claims experience that could increase the risk of paying rebates.  High deductible insurance plans pay fewer claims than plans with low deductibles.  But when high deductible health plans pay claims, the claim dollar amounts tend to be larger. This lower-frequency/high-payment creates less actuarial predictability which can result in high claims in one year and low claims in another. If the plan has low claims, it may not meet the 80 percent medical loss ratio and be required to pay rebates.  If the plan has high claims, it may lose money that it cannot “make up” in other years.

The information below was provided by HSA Bank:

 • Qualified Medical Expenses: Starting January 1, 2011 you will no longer be able to pay for over-thecounter medications from your HSA as a qualified medical expense. The new law removes over-the-counter 

drugs not prescribed by a physician from being paid from an HSA, FSA, or HRA on a tax-free basis.

 • Non-qualified expense penalty: Under the new law, if you use your HSA funds for non-qualified expenses, 

you will face a higher penalty. The tax penalty for non-qualified HSA distributions will increase, effective 

January 1, 2011, from 10% to 20%.

 • Mandated insurance coverage: Effective January 1, 2014, the legislation will require most U.S. Citizens 

and legal residents to have health insurance. It also outlines the minimum coverage and essential health 

benefits that need to be provided for a plan to qualify for the mandated coverage. This could potentially limit 

the types of health plans that will be available to consumers. Below are a few of the areas which require 

clarification by the Secretary of Health and Human Services: 

   • Preventive care services:  All insurance policies will be required to provide first dollar coverage for 

preventive care services. While HSA-compatible health plans are currently allowed to provide first-dollar 

coverage of preventive care services, in the future, all plans will be required to do so. These provisions 

will go into effect in 2014. Additionally, further clarification must be provided regarding what constitutes 

“preventive care” under the new regulations and whether or not that definition conflicts with current IRS 

guidance on what constitutes “preventive care” for HSA purposes.

   • Minimum actuarial value: All insurance policies will be required to provide a minimum actuarial value 

of at least 60 percent for the benefits covered. Clarity must be provided regarding how “actuarial value” 

is defined. It is also not clear whether a plan’s actuarial value would include employer or individual 

contributions made to the individual’s HSA. Including the contributions in the calculation of a plan’s 

actuarial value would make it easier for more HSA-compatible health plans to meet the minimum 

actuarial value requirement. If contributions are not included, many plans could no longer be sold. 

 • Small employer benefit requirements: The legislation also includes a provision that would prevent small 

employers from offering plans with deductibles greater than $2,000 for singles and $4,000 for families 

(indexed annually). Employers may offer plans with deductibles higher than $2,000 / $4,000 if the employer 

offers a flexible spending arrangement (FSA) that reimburses the difference between the higher deductible 

and $2,000 / $4,000. This provision will affect the health plans that can be offered to small employers and 

still qualify for HSA contributions. This provision goes into effect in 2014.

 • Excise tax on ‘Cadillac’ plans: The new law will impose an excise tax of 40 percent on employersponsored coverage that has a benefit value in excess of $10,200 for single coverage and $27,500 for 

family coverage (indexed annually). The benefit value of employer-sponsored coverage would include the 

value of the group health plan and contributions to employees’ FSAs, HRAs, and HSAs. This tax would be 

imposed on insurance companies, including self-insured plans and plans sold in the group market, and plan 

administrators. However, this provision does not go into effect until 2018.

• Medical loss ratio requirement:  The new law imposes a “medical loss ratio” requirement. It would require 

a set percentage of premiums to be paid directly to medical claims. Since HSA-compatible plans have lower 

premiums, this may make it challenging for plans to meet the established ratios and still qualify for HSA 

coverage.

Supreme Court Ruling Infers Obama Was Wrong

The Supreme Court ruled that Obamacare is a tax, so it can be imposed by Congress.

To be clear, I have no qualms with individual mandates at the State level. They are instituted and upheld all the time.

