CHAPTER 1

History of U.S Health Care Reform

Prior to the 1960s, seniors and the disabled did not receive healthcare to treat their health conditions because insurance plans wereexpensive and unaffordable to most. To fill the major void in thehealth care system, John F. Kennedy publicly discussed the conceptof Medicare and Medicaid programs in 1962. With public support,Lyndon B. Johnson signed the amendment to the social securityact, TITLE XVIII—Health Insurance For The Aged And Disabled, tothe Social Security Act to add Medicare into our national healthcare system in 1965.

What is the difference between the Medicare and Medicaid?Medicare is our public health program that insures senior citizensand disabled people. Medicaid is our public health program thatinsures lower income individuals and their dependents as well aspeople with certain disabilities.

Health Maintenance Organization(HMO) Act of 1973

In 1973, President Richard Nixon signed the Health MaintenanceOrganization (HMO) Act of 1973. President Nixon helped fund thegrowth of the HMO system in the U.S. because he wanted to giveAmericans health insurance plan options. In President Nixon'sstatement on signing the HMO Act of 1973, he stated, "Healthmaintenance organizations provide health care to their members ona prepaid basis with emphasis on essential preventive services. Theestablishment of HMO's will allow people to select for themselveseither a prepaid system for obtaining health services or the moretraditional approach which has served the American people sowell over the years." In the 1980s, HMOs plan options were a verypopular plan design with employers. Today, the employer andindividual plan market prefers PPO health insurance over HMO.

Consolidated Omnibus BudgetReconciliation Act (COBRA)

Prior to the 1990s, employees who decided to leave their employerwere not able to take their health insurance plans with them. Forthose individuals who had an illness or had dependents who were illon the insurance plans, getting health insurance coverage elsewherewas not an option. In the individual and family health insurancemarket, if someone had an illness and did not have insurance tocover expenses, insurance carriers declined to offer them coverage.In other words, the healthy could get health insurance coverageafter they were removed from their employer plan, and the ill wereleft in the cold. Because of this loophole in the health care system,the Consolidated Omnibus Budget Reconciliation Act (COBRA)was signed into law in 1996. COBRA requires employers to extendgroup health benefits to employees who may no longer workfor the company but who still want to maintain and pay for theirhealth insurance plans. I cannot imagine a world without COBRAand wonder how the ill workforce survived when their group plancoverage ended.

Children's Health InsuranceProgram (CHIP)

In 1997, voters approved the Children's Health Insurance Program(CHIP). This program helps cover children who lack privateinsurance. CHIP allows low- to moderate-income families the abilityto provide health insurance to their children through this publicprogram. The program was created because families were livinguninsured, especially if they could not get their children insurance.The program allowed children to be covered free or at a low ratebecause the federal government subsidizes the cost to make itaffordable. Today, The Children's Health Insurance Program (CHIP)provides health coverage to nearly 8 million children in familieswith incomes too high to qualify for Medicaid but who can't affordprivate coverage.

Medicare Modernization Act (MMA)

In the early 2000s, The United States had a major dilemma withsenior citizens. The costs of prescription drugs were very expensivefor most people who did not have insurance. As a result, manyseniors would travel across the U.S. border to Mexico and Canadato purchase more affordable drugs. I remember traveling to CostaRica and meeting a citizen of Canada on my trip, and we started todiscuss health care. He mentioned that seniors from the U.S. wouldgo to use their health care system for the affordable drugs it offeredto anyone so much that Canadians had to pay additional co-paysfor drugs because there was a shortage for Canadians. I was verysurprised. I never would have thought that in the golden years,the most established part of their lives for some, senior citizenswould have to travel to another country to get prescription drugsbecause they simply could not pay the expensive rates for them inthe United States. Once the United States was notified by Canadaabout the issue, Congress created a bill to resolve it.

