The Administration's aggressive stance on health care reform has been a worry to the health insurance industry, which fears being marginalized (read: put out of business) by a possible government-run single-payer system.

The industry, not one to stand idly by as billions in revenue become endangered, has been working behind the scenes to ensure that they too, will have a voice in the new, reformed health care system.

To that effect, insurers have made three separate proposals for cooperation with the government, the latest of which represents a huge departure from the way in which the industry has historically operated.

Namely, a number of large insurers, among them Wellpoint, UnitedHealth, as well as the BlueCross BlueShield group of companies, have sent a letter to the offices of Senators Max Baucus (D-MT) and Edward Kennedy (D-MA), proposing the scrapping of the current system under which sick patients, or people with preexisting conditions, are charged much higher rates than healthy individuals.

This is potentially a huge development, because individuals with preexisting conditions historically make up a large portion of the percentage of Americans with no health insurance.

The quid pro quo that the industry is asking for, for now, is for the government to pledge not to set-up yet another publicly-run entity to compete with the insurers in seeking to cover those who currently lack coverage.

“We have outlined a path to achieving a health-care system where everyone has access to affordable coverage,” Zirkelbach said in an interview with Bloomberg. “This will accomplish the same goal that a government-run plan is designed to achieve.”

Well, maybe.

What the insurers want

As mentioned above, the insurance companies are looking for a pledge from the government to not create a public plan that would compete with the insurers themselves.

The industry is also seeking a government requirement that all individuals and families be required to purchase health insurance of some kind, whether directly from the private providers, or through some sort of public subsidy program for those who cannot afford to buy coverage on the open market.

In addition, insurers will continue to set rates based on age, geographical location, and family size, just as they do now.

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This week marks the seventh annual Cover the Uninsured Week, a project of the Robert Wood Johnson Foundation, which aims to shine a spotlight on the nearly 50 million Americans who live without government or private health insurance of any kind.

This week, health care industry members, local and national legislators, as well as representatives from organizations as diverse as the U.S. Chamber of Commerce, the AFL-CIO, the AARP, and many others, will hold summits and meetings around the country to discuss issues related to the uninsured, as well as to put forth proposals for solutions to our developing health care crisis.

Of course, this year the Week is all the more poignant given the Obama administration's stated goal of reforming health care and the health insurance industry. An important reform is already in place, with the signing earlier this year of the S-CHIP legislation, which provided insurance to millions of previously uninsured children.

The focus of the organizers is now shifting towards insuring whole families, not just children, as well as young adults who may be foregoing insurance coverage because of financial reasons.

During the 2008 Cover the Uninsured Week, organizers put together over 800 events that offered insurance enrollment to eligible families. The stated goal of this year's Week is to provide even more opportunities for individuals to learn more about insurance options available to them, and to make enrollment simple and inexpensive for those who qualify.

To learn more about Cover the Uninsured Week, and to find out about events taking place in your area, visit

http://www.covertheuninsured.org

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Today, the National Small Business Association launched a website touting it's pro-reform efforts and platform.

This, of course, makes sense, as health care costs have been strangling small businesses in the U.S. for years. Many companies have simply decided to not offer benefits of any kind, while others, straining under the weight of legacy benefits, have shut down rather than continue to pay insurmountable premium bills.

One interesting statement from the site:

Reforming how health care is delivered in the U.S. is critical to the success of small business—something NSBA has been saying for years. In fact, in 2004, and previously in 1993, NSBA poured enormous resources into developing a proposal for broad health care reform. Meeting with small-business owners, benefit managers, insurance providers, Congressional staff, think-tank experts and leaders of small-business organizations throughout the country for more than a year, NSBA arrived at a proposal that will reduce health care costs while improving quality, bring about a fair sharing of health care costs, and focus on the empowerment and responsibility of individual health care consumers.

Basically, the NSBA is saying that they've been behind reform all along. Maybe.

The problem is that politically, the NSBA has historically supported candidates for office who've had an anti-reform agenda once elected. Let's see if this new mantra at the NSBA will lead them to truly support pro-reform efforts, or if this website/initiative is just a smoke-screen.

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Earlier this week, reports in the Atlanta Journal Constitution and CNN, described an Administration proposal to force veterans to pay for service-related injury care using third-party funding (health insurance, etc.), instead of the VA system.

Wha????

Apparently, the Obama Administration believes that it can save $540 billion by cutting costs at the Veterans Administration, and passing those costs on to third-party care providers.

As ridiculous as this plan sounds (even Jon Stewart made fun of the plan on his show Tuesday night), apparently the executive intends to go forward with exploring the possibility of implementing it, according to Gen. Erik Shinseki, Secretary of the VA.

Here are some problems I see right off the bat:

1. This idea is outrageous. As many veterans organizations have put it, such a plan would violate the "sacred trust" between government and soldier, which assures veterans (as well current active duty personnel and prospective recruits) that any injury they incur while serving will be cared for at 100% government expense.

2. This plan is unworkable. So far, the insurance industry's trade association has released a statement saying only that they take no position on the matter; you better believe that if the idea ever makes it past the embryonic stages, industry lobbyists will work overtime in the halls of Congress to quash it there.

3. Having third-parties pay for service care is likely against the rules of 99.9% of insurance policies. An insurance company could simply treat any injury that produces a claim as "work-related", which would make it a workers' comp issue.

4. The plan is "dead on arrival". This, according to Sen. Patty Murray, D-WA. Of course, anyone in Congress who ever puts the stamp of approval on any such plan, can kiss his or her seat good-bye, as outraged voters would quickly remove such a person from office.

What's REALLY Going On?

Does President Obama really want to hurt military families by forcing them to find a way to pay for care of combat and other service-related injuries?

Of course not!

This fake "proposal", is a ruse, a ploy to get Congressional leaders on board for an 11% increase in VA funding, which the Administration is seeking. While the Bush Administration constantly sought to cut the budget of VA hospitals and rehab centers (ironic, considering that the same Administration created quite a few injured and disabled veterans), President Obama has vowed to dramatically increase the level of care at these institutions.

But President Obama needs Congressional approval for budget increases in the Veteran Administration, and this red-herring plan is a way of showing representatives and senators how dire the situation is, and that they need to act to avert further cuts in care, and possible funding shortfalls.

It's somewhat surprising to see veterans' organizations getting all up-in-arms about the matter, but one could suppose that they must recognize at least the possibility that the plan is a real one, and react accordingly to defend their constituency.

More instructive is the reaction of the insurance industry. If they really believed that they might be on the hook for over half a billion dollars in future annual care expenses, they would be working overtime to stop the plan in its tracks. But they are not, thus telling everyone that they do not deem it to be a realistic proposal.

As with every other question in Washington, follow the money.


Bonus: watch Jon Stewart make fun of this "idea":

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Lost in the AIG bonus kerfuffle this week, is the developing story over the about-face that the Obama Administration appears to be making on the taxation of health benefits to employees.

According to a story in this past Sunday's NY Times, while President Obama will not openly push for such a change in policy, he "will not object if Congress takes up the issue".

A Little History

Health benefits, as offered to employees of companies that offer them, (those companies left that still offer them, that is), are not taxed as part of ordinary income due to a quirk in the law that goes back all the way to WWII.

During wartime, due to wage freezes, companies that wanted to attract or retain good workers could not offer salary raises or bonuses, so instead they begin to offer excellent benefit packages, inadvertently creating today's employer-sponsored health care system. Because industry had many friends in Congress, these benefits were not taxed at the time, and have remained untaxed for over sixty years, resulting in huge tax savings to employees, totaling over 246 billion dollars this past year.

Sen. Max Baucus

The Problem for Obama

The problem for President Obama, and the reason why he must tread lightly on this issue, is twofold, and in both instances, political: first off, he made a specific promise during the presidential campaign not to tax benefits, calling Sen. McCain's plan to do so a "multi-trillion dollar tax increase"; as George Bush Sr. famously found out, voters tend to be rather unforgiving when it comes to campaign promises concerning tax increases.

Secondly, one of President Obama's most loyal (and most powerful) constituencies, the trade unions, are vehemently opposed to the taxing of benefits, because their rank-and-file members receive enormous benefit in the form of huge tax-savings under the current system. Angering the Teamsters and the other unions is probably not something that the Administration wants to do at this time, so any proposal that advocates the taxation of benefits will also have to come with assurances that the added cost to employees will come with substantial savings and or service improvements in other areas, such as lower overall health care costs, and improved access for all.

The Fundamental Problem

Neither of the above problems, however, appears to be insurmountable for Mr. Obama, who appears to be able to wily circumvent all political obstacles that special interests throw at him.

No, I believe that the problem with the taxation of health benefits is a more fundamental one, one that gets overlooked by many who focus strictly on the pros and cons of the numbers in play. Namely, I believe that the problem lies with messing with what works, in other words, making huge changes to the health benefits of those who are happy with their insurance, and do not want anything to upset the balance of care and cost that they currently enjoy.

While this may appear to be an egotistical position to take, it is nonetheless what millions of Americans firmly believe in, and one that can ultimately sink any well-meaning program of reform.

In fact, any health care reform plan, once drafted, absolutely must ensure that any American who is currently enjoying his or her insurance coverage, will be able to continue with the same standard of care, without substantial changes in cost and service levels. Upsetting this balance, which taxing employee health benefits might very well do, could doom any hopes for meaningful reform, as the insurance industry, and the wider health care industry as a whole, is sure to use tactics that will scare voters into not accepting such measures.

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As expected, Kansas Governor Kathleen Sebelius has formally accepted the nomination to become the next Secretary of Health and Human Services. The nomination will now proceed to the Senate, where questioning is likely to arise concerning Ms. Sebelius' stance on women's reproductive rights, specifically abortion.

Governor Sebelius is pro-choice, something that right-to-life organizations are likely to try and use against her, in a (likely doomed) attempt to block the nomination.

Read more in-depth coverage from the New York Times.

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