But at the Federal level, they can only be instituted as a tax. However, I thought Obama said Obamacare wasn't a tax? (see video)

Looks like the Supreme Court disagrees.

So, Obama has increased our tax burden by $1.76 Trillion, by latest CBO numbers. According to the IRS, there were 142,856,282 Individual Tax Returns for the 2010 Tax Year (most recent available statistical year), meaning Obama's new tax liability on average will be 12,320.07 over the next 10 years by those figures.

Anyone out there know of a president or congress that has levied such a large tax before?

Is Health Care A Right?

Two levels on which I don't agree that health care is a right. The first level is that, if it is a right, it is definitely not a protected right under the constitution.  If we as a nation define it as a right by adding it as an amendment or addition to the Bill of Rights, then it would become protected.  When the Bill of Rights was written as a compromise for those who questioned the Federalist notion of a constitution and a central government, hospitals and doctors existed.  If the non-Federalists had felt that healthcare was an inalienable right they would have asked for its inclusion into the Bill of Rights, because they basically asked for everything else they could think of. Good thing they did; Imagine being without the Bill of Rights, which is what the Federalists wanted until it was obvious they needed a compromise.

The second level is on what constitutes a right.  What are rights, and where do they come from?  I have always questioned that, and recently questioned it again in regards to whether I should think health care is a right or not.  If it is, I want to be behind it as a defender of rights.  If it is not, I want to explain why not.

Fundamentally:

• A right is rooted in, and constituted of, principles defining the ability to act.

• Rights come from the obligation of others to keep themselves from violating your ability to act.  In other words, rights are negative obligations - weighty responsibilities.   

What we know:

• The need for health care in a time of sickness is not an act.

• Society has only defined certain obligations of doctors in times of emergency, sickness, or need - and complete health care is not one of them.  

So, health care is not a right, but a privilege given to us unvoluntarily (i.e., at a price) by others who possess (which is a right) and have obtained (which is a right) the skills necessary to do so.

True rights do not infringe on another person's rights.  My right in the pursuit of happiness, freedom of speech, freedom of religion, right to an attorney, right to a fair trial, or any other, should not and do not take away from another's same rights.

If health care was, or could be, a right, how could it be so without taking away the rights of others?

As stated above, I currently have the right to an attorney, but I have to pay for it out of pocket or request one (the act), and the right is given to me to defend me from accusation of my peers (The People, who are under that obligation).  If the People of my State decide to accuse me, I should (and do) have the right to defend myself against them.

However, in the case of a medical need, it usually occurs by natural cause.  The People did not inflict the medical need upon me, so I have no right for a doctor to be provided (there is no act and no obligation).  But I do have the right to hire (a right) one and receive treatment if I have obtained the ability (a right) to do so.

Of course, there are always a few exceptions and further explanations and arguments to these types of philosophies which would take much more time to write than I have.  Such as what happens when The People do inflict harm on someone - then does that person have a right to receive care?  Most judges or juries would rule yes and I agree with that.  Notice, however, that the right is usually alienable, meaning it can be transferred, or it is only for the duration of the treatment of the harm caused.  It normally would not include any and all medical care, as the alienable right was given because The People infringed on that person's right to be left alone.  (See Francis Hutcheson)

One last example, my right to legal representation can still be exercised (therefore it is inalienable) even if all of the lawyers were to leave the world, and none were available to represent me.  In that case, I become my own advocate and represent myself.  The right has not been reduced or transferred from me based on the lawyers' decisions to leave.  On the other hand, if all of the doctors were to leave the world, how would I exercise my right to health care, beyond the rights I already have to take care of and make decisions for myself?

The fact that health care is not a right does not mean we should not be charitable and help where we are able.  It means we should be careful about what types of weighty responsibilities we add to the burdens we share as Americans.  Balance is a notion that we tend to forget about but is symbolically everywhere in the foundations and inner workings of our country.  I believe there is good wisdom in that.