Texas Insurance Shoppers

Doctors and health insurance carriers in Texas are not too pleased with each other at the moment. Doctors are disgruntled about denied claims and lower reimbursements, and health insurers say that docs are over-treating patients and driving up the cost of health care. Doctors point out that health insurance carriers are making sweet profits, while doctors are seeing more rejected claims, spending more time trying to get paid, and making less money than they did ten years ago. But health insurance carriers are wary of ever-increasing prices on claims for high-tech treatments like MRIs, and are accusing doctors of price fixing. A group of 600 doctors in Tarrant County were recently accused by health insurers – and the Federal Trade Commission – of banding together to set minimum prices for treatments. The doctors said they were just trying to get fair reimbursements, but a judge has sided with the FTC and forbidden the doctors’ group from asking members what minimum prices they will accept.

This battle has been going on for ages, and it’s not likely to end any time soon. With rapidly rising health care costs, everyone is searching for a cause. Medical providers and health insurance carriers like to point fingers at each other, but the underlying causes of health care inflation are probably a combination of factors that involve both groups. We do overuse our health care system – alot more health care than most other countries. Doctors could probably provide fewer treatments without seeing a decline in patient health. But at the same time, health insurance carrier administration costs – everything that is not spent on medical claims – increased 118% between 1996 and 2006. Doctors feel shortchanged in the deal, as they are seeing more claims denied and lower reimbursements, while health insurance carriers are spending more money than ever on non-claims expenses.

The ultimate losers in the whole battle are Texas residents, who have to work with both doctors and insurers in order to have access to health care. A system with more transparency, better communication, and less red tape would benefit patients and lead to less bickering in the health care system and ultimately more focus on patient care, which is what the whole thing is supposed to be about in the first place.

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Texas Health and Human Services Executive Commissioner Albert Hawkins has announced that a plan to provide health care to thousands of currently uninsured, low-income Texans will not be implemented by this fall, as originally intended.  It now looks like it will take another two or three years to get the program in place, and the design of the plan has gone back to the drawing board. 

There are 2.1 million low-income adults in Texas who earn too much to qualify for Medicaid, but less than 200% of the federal poverty level.  The proposed program was supposed to provide a measure of care for these people, and to start shifting the focus of care from emergency treatment to preventive care.  Unfortunately, uninsured residents are a lot less likely to seek preventive care and treatment for minor ailments, and tend to end up in crowded emergency rooms only when a situation has become dire.

The plan that was to be implemented later this year has been criticized for not providing enough consumer choice in plan design, and also for providing too little care for the critically ill.  It would have allowed five days of inpatient hospital care per year, which would be plenty for most people but not even close to enough for the seriously ill.  The Texas Hospital Association has been critical of such gaps in coverage, pointing out that for catastrophic illnesses, five days of hospital coverage will barely make a dent, and hospitals will be stuck with the expenses.  But who’s paying for it now?  Hospitals and emergency rooms all across Texas are suffering under the weight of a population in which nearly 28% are uninsured.  Obviously there were some flaws in the proposed health care plan, but wouldn’t it have been better than nothing at all?

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SMDC health systems in MN has decided to walk the walk when it comes to commitment to lowering drug costs and avoiding a conflict of interests between patient needs and pharmaceutical sales tactics. The hospital system has rounded up all the promotional pharmaceutical gizmos and gadgets – and 18,781 of them – and will be sending them to Cameroon in West Africa. The loot includes clipboards, pens, notepads, coffee mugs, etc – all decked out with drug company names and logos. There isn’t expected to be a conflict of interests at the medical centers in Cameroon where the stuff is headed, since the advertised drugs aren’t available there.

Research has shown that even cheap gifts like pens and paper have an influence on doctors prescribing habits. It makes sense that if a doctor sees a particular drug name every time she looks at her desk, she will be more likely to think of that drug when it comes time to write a prescription.

I applaud SMDC’s clean sweep approach. It’s high time that pharmaceutical companies stopped being able to worm their way into doctor’s offices with gifts and lunches and trinkets. Medical treatment should be a collaboration between the patient and the doctor. Health insurance companies and pharmaceutical companies have way too much of an influence on treatment protocol, and the focus needs to shift back to looking at what is in the patient’s best interest. If a generic drug will do the job just as well as a name brand, it’s to the patient’s financial advantage to prescribe the generic. And pharmaceutical reps who tell doctors otherwise really have no place in the offices.

I hope that SMDC’s idea catches on. It would be nice to see hospitals and doctors across Texas and the rest of the country turning away from pharmaceutical company gifts and freebies, and focusing instead on the peer-reviewed research about new drugs. That seems like the best way to provide quality patient care while minimizing conflicts of interest.

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Texas Attorney General, Greg Abbott, has come up with a plan to provide health insurance to uninsured children in the Texas child support system.  Texas state and federal law already require that non-custodial parents ensure that their children have health insurance, but that doesn’t mean that all of them do.  The state estimates that 200,000 children in the child support system are currently without health insurance, and Abbot’s plan would attempt to rectify the situation.

