Here’s what needs to be done:

Eliminate the ridiculous State imposed Mandates that PROHIBIT Health Insurers from offering coverage in EVERY SINGLE STATE! For example, Small Businesses in California have roughly 6 (yes that’s six) options for Health Insurance. Yet there are 1,300 Health Insurance companies in America! States like Colorado FORCE carriers to cover “substance abuse” which DOUBLES the Health Insurance premiums in Colorado (you can now waive “substance abuse” coverage and your premium is subsequently reduced BY HALF!). This kind of State Mandate (and so many more) is what prevent the majority of Health Insurance carriers from offering their products in every State.

Basic economics 101 teaches us that NOTHING increases quality and drives down prices LIKE COMPETITION! How can we increase quality and competition when we stifle it by imposing ridiculous mandates that inhibit competition from the get go? All 1,300 Health Insurance carriers should be able to offer ALL of their products in EVERY SINGLE STATE. This way if you do not like your current coverage you have 1, 299 OTHER OPTIONS. With that many options available, carriers are NATURALLY FORCED BY THE RULES OF COMPETITION AND FREE MARKET ENTERPRISE to IMPROVE not only the quality of their products but to also improve their customer service OR THE CONSUMER WILL PURCHASE their Health Insurance from 1,299 other carriers! It’s as simple as that! Also, actuarial tables teach us that the more lives that are in the pool, the lower the premiums for all. How much lower could premiums be if everyone in EVERY state had 1300 carriers to choose from? How can NONE of the bills proposed in the House or the Senate not address repealing the McCarran Ferguson Act of 1945?
http://law.jrank.org/pages/8497/McCarran-Ferguson-Act-1945.html

Instead of bailing out GM with Billions of our blood sweat and tears and then letting them file bankruptcy 3 months later. Why not fund a NATIONAL High Risk Pool for those who are rendered uninsurable? We already have such State run High Risk Health Insurance pools in the majority of States. These Risk Pools will cover anyone regardless of their medical history. The problem is they are under funded so the premiums are extremely high. Instead of spending up to $6 Trillion over the next 10 years to insure only 20 Million of the 45 Million uninsured. LEAVE the bulk of the nation’s risk where the money is, namely with the insurance companies. Then provide a National Federal & State funded Risk Pool for those who are rendered uninsurable. Since the uninsured far outweigh the uninsurable, this would cost far less than the currently proposed $1.6 Trillion over the next 10 years.

Update the outdated Health Insurance Portability laws (regarding credit for pre-existing conditions) to INCLUDE Individual Health Insurance Policies. As it stands now, HIPAA law allows an insured to move from one “Employer Sponsored Group Health Insurance Plan” to another “Employer Sponsored Group Health Insurance Plan” and receive FULL coverage for “pre-existing” conditions so long as they can prove to the new carrier that they have had 18 months of prior coverage with no lapse of more than 63 days. Millions of American Entrepreneurs have chosen to leave Corporate America and strike out on their own since these archaic laws were written in the 1980′s. As the face of our work force changes so too should the laws that protect it. Most especially since these entrepreneurs shoulder the BULK of the nation’s risk and PAY the bulk of the nation’s tax load! Throw them a legal bone!

Educate the American consumer about the primary reason for the high cost of health insurance! Namely, LOW DEDUCTIBLE, LOW CO PAY (a.k.a. Traditional) Health Insurance. NOTHING drives up the cost of Health Insurance like maintaining a low deductible, low co pay plan. Instead, offer new more intelligent option to the American Consumer like “Consumer Driven Tax Qualified Health Insurance”. There simply is no more intelligent or cost effective way to insure anyone. The sad part is, these Consumer Driven Tax Qualified concepts have been around for more than a DECADE! Yet, only a small minority of the American population has even explored these intelligent (& much lower priced) Health Insurance alternatives. Those that have, are WAY AHEAD of the rest of population when it comes to managing medical risk.

I would say weed out the 12 million Illegals (that we know about) who are sucking our Medicaid system dry…but as Congressman Joe Wilson so aptly stated, Obama CLEARLY wants to “provide a PATH TO CITIZENSHIP for the 10 to 12 million Illegals in our country”. Once they’re legal, he can then cover them ALL on our tax dollar! So YES his plan IS to cover Illegals, he’ll just make em legal first! Think they’re not sucking our Medicaid system dry? Just visit California or Illinois. Good old “Blago” enrolled thousands of Illegals in to our Medicaid system, thereby running the program in the ground & leaving our Illinois Medicaid system approx. $1.5 BILLION behind in payment of claims to physicians who have been providing “free” care to all illegals who were lucky enough to flock to the State of Illinois to insure themselves for “free”. In fact, according to the U.S. Census Bureau 10 to 12 Million of the Uninsured in America are illegal aliens. Who comprise the rest? Find out here.

