The Lie Behind ACA Reinsurance-The Next Step Towards Single Payor

Ok, usually I will post an entire article and then put my comments in red alongside of the part of the column I wish to comment on.
Not so with today. Today, I am just going to post the column here and then explain my opposition to reinsurance and why I strongly believe it is the ultimate backdoor into single payor.
Here is the news piece in question.
http://khn.org/news/hhs-states-move-to-help-insurers-defray-costs-of-sickest-patients/
We are hearing from Washington that states are looking to the federal government for help in addressing their massive double digit ACA premium increases. At face value it is beyond laughable. Are people actually looking for solutions from the same people who purposely caused this problem to begin with? Here the federal government creates the plans that caused these problems and now the solution they have come up with is an extremely complicated method of mitigating risk called "reinsurance"?
Does anyone know what Reinsurance actually is? Reinsurance at face value is rather simple. Companies will take out a policy called a Reinsurance policy which is designed to help companies with risks that are too large or put the company in grave danger of folding should those claims ever get filed.
The company will apply for reinsurance like any other insurance product, the RE company will underwrite the risk and then issue a corresponding premium amount for them to accept the risk. It is how insurance is supposed to work and has worked for hundreds of years. The problem here is the logistics. How will the reinsurance product work? Will the feds reinsure at a dollar amount? Will they reinsure on a per policy level like other reinsurance carriers? How will the feds underwrite reinsurance policies? Will it be by state and will policies from the larger more populated states like NY and California pay more because of the elevated risk of exposure to a high dollar claim? These are all questions we must ask before we allow our government to start playing reinsurance company.
The federal government is not a reinsurance company and shouldn't even be a standard risk company. No one has explained how this will work. Ok, so the states are now able to go to the feds for a bailout should utilization start crushing plans. Reinsurance will only help adjudicate those high dollar claims. It will do nothing to help with premium amounts as they are advertising. Why is that, you ask? Well it is simple. This reinsurance policy will do nothing to address utilization. Yes, it may in the end through the feds eating the high dollar claims but it will do nothing to address the issues of utilization and the way it drives up premium costs. Those utilization costs will be there no matter who is adjudicating the claim which is why the reinsurance plan looks more like a scam. Where is the federal governments insurable interest here? I mean, why would the feds take on such enormous risk if there is no pay-off? Reinsurance carriers do it because the premiums are set after underwriting has determined the risk an acceptable one in which the risk exposure is minimized and the chance to profit is in their favor. The government's plan looks more like a kick in the teeth. No underwriting, no risk management....just pure risk. Taking on all that risk is what makes me think this is the next step towards single payor.
It makes sense that this is another and potentially the final step in the march to Single Payor. First the feds come up with the ACA to begin the federal compartmentalization of healthcare. It is now blowing up as they intended. Now the feds are coming up with this ridiculous reinsurance idea as a way to start actually paying claims. So now you have the federal government building and offering plans AND you will have the federal government paying claims, ironically the most expensive claims. The next logical step is for the feds to say that they are getting killed on reinsurance costs and the only way to control those costs is if they are the ones adjudicating those claims from the start as they can best negotiate fees and rates. Of course they will considering they built all of the fee and rate schedules. Now, at that point you have single payor. It probably won't be called that of course but the end result will be the same. Your healthcare will be offered, managed and adjudicated by the federal government. A rose by another name....
This is horrendously bad government policy and one I hope that never sees the light of day.

Another Well Made Case Against Single Payor

I found this one over the weekend and it intrigued me because it is a well written piece making the case against Single Payor Health Coverage. She did a fantastic job but the reason why I wanted to write this is because she left a few pieces out that I will add in. As usual my comments are in red.

Single Payer Is Fool's Gold For California

• SALLY C. PIPES
• 3/31/2017

While the latest Republican attempt to repeal and replace ObamaCare may have failed, Democrats in California and in D.C. are just getting started in their effort to eliminate the health law.

Yes, just as they intended to do 7 years ago.

Unfortunately, they're angling to replace ObamaCare with something even worse.

Yes, that's true but this was indeed all part of the plan. Set the free market up to "fail" so they can come in with a "fix" that will solve all of our "problems".

In California, State Senators Ricardo Lara and Toni Atkins introduced the details of the "The Healthy California Act," on March 30 which would create a "single-payer health care coverage program and a health care cost control system." And they're considering using the flexibility afforded by ObamaCare's "state innovation waivers" to enact this vision.

So many buzzwords, so much losing. Notice they take the word "insurance" out of it. They need to kill that word so that when they start hemorrhaging cash by the billions, they can't be held to task for ignoring Actuarial Science and Risk Management principles. It will be quite interesting to see how they attempt to control costs when they will cover everyone for everything at no cost. Utilization costs will drive them into bankruptcy inside of 18 months. 

As Sen. Lara put it, "now more than ever is the time to talk about universal health care."

The opposite is true. Since ObamaCare became law seven years ago, the case for single-payer has only grown less convincing.

Oh, I disagree. Now is INDEED the time to talk about Single Payor. Every time we ignore these people, they take our silence as assent and implement their agenda. We need to confront it every time it pops its ugly head up. They want to talk about Single Payor Universal Coverage, fine. We will show them what a failure it is.

Consider the two states that have already tried and failed to launch single-payer systems.

Vermont's attempt imploded in 2014 following news that it would cost $4.3 billion a year — nearly as much as the state's entire budget. Gov. Peter Shumlin concluded that the taxes and regulations required to fund the program — an 11.5% payroll tax on business and a tax of up to 9.5% on individuals — "might hurt our economy." No kidding.

Colorado voters had a chance to adopt a single-payer system with a ballot initiative last November. The reform, known as Amendment 69, would have imposed a 10% payroll tax, and would have nearly doubled the state's $27 billion budget.

It would have also eliminated most private coverage throughout Colorado. Eighty percent of voters rejected the proposal. Even the state's Democratic governor, John Hickenlooper, opposed the initiative.

Outrageous taxes are perhaps the least troubling consequence of single-payer care. Indeed, had residents of Colorado or Vermont gone through with their reforms, they would have soon faced long delays for substandard care.

The single-payer system I grew up under in Canada, also known as Medicare, condemns sick patients to delays that have grown ever-longer over the past few decades. Last year, Canadians waited an average of five months for medically necessary specialist treatments after receiving a referral from a general practitioner, according to the Fraser Institute, a Canadian think tank.

That's almost two weeks longer than the previous year's wait times from seeing a primary-care doctor to getting treated by a specialist — and more than twice the average wait-time in 1993.

Now while that may indeed be simply because of substandard care but the increased wait times seem to be more of a symptom of an increasing population using a system not designed to care for such an increasingly large number of patients. This is what happens when liberal immigration policy meets liberal healthcare initiatives.

Canadians seeking an MRI can expect to wait 11 weeks, while those in need of neurosurgery face an average wait of more than 11 months.

The evidence from the United Kingdom's single-payer system — the National Health Service — is even less encouraging. Unlike in Canada, the U.K. allows patients to purchase private coverage outside of the government-run system. But the majority of Brits who rely on NHS hospitals face what the British Red Cross recently described as a "humanitarian crisis."

Yes, I heard that myself while touring London last fall. I spoke to people in pubs around London, just striking up conversation and while everyone wanted to talk about Trump, most also took the opportunity to rail against National Health.

That's not an exaggeration. Chronic overcrowding forced 20 hospitals to issue "black alerts" earlier this year, meaning that they couldn't guarantee life-saving emergency care.  Last year, more than 2 million Britons waited more than four hours for emergency-room care.

Here in the United States, our own version of a single-payer system — the Veterans Health Administration — offers another cautionary tale.

Exactly. You want to see the future of Single Payor in America, look to the VA. It's a mess.

Predictably, patients stuck in the system face chronic shortages of and delays in care. Just last year, a federal report found that 215 veterans died while awaiting potentially life-saving care at a VA facility in Phoenix.

This discovery came two years after a scandal in which VA employees were caught covering up evidence of excessive wait times at the same Phoenix hospital. After a national outcry — and a high-profile federal reform effort — veterans still must withstand potentially fatal delays when seeking care.

What makes this example even worse is the limited number of Americans using VA. Less than 2% of Americans will be associated with our Armed Forces. The fact is, we can't even treat 2% of our population without screwing it up. Imagine increasing that number fifty fold? The failure would be staggering.

Nevertheless, California lawmakers like Lara and Atkins remain captivated by the idea of a government-run health care. Sen. Bernie Sanders, I-Vt., is also under the spell of single-payer, and has promised to introduce national "Medicare for All" legislation soon.

And here exactly is why I chose this piece. This is where Ms. Pipes hits the target but misses the bullseye. This isn't about compassion or coverage or Universal Healthcare. Not at all. This is about money and who controls it, plain and simple. When the government can control every premium dollar, every deductible dollar and every coinsurance dollar and then control how it is distributed and to whom, well that is real power. 

The ACA has a Medical Loss Ratio (MLR) of 80%. That means for every $1 taken in premium 80 cents must go out in claims. That sounds fine until you realize that health reform states like NJ had an 85% MLR which means the government is looking to keep an extra 5 cents of every dollar collected. In fact, the government doesn't need an MLR because the MLR was designed to prevent insurance companies from hoarding claims money and "increasing profits". Government should never run a profit in anything, it should be a revenue neutral operation. Budget, allocate, spend and put anything extra back in the hands of the people. Single Payor ensures that the power will now reside in big government. Big Government will collect your premiums, keep your health records, decide what health plans you will have and will decide how and if your claims are paid. Orwell's 1984 was a novel not a field manual.

But as Canada's Medicare system, the NHS, and the VA make clear, single-payer is the only approach to health reform that has performed worse than ObamaCare these last seven years.

ObamaCare was supposed to underperform, it was designed to do as such. Beware the hucksters who sell Single Payor as the cure for the problem they caused.