Under the new proposal, a private Texas health insurance carrier would contract with the state to provide health insurance for the children.  Courts could order parents to buy the health insurance for their children, and income levels would be taken into consideration to determine a parent’s ability to pay for the policy.  Since the system would be set up through the state, courts would also be able to payroll deduct a child’s health insurance premiums from a parent’s paycheck.

Any program that aims to reduce the number of Texans without health insurance (currently 5.5 million) is a good start.  But I have to wonder why the state wants to set this program up through a private health insurance carrier?  Texas, like every state in the US, already has a government-run health insurance system – Medicaid – in place for the poorest of its citizens.  Why not just expand that program to cover the uninsured children that Abbott’s proposal targets?  The state could still payroll deduct premiums and court order parents to enroll their children.  By eliminating the middle man (a private health insurance company) it seems that the program could be more cost effective.  No private health insurance company is going to submit a bid unless they will be able to make a profit from the contract.  If Texas were to just add more people to the current state health insurance program, more of the funds could be used to provide health care services for the currently uninsured children, instead of creating dividends for the shareholders of whatever private health insurance carrier the state picks to run the proposed program.

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The Texas 80th Regular Legislative Session has now concluded. As a result of all the bills passed, only two will impact individual health insurance products. A brief description of these bills, along with actions taken by health insurance companies doing business in Texas, is provided below.

HB 1919 – This bill expands the existing mandated benefit for treatment of Acquired Brain Injury (ABI) to include outpatient day treatment services or other equivalent post-acute care treatment services.

With most companies, like Blue Cross Blue Shield of Texas, outpatient day treatment service and other post-acute care treatment services had been covered under the existing ABI benefit provisions. In order to completely comply with the new law, amendments have been developed to expand and include these services into the definition of ABI.

HB 2548 – Currently, members receive pre-existing credit for prior group, government or church coverage when purchasing an individual health policy. This bill provides the same credit for an individual policy and now allows the member to transfer credit from one individual policy to another.

Companies that haven’t made this change will be sending out amendments to insureds.  Some companies, like Blue Cross Blue Shield of Texas, made this administrative change already.  Blue Cross Blue Shield of Texas made the change effective July 1, 2007, prior to the passing of this bill and amendments have been developed to align the policy language to the new law/procedural change already implemented.

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Texas has a long history of hard working people digging in their heels and getting by.  It’s not a state that tends to offer government handouts or entitlements on a whim.  The lack of state programs to provide health care for poor Texans is reflected in the state of the health care system:  Texas ranks 49th out of 50 states and the District of Columbia in terms of the overall performance of its health care system, and is last in the nation in the percentage of its residents covered by health insurance.

There are plenty of barriers that Texas has to overcome to improve the health care numbers.  Between 2000 and 2006, Texas had the fastest growing illegal immigrant population of any state in the US.  And a full third of the state’s residents under age 65 fall into the poor and low income categories, with only the poorest of those qualifying for Medicaid.  And then there’s always ignorance on the part of the public.  Jason Robertson’s article includes a mention of Mesquite resident Gloria Newton, who works 72 hours a week at two jobs, one of which offers health insurance for $35/week.  Ms. Newton says that she could afford the premiums, but she considers the health insurance to be of little value because of its $1500 deductible.  So she chooses to go without.  In the absence of a universal health insurance system, people like Ms. Newton will continue to be uninsured unless they get a serious wake-up call in the form of a major illness or injury to themselves or a loved one.

The grassroots group Health Care For All Texas is trying to implement a single payer system to provide health insurance for all Texans as one group, administered by a nonprofit organization.  The group detailed their plan at a Texas legislative meeting in 2006, but so far no legislation has been proposed.  Indeed, providing health insurance in Texas for everyone will be an uphill battle.  Mass, which implemented a universal health insurance system in 2007, was starting with 94% of their residents already covered by employer sponsored health insurance.  In Texas, that number is only 74%.  But just because something is challenging doesn’t mean that it can’t or shouldn’t be done.  Texas must face the current health insurance challenge head-on in order to solve a situation that is becoming more and more a problem for all residents, not just the uninsured.  The uninsured are still receiving health care, often at over-crowded emergency rooms across the state.  And the cost of their care is passed on to Texas health insurance carriers and insured patients in the form of higher premiums and copays. 

It will be interesting to see what health care changes come about in the next few years on a national level, and how those changes effect the Texas health insurance system.  Hopefully the number of uninsured residents will start to shrink, and emergency rooms will be able to provide services for true emergencies, rather then functioning as primary care facilities for uninsured patients.

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Health care reform and finding a way to insure the uninsured has become a major issue over the last year, and promises to remain in the spotlight for at least the rest of 2008, as every leading presidential candidate has made health care reform at least a part of his or her platform – and for some, it is the main pillar of the platform.  No state has got the problem completely figured out.  But most are at least making headway, allebit slow, tedious headway.  In Texas, there is more work to be done than in any other state.  Nationwide, about 15% of Americans are uninsured.  In Texas, that figure jumps to 24% – the highest in the US.  And in Harris county, where Houston is located, 30% of the residents have no health insurance. 

