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Maximize Your Medicare Newsletter
March 9, 2019
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Medicare Section

Here's Stuff That We Can Never Do

Look Up Your Hospital: Is It Being Penalized By Medicare? (link) 

Kaiser Health News, Kaiser Family Foundation, and affiliates are one-of-a-kind. For actual data, for actual findings, without over-arching politicking and grandstanding, the information from this platform is unparalleled. Period (you see, we can dole out compliments in equal measure). They have resources that we do not possess (unless you have a spare $1B to donate, in which case, we are up and running, yesterday).

Does This Matter? Yes.
It matters because hospitals rely a HUGE amount on payments from the CMS. If a CMS de-certifies a hospital, the hospital can close, literally. It also provides an incentive for hospitals to classify treatment as outpatient services, which are not subject to this same set of penalties. This is inherently built-in. That is a problem.

Studies Say ... Maybe
Not obvious, but this study says hospitals are buying outpatient service providers and practices intentionally (link). Anecdotally, you know this to be true, that stays in hospitals are shorter and shorter. Those that do not cross two midnights can be ruled to be outpatient stays, which is a different set of payments to the healthcare provider. 

You Can Draw Your Own Conclusion
It need not be black or white. However, the threat of being penalized and for payments to be curtailed, as the result of inpatient hospital stays is pretty large. Just click on the link at the top of this article. We are not in a position to say, one way or the other, whether or not this is affecting healthcare delivery decisions. Hopefully not.
However, if I am a physician and I get to choose to be paid under Part A or Part B? That is obvious: Part B is better. It is a structural problem with how Medicare is funded that creates this ripple effect. Reason this point matters? If you want to get to "value-added services" or ACOs etc, you need to solve this payment structure FIRST.

The Barrier to Solving This is High
There is a very long list of problems if you want to solve the payment structure to Medicare.
  • Existing Medicare beneficiaries have already paid into Part A. Combining Part A and Part B will require a lot of thought of who is to be taxed and by how much. You can hear the AARP warming up a long list of complaints, this time they will be right.
  • You have to VOTE to get that passed. There is no doubt this would require legislative change, by Congress. If you are a member of Congress, your #1 job: get re-elected. So there's that.
Don't hold your breath for ground-breaking changes, unless we can agree on how to pay for structural changes. That said, is there a path to that? Yes there is. Have I seen a viaible solution in print? Not yet.

Medicare For All "Fun" Fact

Medicare For All could potentially solve all active employee health insurance matters, and perhaps more importantly, all underfunded retiree health benefit obligations. 
  • Since all insurance would disappear, and a comprehensive plan would be centralized, that means that all employers would not have to think about this.
  • For governmental entities of every shape and size, virtually all have a hugely underfunded retiree health benefit liability. If Medicare for All was adopted, these problems would be solved.
  • The issue is that active employees largely approve of their existing coverage.
  • How to Pay? 
Note: Medicare for More, the ability for those to "buy in" to Medicare at an earlier age, could do a lot of this. Why? Readers of Maximize Your Medicare and GH2 Unfiltered know that it can be better for you, from both a coverage and cost point of view, if you were to "opt out" of your employer-provided benefits, and purchase a Medicare configuration on your own, if you correctly understand the rules.
Newsworthy (relatively speaking)
  • How Much Will Medicare for All Cost? (link) Comment: This article quotes a wide variety of other estimates, all of them come in at an average of $30 Trillion over a decade.
  • Gas-guzzling car rides expose AOC’s hypocrisy amid Green New Deal pledge (link). Comment: Charismatic? Sure. Social media savvy? Definitely. Holier than thou, as self-proclaimed? C'mon now, that took about 5 seconds to uncover.
  • Medicare for All Loses Momentum Among Democrats (link). Comment: The WSJ weighs in, there will be every imaginable viewpoint, embedded in every single byline. Exhausted yet?
  • 'Medicare for All': The Impossible Dream (link).  Comment: there is a long list of those that would be disrupted. Whether or not they will vote for a candidate that champion Medicare For All? We'll see.
  • The Coming Democratic Drama Over Medicare for All (link).  Comment: it's a present from the opposition party to the sitting POTUS: the path to re-election could not be more clear: let the other guy struggle with presenting a single solution to an impossibly-complicated issue. The same strategy has keep the ACA in effect, so we know that the strategy works.
Books I Wished I Wrote
If You Had to Read Just One Book on Investing? Probably.
GH2 Unfiltered

The Wide Gulf Between Uncertainty and Gambling

Blue Cross Blue Shield of MI "Legacy Plan C" Example

One of the laziest, most inaccurate over-generalizations people make? "We can't predict the future, so insurance is like gambling." Nope and it's an expensive lesson people do learn, and when they do, it is frequently too late.

In 2016, this Newsletter existed, and you could read "BCBSM Legacy" premiums. It was an alert, that BCBSM held rates artificially low, due to a legal agreement it made, and the expiry date approached. Further, there was a "way out" into alternative, much cheaper and very similar coverage (Plan N).

I contacted the carrier after the "free get out" period expired, and stunningly, the carrier told me that over 70% remained in the existing Legacy plan. That told me a number of things:
  • People didn't correctly know the options
  • People didn't believe me
It is fine, I call the second point "Tuesday," i.e. this happens all the time. 
The entirety of every article and the book?
  • We cannot predict the future, but we know the inputs to how decisions are made by the carrier, and the we should know that the carriers are smart, but have to play by the rules of regulation and fierce competition.
  • We know that the ripple effects can last a long time.
The Definition of Gambling
People lump together the idea of "uncertain outcomes" with "gambling." Gambling is when you know and understand the probability, and when you choose to do something that run opposite to that knowledge. Insurance carriers are not in the business of gambling. That said, they have to adhere to regulations, and cannot set the price too high, because there are other, equally-smart sellers.
Look at the evidence:
  • Medigap pricing in Midland MI for T65 female: TEN SELLERS within $10/month. We don't need to know a thing to know this is the correct price, the topic does not need to be Medicare/health insurance/blahblahblah.
  • Medicare Advantage: 5% profit margin.
  • Exceed 20% profits? Federal regulations to return the difference to you.
We Are Grateful to Those That Listened
The fact is that we guided people out well before this occurred (years), because this outcome was self-evident. We literally shepherded as many people out as would listen to our reasoning. Sometimes the outcome is unknown (a hurricane doesn't exactly strike a predicted target), but since we knew the rationale, this wasn't "anything can happen" situation. It was entirely loaded towards "this is very, very likely to occur."

Does this exist elsewhere in the world, on financial matters? You bet. GH2 Unfiltered.
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