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Reminder on Medicare Part D Donut Hole September 1, 2010

Posted by Ken in Health Care, Politics.
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A hand-drawn chart showing Total Out-of-Pocket expenses under Medicare Part D

Recently Health and Human Services Secretary Kathleen Sebelius has said that there is “a lot of reeducation to do” heading into the midterm elections – to help her in her efforts, I wanted to take a moment and explain the one immediate benefit many Americans are enjoying as a result of the Health Care Reform Bill referred to as “Obamacare” – the $250 rebate check for the so-called donut hole in their prescription drug coverage.

As you may recall President Bush (43), with bi-partisan support, implemented the Medicare Prescription Drug, Improvement and Modernization Act commonly referred to as “Part D” that provided real, significant savings to nearly all seniors who need prescription drugs. In a nutshell, seniors would choose the Part D plan that best suited their needs, and they would realize savings once their drug costs exceeded $295/year. The plan provides for 75% savings on every dollar spent above $295, until your medication costs exceeded $2,700 for the year, with a second round of discounts kicking in once your total expenses hits $6,154, after which you get 95% savings on every dollar spent above that threshold. But what does that mean?

If you spend less than $295/yr on prescription drugs, this plan offers you no savings, but at just under $25/month, your expenses should be fairly manageable.

If you spend between $296 and $2,700/year on prescription drugs, your maximum out of pocket expense will be $896.25 – a maximum possible savings of over $1,800. Every dollar between $295 and $2,700 spent only costs you 25 cents.

If you spend between $2,701 and $6,154 you will have no savings on any dollars spent in excess of $2,700 – this is the “Donut Hole” and the folks that complain about the donut hole tend to forget that Part D has already saved them over $1,800, and if you were to calculate the savings after Part D was enacted, they are only spending $4,350.25 for what cost them $6,154 before Part D was enacted – a 30% savings on all drugs right up to the Donut Hole upper limit.

Now, if your needs are such that you require more than $6,154 a year in prescription drug expenses, you will realize a 95% discount on every dollar spent beyong $6,154. In my sample chart, I only go to $9,000/yr, which is $750/month, and at that level the realized benefits are that for the $9,000 in total annual benefits your total-out-of-pocket expense is $4,492.55 – just a smidge more than a 50% discount, and and expenses increase, the savings really add up – the next $5,000 in benefits only increase the out-of-pocket expenses for the patient by $250!

But, having exploited the seemingly horrific “donut hole,” certain politicians felt a change was needed to address the Donut Hole, so, as part of the Health Care Reform Bill passed into law earlier this year, they included a provision that instituted “rebate checks” to help ease the financial strain of those that find themselves in the dreaded “donut hole” – they will get a $250 check from the government. The Health Care reform bill proposed to eliminate the “donut hole” by the year 2020.

This very real benefit from the Healthcare Reform Bill kicks in once you spend more than $$2,700/yr on prescrition drugs and alters your out-of-pocket expense. For my worst-case patient that requires $750/month in prescription drugs, their out-of-pocket cost is decreased from $4,492.55 (50% discount) all the way down to $4,242.55 (a 52.8% savings).

Secretary Sebelius reports that over one million $250 rebate checks have been sent out so far (meaning that over one million medicare recipients have spent more than $896.25 for more than $2,700 worth of prescription drugs, and she further expects a total of four million rebate checks may be sent out before they year is over (the checks are sent as the $2,700 expense threshold is crossed) – the total cost of the rebate checks will therefore approach one billion dollars this year.

Also, just a reminder, that medicare recipients can select Part D plans that include additional coverage to help with the so-called “donut hole” expenses by paying slightly higher premiums for their coverage.

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Thoughts on HR1586 August 11, 2010

Posted by Ken in Education, Health Care, Politics, Taxation.
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Congress took money from defense, food stamps, and will tax Americans working overseas (for 10 years!) to pay for “teacher jobs” and propping up Medicare… First off, why did it take TEN YEARS of cuts and sacrifices by Americans before this bill is deficit neutral? Second, I thought we had a few wars going on, why cut BILLIONS from defense? Third, I thought Medicate was the wonderful example of Gov’t healthcare, why must it be bailed out (for six months of benefits, paid for with 10 years of taxes)? And finally, who thinks that cutting food stamp payments in 2014 (rolling them back to ‘pre-stimulus’ levels, AKA 2008 levels) is the best way to restore a couple of teacher jobs?