There are many reasons for the health insurance crisis in Texas.  Small businesses in Texas are less likely to offer health insurance to employees than their counterparts in other states.  Income limits to qualify for Medicaid are much lower in Texas than in other states ($4822/year for a family of three, compared with $10,000 in FL, $18,000 in CA, and $25,000 in NY), leaving plenty of families who earn very little money unable to qualify for state funded health care and equally unable to pay for private health insurance.  $4822/year is $402/month.  Once you pay for housing, food, and gas, you’ve probably already gone into the red.  Health insurance premiums just don’t physically fit into the equation.  Another problem adding to the uninsured mess is that Texas forfeited $900 million in federal aid for the Children’s Health Insurance Program over the last six years because it wouldn’t or couldn’t come up with 28 cents for each 72 cents that the federal government was offering.  The result?  Far more uninsured children per capita in Texas than in other states.  Texas has also had a population growth rate twice the national average since 2000, which has placed even more of a strain on an already ailing health care system.

Because of the sheer volume of uninsured people in Texas, emergency rooms are past the point of overcrowding.  Patients – both insured and uninsured – must often wait hours to be seen, since the uninsured often use emergency rooms as primary care facilities.  And the cost of treating those uninsured patients is passed on to the insured population.  According to a December editorial in the Waco Tribune-Herald, the average family’s health insurance premium is $1551 higher than it would be if there were not an uninsured population whose treatment becomes bad debt for hospitals.  Here’s the scenario – uninsured patients are treated in emergency rooms all across Texas (and indeed, all across the US, but more so in Texas) and the hospital doesn’t receive compensation.  So in order to keep from losing money, the hospital increases fees for everyone – the majority of whom are still paying, insured patients.  And when insurance companies have to pay more for services, they charge more in premiums.  So we’re all paying for the fact that Texas has such a large population of uninsured residents.

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CRAWFORD, Texas – President Bush signed a temporary extension of SCHIP into law until March 31, 2009 today.  Democrats wanted to bring it up for renewal sooner so it would be in discussion just before the presidential elections in 2008, but senate republicans forced a longer extension so the next president and congress will be in charge of dealing with any changes to SCHIP.

The legislation also provides a 0.5 percent increase for Medicare doctors for six months, delaying a scheduled 10 percent pay cut.

Bush twice vetoed more ambitious earlier bills that would have expanded the children’s health program to cover about 10 million children in low and moderate income families, despite bipartisan support.

Bush and Democrats have been locked in a fight over budget and spending and the president said the previous bills were too costly and would push more children into government-run health care instead of private health insurance plans.

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In an attempt to reduce the reliance on expensive, hospital-based care to make primary and preventive care affordable for the working poor, Texas is creating a new state-administered “Health Opportunity Pool.”  The plan submitted to the federal government is supposed to increase the number of people in Texas with health coverage (lower the uninsured) but benefits would be less than what Medicaid currently offers.

The most interesting part of the whole plan is who is offering the coverage… private Texas health insurance companies.  As a result, safety-net hospitals like Parkland Memorial Hospital in Dallas are wary of the effect of shifting money into the pockets of health insurance companies.

If you take the money away from the large safety-net hospitals … and put it into insurance companies, they may dissipate the patients everywhere.

said Ron Anderson, Parkland’s president and chief executive officer.

If the federal government approves the plan, the working poor who are 19 years or older can apply for subsidized coverage through the “Health Opportunity Pool” starting next fall.  Last spring, lawmakers approved an extra $150 million of state money to increase reimbursements for hospitals that treat Medicaid patients.  The federal government will match that increase with $246 million of federal funds.

The restrictions on Medicaid in Texas are so strict right now that a working parent with two children making more than $308/month would not qualify.  I guess the state of Texas expects them to take the $309/month they do make and put 60% of it towards a health insurance premium.

Under the new Health Opportunity Pool, a working parent of two could earn up to $2,862/month and still be eligible for subsidized health insurance coverage through private insurers.  Applicants will be helped on a first come first served basis until funds run out.

Do You Want to Help the Poor? Go To A Strip Club!!

A new Texas state tax of $5 per customer will go toward a new state sex assault prevention fund.  Over the next two years, the fee is expected to raise $87 million, $25 million of that will go to the sex assault prevention fund and the rest will go to the Texas Health Opportunity Pool.

I had to make a decision to find a revenue source for issues important to me.  It won’t impact business and will serve a good cause.

said Senator Royce West, (D)Dallas, who sponsored the bill in the senate.

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As 2008 approaches, we’re changing the structure of texinsurance.org to a “blog” setup.  This is mainly due to the rapidly changing health insurance industry in Texas.  Because the site will be structured as a blog, it will now be more interactive.  This will allow our clients and all texinsurance.org visitors to leave questions and comments about the information presented on the site.  Feel free give your opinion about the insurance products, legislative issues, and Texas insurance news in general.

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