TORT REFORM! This is one area of reform that is rarely spoken of by the Liberal left. Medical malpractice liability forces providers into practicing defensive medicine. In other words, it causes medical practitioners to order multiple expensive (and often times unnecessary) tests and procedures “in defense of” potential lawsuits, JUST IN CASE they miss something in a patient’s case. All for fear of being sued for ridiculous amounts in a malpractice lawsuit. Limiting liability lawsuit awards to reasonable amounts will deter those who seek the “big pay day” by filing frivolous lawsuits against medical practitioner.

Establish a Federal oversight committee to regulate and hold accountable physicians who make medical mistakes. What’s one of the biggest reasons why health care is so expensive? Hint: It’s not “rich CEO’s” and “outdated medical records transfer processes.” It’s Medical Mistakes! Here’s the real facts you won’t find in the media outlets:

1994: Five years after a groundbreaking Institute of Medicine report focused attention on medical errors in hospitals, Americans say that they do not believe that the nation’s quality of care has improved. In fact, 1 out of 3 patients states that they have experienced a serious medical error http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.534

1995: A Study published in the Journal of American Medical Association (JAMA) found that only two percent of medication errors that occurred during the medication administration process were intercepted.
a. More people die from medication errors than from work place injuries
b. Medication errors account for approximately one out of 131 outpatient deaths and one out of 854 inpatient deaths.

1999: Institute of Medicine (IOM) releases its first report on healthcare quality and medical errors. http://www.iom.edu/?id=12735 The Study finds in part that:

a. Medical errors are responsible for injury in as many as 1 out of every 25 hospital patients.
b. Between 44,000 and 98,000 Americans die each year from preventable medical errors in hospitals alone.
c. The deaths from preventable medical mistakes are equivalent to the number of people who would die if a jumbo jet crashed EACH AND EVERY DAY OF THE YEAR, and all its passengers died!
d. Medical errors cause more deaths than motor vehicle accidents, breast cancer or AIDS…..and this study is TEN YEARS OLD and STILL no Federal oversight committee! Oh wait! It gets worse!

2002: A Study issued by the United States Pharmacopeia (USP) concluded that more than 200,000 medication errors occurred during 2002

2004: CDC reports that 90,000 patient deaths occur each year due to patients contracting hospital acquired infections. http://www.cdc.gov/ncidod/dhqp/pdf/nnis/2004NNISreport.pdf
a. Many hospital acquired infections are caused by health care workers who fail to wash their hands in between patients.

2006: Studies assessing the state of hospital patient safety conclude that current progress is slow, results in general are at best modest, and the gap between the best possible care and actual care remains large. http://www.healthgrades.com/media/dms/pdf/PatientSafetyInAmericanHospitalsStudy2006.pdf

More Facts:

Preventable medical errors result in extended hospital stays, expensive treatment for chronic medical conditions and astronomical medical costs that are associated with treating debilitating life-long illnesses. Some experts state that these costs may be in the range of $150-200 Billion dollars per year. Gee, where else could we spend that money??? Quick reminder:

ALL of the aforementioned happened under the nose of our Federal Government. And we want them to regulate Health Care?? Let’s not save ALL of our anger for the “greedy” insurance companies and “over paid” doctors and CEO’s. Let’s focus our Anger on our GOVERNMENT who has allowed this systemic problem to continue over three administrations!

Ask yourself, why does the health care industry basically regulate and report on itself? Why is certification and accreditation voluntary? Why don’t we have a Federal agency that acts like the FAA and investigate medical mistakes, just like airline accidents or near misses? Why do only some states have mandatory reporting requirements of medical errors? All Good Questions that need to be answered before we hand over our very health freedoms to the same Government to “regulate”.

In summary, REAL healthcare reform can be accomplished through consumer education, weeding out abuse of existing Federal entitlement programs (via a legitimate needs assessment) and increased funding and expansion of existing State sponsored Risk Pools so that people who are declined for insurance have an affordable option to continue coverage if declined on the individual major medical market.

Following these few simple steps will go a long way towards not only maintaining our current health care system, but also towards keeping the bulk of our nations risk where it belongs, namely with the private health insurance industry.

In light of the recent multi Trillion Dollar “Bail Outs” and many other failing corporations coming to the table with their hats in their hands (and their private jets on the tarmac) the last thing our government should do is start cutting more blind “bail out” checks in an effort to “reform” the U.S. health care system.

More on WHY the Wall Street Journal refers to these bills as “The Worst Bills Ever”: http://www.sbisvcs.com/blog.htm

HSA stands for Health Savings Account, more commonly referred to as a “Medical IRA”. HSA qualified HDHP’s are one of several relatively new Health Insurance concepts that fall under the heading of “Consumer Driven Health Insurance”. Health Savings Accounts are a unique way to attractively manage your health insurance costs. They were originally named MSA’s or Medical Savings Accounts designed by Senator Bill Archer (R) of Texas. Bill’s project was to find a way to reduce the cost of health insurance for the self employed without sacrificing quality coverage for a major medical illness. Bill’s brilliant idea was to eliminate the parts of a Traditional Health Insurance Plan that cost the consumer the most money. These expensive benefits include outpatient doctor “co pays” and outpatient prescription “co pays”. Bill approached Congress with a proposal that stated in essence that if you remove those two features and keep the major medical coverage in place you could conceivably cut the cost of your health insurance premium considerably. He was absolutely right!

To illustrate how Bill’s idea works in the real world. We will use a real world example. Tony & his wife are currently paying $1,134 a month for Cobra continuation coverage from a previous group plan. In comparison, the monthly premium for an HSA qualified HDHP (High Deductible Health Plan) which covers each insured family member up to $5 million dollars is less than half of the premium that they are paying now ($481.64 monthly to be exact). This is a yearly savings of $7,828.32 or a monthly savings of $652.36. This is a significant difference. However the insured has to give up all of their outpatient co pays. Is this worth it? This was the question posed to Senator Bill Archer (R) when he approached Congress back in the late 1990′s. His answer to Congress was simply “make it worth it”.

In other words, he asked Congress to make it worth it to the insured. Their response was two fold. And it is these two primary reasons that make HSA’s a “no-brainer” for every self employed prospective insured and for their corresponding employees. The first thing Congress did was to state that if a policy holder buys a major medical health insurance policy (HDHP) with a yearly family deductible between $2,200 per family (not per person) or as high as $5,800 per family we will call that an HSA qualified health insurance plan (HDHP).

They further said that in order to make giving up outpatient co pays more attractive to the insured we will allow anyone who has an HSA qualified health insurance plan (HDHP) the option to open a tax favored HSA (Health Savings Account) with their local bank or financial brokerage house. Since the insured is saving a considerable amount of money each month by giving up their out patient co pays, we will allow them to take that extra premium that they would have normally given the insurance company for the “privilege” of a co pay and put it into a 100% tax deductible account that will grow tax deferred at an interest rate adjusted by the Fed.

In addition to depositing the amount you save in insurance premiums, you may also deposit in your HSA an amount equal to what the IRS allows for that given year. For the year 2009 the maximum contribution a family can make to their HSA account is $5,950. In addition, any family member who is 55 years of age or older can deposit an additional $1,000 annually (more on the age 55 allowance below). This means that the total amount that Tony and his wife (in our example above) can deposit per calendar year is $7,950 and they can take a 100% tax deduction for that contribution similar to an IRA.

Furthermore, if they do incur medical expenses that arise throughout the course of the year that are subject to the deductible (i.e. prescriptions, doctor’s office visit charges, etc.) the IRS will allow them to pull out that money that they put into their optional tax deductible, tax deferred HSA savings account to pay for those expenses. When they use their HSA money to pay for those expenses the IRS will allow them to write those expenses off at a 100% tax deduction. The list that the IRS allows them to spend their HSA money on is very liberal and includes things like dental, orthodontics, eyeglasses, radiokeratonomy (Lasik corrective eye surgery), alternative medicines etc. Click the hyperlink to see the list of allowable expenses and disallowed expenses on the HSA section of the IRS web site here: http://www.irs.gov/publications/p502/index.html

Arguably the most attractive tax advantage to owning an HSA is the fact that the money left over in the HSA account that was not used on medical expenses at the end of the year is “rolled over” into the next year and awarded a higher rate of tax deferred interest. The insured also has the option to roll those unused funds into no load mutual funds, thereby building an extra tax deferred retirement account with money they would have normally given to the insurance company each and every year whether or not they had any claims that year!

It should also be noted that with not having a “co pay” with your plan does not mean that your outpatient doctor visits and outpatient prescription drugs will not be a covered expense. With most HSA qualified HDHP’s these charges are a fully covered expense just as they would be with a Traditional Health Insurance Plan. The only difference is these charges will be subject to the “aggregate” family deductible.

Being “subject to deductible” does not mean that you will pay full price for these charges either. If you stay within the vast PPO network that most reputable carriers offer (www.phcs.com) your outpatient doctor office visit charges will be discounted by as much as 40%. Your prescriptions will also be discounted significantly as well by staying within the Rx prescription network.