Once this bill is understood (BTW, love the name “___________ of __________”), many on the left will join the right in opposing it.

What gets lost in the discussion is that this bill took the place of the ” TARP Bailout Bonus” clawback taxes AND the investment in Air Safety initiatives that were the previous bills under this number (H.R. 1586) – both bills were scrapped to get this pandering POS bill on Obama’s desk ASAP, before elections…

How many teacher’s jobs will this restore? I bet almost none, since the money won’t come until after school starts, expect to see a lot of federally-funded programs that don’t involve re-hiring teachers… And what happens to any teachers hired this year under this bill? Will states suddenly find the hundreds of millions they need to retain them next year?

This is like taking out a ten year loan on this seasons NFL Season Pass on satellite TV – it seems like a good idea, but wait until the season is over and you still have 9 1/2 years of payment stubs before you’ve paid it off!

The Three Main Issues in Healthcare Reform August 2, 2010

Posted by Ken in Health Care, Politics.
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The healthcare problems we find ourselves facing in America today are rooted in three fundamentally very simple issues:

  1. Healthcare for many Americans is tied to their employment.
  2. Few Americans actually know what the care they receive costs – they know what their insurance co-pay and premiums are, but nothing more.
  3. Americans insist on the latest, newest procedures, drugs, and devices.

The answer to the first issue is that healthcare coverage is tied to employment is the result of the Revenue Act of 1942 which made healthcare benefits tax deducatbale while placing salary caps on many industries. Nowadays, employees demand defined healthcare benefits, maintinag the previous year’s level of services irrespective of cost, and employers are thus at the mercy of the insurance companies who are not motivated to lower healthcare costs.

The second issue is that there is almost no concern to conserve or do any cost benefit analysis done by the patient, causing costs to escalate – once the patient makes their $10-25 copay, they have no interest in considering lower-cost procedures – to them, all cost the same.

The third issue is that America is the home of many of the latest breakthroughs in healthcare and as a people we demand availability to the latest treatments, that raises costs as well.

Further insulating consumers from the cost of their healthcare will not drive down costs.

Squeezing incentives from providers will drive out providers (doctors, etc.) and only make healthcare more scarce, again driving up costs.

The only portion of the current healthcare reform bill that will lower costs (actually, more likely simply contain costs) are the various review boards that will determine the appropriate level of care for a given ailment, and may ration more expensive treatments.

Newborns can have pre-existing conditions? March 31, 2010

Posted by Ken in Health Care.
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In a recent ABC News piece (here), the story of one family’s ordeal in trying to get health insurance coverage for their newborn after it was diagnosed with a severe heart condition (dextro-transposition of the great arteries). After applying and being refused by Blue Cross Blue Shield of Texas (BCBSTX), they applied to the state-run insurance pool (Texas Health Insurance Risk Pool) and will get coverage for thier child for about $10/month more than the original BCBSTX plan they tried to enroll their child in. (more…)

Party of “No”? December 13, 2009

Posted by Ken in Health Care, Politics.
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A friend on Twitter (OK, it may be a one-sided friendship, but still…) recently commented on a Charles Krauthammer piece I linked to on Twitter regarding health care reforms different from the House and Senate bills the Democrats are currently support. I quote:

@n2vip I like the sound of these Republican #HCR solutions, but BS meter wonders why they never pushed them through when they ran Congress.

Well, there are a few things wrong here, but I understand the sentiment, let me walk through them one by one. (more…)

Sen. Harry Reid ignores history, blasts opponents December 8, 2009

Posted by Ken in Health Care, Politics, Taxation.
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From a FoxNews.com report:

Senate Majority Leader Harry Reid took his GOP-blasting rhetoric to a new level Monday, comparing Republicans who oppose health care reform to lawmakers who clung to the institution of slavery more than a century ago. 

The Nevada Democrat, in a sweeping set of accusations on the Senate floor, also compared health care foes to those who opposed women’s suffrage and the civil rights movement — even though it was Sen. Strom Thurmond, then a Democrat, who unsuccessfully tried to filibuster the Civil Rights Act of 1957 and it was Republicans who led the charge against slavery.

As his popularity in his home district plummets, maybe Senator Reid thinks the way to rally the actual majority of Americans that oppose this particular Health Care Reform bill (H.R. 3590) is to insult them. Good luck with that Senator.

Here is the video:

Here’s a flashback to a time when Harry Reid thought taxes were optional in America: