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Rebecca S. Busch
Reform & Employer Healthcare Benefit Plans
December 8, 2009

Regardless of what shape healthcare reform takes, the "system” will still be a victim to immensely costly fraud by providers, sponsors (employers), patients, organized crime and the evolving ethically challenged schemes that fall into white collar crime activity. The main victims of healthcare fraud are sponsors with ongoing increases in premiums that are passed down to their employees, insurers who have to pass this cost back to their sponsors, the government (Medicare/Medicaid) who has to pass this cost back to the tax payer, and any party who has to manage and work in this economy in hidden forms of tax payments.

Here is a snap shot of why a gun shot reform policy cannot be executed. Just way too much history- a few highlights:

▪ The Insurance Monitor, "the opportunities for fraud [in health insurance] upset all statistical calculations ... Health and sicknesses are vague terms open to endless construction. Death is clearly defined, but to say what shall constitute such loss of health as will justify insurance compensation is no easy task" (July 1919, vol 67 (7), p 38).

▪ Prior to 1920 the programs provided where Illness Benefits.

▪ 1920 - 1930 Compulsory insurance reform failed in US

▪ 1930 Birth of BCBS for illness benefit coverage out of a teachers union in Texas (simplified)

▪ 1940s growth of private insurance market - after the proliferation of money into the market

▪ "Insurance" when from community rate based mix pricing to risk based - which requires the elimination of high risk people

▪ World war wage freezes - resulting in additional compensation through enhance benefits. Starting the movement from illness coverage to Health coverage

▪ Medicare and Medicare came into play by 1960 too many unemployed poor elderly - no care have grown from illness coverage to health coverage. Two very different concepts.

▪ Fraud, fraud, fraud, abuse, and waste intermingled with legitimate services

▪ We have shifted risk from the provider to the payer to the employer now back to the employee. We have no one left to shift the costs to.

▪ The tax payer is saying wait a minute. As a tax payer i am an employer, i am an employee, i can only be taxed so many times...

Healthcare reform has been around since the early 1900's with at least 8 major initiatives that have never fully progressed. Just a series of bandages and we are hemorrhaging now. Recently, I have learned that payers, for those of us who are deep into the healthcare market place, have a new policy when an employer is late on paying their premiums. Payers are having their own issues with diminishing dollars; as a result some are implementing a new practice. If an employer is late in paying their health insurance premium bills to their insurance company - apparently the healthcare claims for the month in which the payment is paid late or not paid at all - is being denied. This is placing the patients who have employer coverage into a tail spin and the providers who are trying to stay afloat in a difficult position collecting from their patients. The employer is now dealing with employee complaints in particular if their premiums are being taking out in a timely basis. This is just the beginning of what happens when every market player is feeling the squeeze. It is a domino effect of consequences.

The amount of "risk” and the proliferation of fraud schemes to offset a sinking economy are only going to get worse. To truly make a dent in the plague of healthcare fraud and runway escalating costs this is what congress needs to do:

▪ All healthcare market players including government programs must use accrual accounting methods.

▪ Any healthcare transactions, the terms, the amount paid must be transparent, and the parties receiving monies be disclosed.

▪ Private payers cannot pay less then Medicare or Medicaid.

▪ Private payers cannot adopt Medicare program provisions without making all of their provision public.

▪ Health insurance should be sold and managed in the same context as property and casualty – which means geographic limitations, should not exist.

▪ Health plans should be defined in the following categories: "wellness coverage;” "illness coverage;” "Catastrophic coverage;” or a combination thereof.