Matthew Berrafato

Have you heard of the terminology consumer driven health care? (CDHC)  But do you really know what it means? I am going to devote a handful of  B.I.T.E.s from the EHI One Bite Connection over the next couple of weeks to educate people on this important concept. CDHC is similar to health care and health care reform in one important characteristic, it consists of a number of separate issues with many moving parts. It can be overwhelming when the average person with no background in health insurance or health care tries to wrap their arms around all the different components of CDHC. The EHI One Bite Connection will take a close look at each individual component one bite at a time as always to simplify for better understanding. If you will take the time to explore and understand each B.I.T.E. I will share over the next couple of weeks, when you look at them all together at the end you will see why so many of the experts agree that CDHC is the key to successful health care reform.

The consumers of health care must have skin in the game in order to reduce and control the increasing cost of health care in America.

What do I mean when I say “skin in the game.” Let’s look at a couple of examples to illustrate the power of putting your skin in the game.

#1 — Have you ever played a card game like poker or blackjack with three or four other players using poker chips that had no real dollar value? Do you remember how you would bet freely and take risky chances? How does your betting change when you start using your own money in place of plastic poker chips with no value? That is the effect of putting your skin in the game.

#2 — Cars: What if you gave your teenage son or daughter a 2007 Toyota Corolla and paid for their car insurance and paid for all their gas? How would they take care of this car versus if they bought the same car with their own money and paid for their own insurance and their own gas? How well they take care of that car will be in direct proportion to how much skin they have in the game.

#3 — Health Insurance: Scenario #1 — a person pays only $25 per month for their health insurance premium. They have a $10 doctor office co-pay feature, there is no deductible ($0), and 100% coinsurance with zero out-of-pocket cost.

Scenario #2 — the same person pays $100 per month for their health insurance premium. There is no doctor office co-pay feature, there is a $1000 deductible with 80/20% coinsurance and an out-of-pocket maximum of $3000. Once the person has paid out of their pocket $3000 the insurance company covers 100%.

Under which scenario will the person use more health care whether they need it or not? When there is skin in the game, the consumer will behave differently about how they spend their health care dollars because it is their money. Without skin in the game there is no incentive to be a wise and prudent shopper.

Without skin in the game by every consumer (including politicians and all government employees) there is no incentive to ask the question “How Much Does This Cost?” Without everyone asking this question of the system costs will continue to rise out of control.

Matthew Berrafato
Elephant Hunter

From the very beginning of the presidential campaign starting with the primary elections, we have been hearing about “the uninsured” of America. These two words have been used by both parties more than tax and spend or conservative and liberal. But we have yet to hear any discussion about who they are. What people are being included in this terminology “the uninsured”? During this entire debate on healthcare reform no one from the current administration has broken it down by the actual numbers.

Let’s take a look at the statistics that many people have never heard in regard to the uninsured. My point in sharing this is once again to arm everyone so you can effectively debate the healthcare reform issues at hand. Whenever we look at and study the statistics I am about to share, the more we are reminded of a phrase “don’t throw out the baby with the bathwater.” In other words, do not scrap and throw away the entire private health insurance market that is currently working for between 85 and 90% of the entire American population. These figures are from the U.S. Census Bureau as well as the BCBSA Analysis and Congressional Budget Office. The most recent statistics available from the U.S. Census Bureau were from 2002. The total uninsured population in the US was 41,207,000 which at the time represented 14.6% of the total population. But here’s what we have not heard from any of the media since the presidential campaigns began. Of the 41,207,000 uninsured, 14,059,000 were eligible for government programs and never enrolled, another 13,059,000 uninsured earned more than $50,000 of annual income and chose not to purchase any health insurance even though they could have. Another 5,707,000 people were considered short-term uninsured which meant they were uninsured for less than two years, between jobs, recent college graduates or seasonal workers. This leaves 8,213,000 long-term uninsured individuals representing 2.91% of the total population. I don’t have a good answer as to why we have never heard the statistics before.

I encourage you to check out the link I have listed below for more detailed information about the uninsured in America, it is a resource provided by the Foundation for Health Coverage Education.      Coverage for all.org

The Congressional Budget Office (CBO) recently scored the proposed public plan run by the government at over $1.6 trillion and there is even more spending in the bill that the CBO hasn’t even scored yet. The net decrease in uninsured after spending $1.6 trillion is only 16 million still leaving 30 million people uninsured!