Let’s break that down in plain english. Let’s say your doctor’s office charges you $100 for a “sick visit”. If you use a PPO provider (typically PHCS or MultiPlan) those office charges will be “re-priced” down to roughly $60. Now compare that to a Traditional plan which provides you with a $25 “co pay”. The difference to you is $35 out of pocket for that doctor’s office visit. But is that all you are really saving?

Not if you add in the monthly premium savings between the two plans. The typical monthly premium savings between a Traditional plan and an HSA qualified plan for a family is $200 to $300 monthly or more. Let’s split the difference at $250 less monthly. This equates to an annual savings of $3,000.

Now let’s take that $3,000 annual savings and deposit it into a tax deferred, tax deductible interest bearing account. Let’s go a step further and imagine you find an HSA account that bears you NO interest AT ALL (which is not that hard to imagine in this economy). You’re still saving $3,000 annually and you’re deducting that amount from your adjusted gross income. This means less reportable income which means less taxes.

Now lets imagine you have no major medical claims in year two and you deposit the same amount. Now in year three you have a worse case scenario occur. Now you have $9,000 to help pay your “aggregate” family deductible. Moreover, since deductibles with HSA qualified HDHP’s include only one “aggregate” deductible for the entire family there will be no other risk to any other family member for the rest of that year. Unlike Traditional Health Insurance Plans which typically require each of three separate family members to pay their own calendar year deductible if they end up in the hospital (or need an MRI, CT, Nuclear Medicine Scan etc.)

The longer you look at HSA qualified HDHP’s the more sense they make. This is why they have caught on like wildfire and will continue to do so. The only inhibitor to the spread of HSA’s is lack of education (as is the case with any other financial vehicle).

Now you can help fund your HSA account by purchasing every day items! Click http://www.myhsarewards.com

To learn more about HSA’s and the recent federal legislation that has made them even more attractive to people over the age of 55 click: http://www.treas.gov/offices/public-affairs/hsa/about.shtml to read all about them on the Federal Governments HSA educational web site. To learn more about H.S.A.’s in a power point presentation format please click here: http://www.hsacenter.com/

If you are an employer and are considering HSA qualified plans for your employees consider this. An individual’s employer can make contributions that are not taxed to either the employer or the employee. The combined income and payroll tax deductibility leads to discounts for health insurance of over 40 % in some cases relative to other forms of insurance. For more details for the employer http://www.treas.gov/offices/public-affairs/hsa/faq_employer-participation.shtml

Fortunately, these health savings accounts provide a tax deduction equal to your premium. Paired with a high deductible health plan, these plans provide significant tax savings that can be used for over the counter medication, chiropractic medicine and other items that might not be covered by your major medical plan.

The plans work like this: Iff you had a $5400 family deductible with 100% coverage after that deductible is reached (a very common plan), you’re total cost would have been approximately $3240 is total expenses after your tax deductible health insurance deduction. If you don’t use the funds setup in the HSA, they roll over each and every year unlike an employer sponsored flexible spending account. Although you’re responsible for paying everything up to your deductible, insurance companies are betting you’ll be more frugal with your money and compare services provided by different doctors and hospitals to find the best care for the most affordable price.

Contrary to popular belief, the vast majority of Individual/Family Health Insurance policies purchased on the open market (other than Blue Cross) DO INDEED cover pre-existing conditions such as Hypertension (elevated blood pressure)& Hyperlipidimia (elevated cholesterol) providing that these conditions are:

1.) Well controlled by medication
and
2.) Disclosed on the Health Insurance application.

Coverage may cost a bit more for that applicant due to a “co-morbidity” underwriting “load” that will be applied to their portion of the family premium. However, both conditions and the medications one uses to control them will indeed be covered from day one on the majority of Individual/Family Health Insurance policies.

Melanie was partially correct regarding Depression/Anxiety. The vast majority of carriers do not cover these conditions. However, this does not mean that a person with Depression/Anxiety will be declined for Individual/Family Health Insurance.

Instead, an “exclusion rider” will be placed on the policy pertaining to these conditions. Or (as many carrier are doing now) the policy will simply state in it’s wording that “there will be no coverage provided for Mental Nervous Disorders”. However, the policy will still provide coverage for the vast majority of other medical conditions that the applicant may suffer from in the future.

This again, is one of the primary reasons why no one should purchase Health Insurance without the guidance of a reputable and knowledgeable Broker.
Most especially since it costs NOTHING extra to do so.

I will be checking out Frugal Dad from now on. Thanks so much for such a helpful blog!