We should be working on a solution to cover the 2.9% of our overall population that represents the actual long-term uninsured.

A public plan run by the government as a solution to cover the entire 47 million uninsured population is a formula that will destroy the private health insurance industry in just two short years says The Lewin Group. That is what I call “throwing out the baby with the bathwater”.

Matthew Berrafato
Elephant Hunter

Can you see it in your mind’s eye? An 800 number that promises to have all your answers about the brand-new government health insurance plan. The hair on the back of my neck stands up on end when I think about what is being proposed without any insurance agents or brokers, only a magical 800-number.

When is the last time you had to stand in line at the DMV to have your drivers license renewed? What was your experience like? How about the last time you waited in line at the post office? What kind of service did you receive? How quickly were you served? How friendly were those people who waited on you?

The Public Plan run by the government that is being proposed has many consequences associated with it and I would like to continue using the elephant hunting philosophy to address each of them one at a time. As I mentioned in one of my earlier bites, the almost certain outcome of a public plan offering will result in the elimination of all competition from the private health insurance market. When competition is nonexistent there is no incentive to offer high quality service. I have been a licensed insurance agent for over 28 years. If I do not go out of my way to offer friendly, competent and fast service to my clients they can simply go down the street to another insurance agent who would be more than glad to serve them. This is the beauty of our free enterprise system and what competition automatically instills into the equation.

I came across a video that I encourage you to look at that will give you a glimpse at coming attractions you can expect from a public plan run by the government. Although it is funny, pay close attention to everything that goes on in this little parody titled “Universal Car Care“.

Matthew Berrafato
Elephant Hunter

The government can administer health care more efficiently and more cost effectively than the private sector.

Before anyone buys into this statement that is being made by the Obama administration, look at the following statistics from the Centers for Medicare and Medicaid Services, Table 4, 2006. Healthcare administrative cost as a percentage of healthcare income:

Medicare = 3% (administered by private corporations)

Private Insurance = 9.2% (administered by private corporations)

Federal Programs = 17.7% (administered by government agencies)

State Programs = 19% (administered by government agencies)

The reason that Medicare and private insurance administrative costs are so low is that the free market forces these private corporations to keep expenses low and service quality high, as opposed to the federal and state government monopolies who operate without any private competition which produce administrative costs that are more than double.

Is there anyone else out there that would like to see private companies compete with the United States Post Office? What do you suppose would be the resulting outcome? Lower postage rates? Faster and more friendly service?

 

Competition must be present in order for free enterprise to work and deliver the highest quality healthcare for the most competitive costs! A public plan run by the government will only eliminate competition, we the American people have to fight to keep the competition alive or the free enterprise system will crumble all around us.

 

Matthew T. Berrafato
Elephant Hunter

 

 

How big is $1 trillion? Does anyone really know?
Unless you are an actuary or at the very least a mathematics major most likely you have no idea just like me of the magnitude of this number. Ever since the start of the presidential campaign over two years ago we have been hearing three words thrown around like they were quarters. Million, billion and trillion. When healthcare reform is being discussed, what is really at stake?
Why is it time for someone to sound the alarm? Because the stakes are high and they are greater now than they have ever been in the history of our country. What has happened since the new administration has taken over is that we have been numbed by the numbers. Throughout all of the media, television, newspapers, magazine articles and the Internet, we have heard millions, billions and trillions of dollars being thrown around. It is very hard for anyone to get their mind around the financial concept of how big these numbers really are. Here’s an example that will give you some perspective on what we’re talking about. Let’s look at the measurement of time which is easier for us to comprehend. How big is a million? Let’s  rephrase the question: how much time is 1 million seconds?

1 million seconds is approximately 11 1/2 days.
How much time is 1 billion seconds?

1 billion seconds is approximately 32 years!
How much time is 1 trillion seconds?

1 trillion seconds is approximately 32,000 years!!!
The healthcare industry in America has been measured at approximately $2.4 trillion. Do we really want Uncle Sam taking over 16% of our gross domestic product? This is what is at stake. The point of  B.I.T.E. #4 is to give you some perspective. When the numbers are this big we won’t have a second chance to get health care reform done right.

Matthew T. Berrafato
Elephant Hunter

One thing I can guarantee about health care reform is this: anything that messes with Americans and their relationships with their personal doctors is not acceptable and non-negotiable. When anyone messes with this American sacred cow it strikes a raw nerve with its people.
 If this is your first time visiting “The EHI One Bite Connection” I want to refer you to B.I.T.E. #2 on this blog to fully understand what I’m going to share with you here in B.I.T.E. #3.
There are many consequences that will result if a public plan run by the government is introduced. As I said in B.I.T.E. #2 the experts predict within two years the private health insurance market will not exist. When this outcome occurs I have two questions for you:

 — How important is your relationship with your personal physician?

 — Are you willing to give up that relationship?

The single-payer healthcare system that will most likely evolve will be just like the one in Canada. This would be like having one giant HMO. Just ask your present doctor if they are not currently part of an HMO, why aren’t they? They will tell you that they could not be profitable enough based on the low level of reimbursement paid by the HMO. Under a public plan there are a number of variables that will affect your relationship with your doctor:

1 — If your doctor does not agree and accept the public plan’s low reimbursements, you cannot use that doctor. (Loss of freedom #1)

2 — In Canada it is against the law to pay a doctor under the table in cash for any services, no matter what your circumstances. The government dictates the medical necessity of services, not your doctor. (Loss of freedom #2)

3 — A public plan will drive away the best quality doctors because they will elect to practice medicine in countries outside of the US. If you want to use these top doctors you will have to pay with cash and travel outside of the United States to access their services. (Loss of freedom #3)

 America used to be synonymous with freedom. Under our current healthcare system 85% of Americans have the freedom to choose which doctor they want to see and when they want to see that doctor. They can also choose to shop around for a better doctor or one that costs less if they choose to do so.

 Introducing a public plan will force the 85% currently covered to jeopardize this freedom of choice. Health care reform needs to bring a solution that offers similar freedom of choice to the 15% that currently don’t have access to that freedom. Otherwise we will be “throwing the baby out with the bathwater”.

Don’t just take my word for it, I challenge anyone reading this to ask your personal doctor, what would happen to your patient-to-physician relationship if this public plan becomes a reality?

Matthew T. Berrafato

Elephant Hunter

My goal in writing this is to encourage everyone regardless of what side of the political fence you’re sitting to debate the issues that are being introduced under the broad category of health care reform. I will be using the core principle of elephant hunting by only introducing one bite of information each day on this topic of health care reform. In doing this I believe it is possible to keep from getting overwhelmed on this extremely complex topic. My intent is to focus on only one issue each day giving readers the facts and information to effectively debate the issue.

Don’t be fooled!

The new administration in Washington will be attempting to introduce as early as July 2009 a “public plan option” that would supposedly be allowed to compete with the private health insurance marketplace. This public option would be financed by you and me and businesses through taxes and would be run by our federal government and would be open to every American just like Medicare. In my opinion this is the most important debate to be discussed when looking at health care reform. It is not only my opinion but that of the independent consulting firm Lewin Group that if this public option is adopted, within as little as two years, the private health insurance industry would no longer exist. I strongly encourage you not to take my word for it but to check out the website for the Lewin group, www.lewin.com and read their white paper titled “The Cost and Coverage Impacts Of a Public Plan: Alternative Design Options”. This particular paper gives you specific details of why they have come to this conclusion. They point out that of the 170 million Americans currently covered under the private health insurance industry, 119 million would move from the private health insurance side over to this public plan. All you need to do is look back to 1965 when Medicare was introduced, it was created as a plan to compete against private insurers that offer coverage to seniors. Within only a few years, the only option left was the current federal Medicare plan that exists today that has zero competition. By the way, the federal government issued a report a few weeks ago that indicated Medicare will be out of money in only eight years. The current system of Medicare covers 40 million people approximately, my question is if we are going to add another 119 million people to a government run health insurance plan, who is going to pay for it?

Don’t be fooled by this public plan offering!

I am asking each one of you to debate the issues with your Congressman and Senators from Washington. Share this information with other people within your own centers of influence as well encouraging them to join the debate.

Matthew T. Berrafato
Elephant Hunter