The Medicare Modernization Act of 2003 (MMA) was created andapproved by Congress. George W. Bush signed it into law that sameyear. The Medicare Modernization Act is also known as the MedicarePart D law; this program expanded prescription drug benefits tosenior citizens. If a senior had the Medicare supplemental healthinsurance plan from an insurance carrier, that senior would alsoneed to purchase a Medicare Part D health insurance plan and payfor drugs through that Part D plan. Senior citizens who purchaseda Medicare supplemental plan who did not purchase a Part D atthe time of the original enrollment would be subject to a penaltyof 1%. "The late enrollment penalty is calculated by multiplying1% of the "national base beneficiary premium" ($31.17 in 2013)times the number of full, uncovered months you were eligible butdidn't join a Medicare Prescription Drug Plan and went withoutother creditable prescription drug coverage. The final amount isrounded to the nearest $.10 and added to your monthly premium."Senior citizens who do not enroll in time and do so at a later dateare unaware of this penalty until they enroll. Once enrolled, thoseseniors are notified by the Medicare Part D plan because theirpenalty is incorporated into their monthly premiums.

Affordable Care Act

If you are unaware of the true dilemma of our current healthcare system, here is the information you need to increase yourknowledge. Health monthly premiums and health care expenseswith insurance have skyrocketed in the past 10 years. When I sayskyrocketed, I don't mean like a paper airplane flight only a fewdegree above the ground. When I say skyrocketed, I mean the costof health care has gone straight up like watching a space shuttleflight flying straight into outer space. Our health care system costis increasing so much that there is no end in sight. For example,"The Kaiser Family Foundation reported that from 1999 to 2009,health insurance premiums for families rose 131%." I am sure youare wondering if the ACA reform is helping with slowing down thatincrease. Based on reports, the answer is yes. Monthly premiumshave increased due to additional benefits required by law, such asdependent coverage until 26 years old and maternity coverage onall policies. The cost has also increased because of the insurancetaxes incorporated in the new insurance rates that are used to payfor establishing the federal and state health insurance exchanges.ACA rates have shown a track record of health care cost increases,but those increases are less than previous years. It may be becauseACA took effect in the middle of one of our worst recessions, and itmay be because the ACA requires insurance carriers to pay policyholders money back if they did not spend premiums on their claims,a process called medical rebates. Another reason the rates maybe steadily increasing instead of the previous drastic increasesis government monitoring on how much insurance carriers canincrease policy holders health insurance premiums. In the end, TheKaiser Family Foundation has shown that whatever is being done,it is slowing down the cost of health care.

The one thing that we have to remember when we compare ratesof increases is that no one can put a number of the amount ofmoney it costs to maintain someone's life. Life is priceless. It is nearlyimpossible to explain the difference of inflation on a car versusinflation on adequate health care to maintain someone's lifestyleor life. These two things are not an apple-to-apple comparison.When you try to compare these two subjects, it is more like anapple to an elephant. The elephant will always be more expensiveand breathtaking.

On March 23, 2010, President Barack Obama signed the PatientProtection and Affordable Care Act (PPACA), or ACA into law. Thelaw includes numerous health-related provisions to take effectover an eight -year period, including prohibiting denial of coverageand claims based on pre-existing conditions, insurance taxes andpenalties for insurance carriers, businesses, and individuals. ACAalso expands Medicaid eligibility, subsidizes insurance premiums,provides incentives for businesses to provide health care benefits,and establishes health insurance exchanges and support formedical research. Senior citizens will see a discount of up to 53.5%for brand-name prescription drugs once they meet their drug plandeductible, also known as the prescription donut hole.

Health Care System Past and Future

In the beginning of the Health Care System in the United States,the main objectives were to have a system that allowed physiciansto assist their patients and insurance carriers to help both theircommunity of patients and their doctors. One of the ways thatinsurance carriers did this was to create the prepaid healthinsurance plan where patients pay a monthly premium for theirhealth insurance to pay for future health insurance expenses froma doctor or hospital. The insurance carriers would market doctors tonew patients and remind patients of any out-of-pocket paymentthat was due to the physician(s). The setup was very simple whenhealth insurance plans were first established over 200 years ago inthe U.S.

As physicians' cost increased physicians increased their ratesfor services to pay for expenses. Soon after this change, patientability to pay doctors became unmanageable. It was at this pointthat the insurance carriers got into the cost management side ofthe business. This portion of their business is when an insurancecarrier reviews a physician's rate and study's the average rate inthat physician's geographical area. Then the insurance carrierdetermines the in-network doctor's rate for that particular service,even if the doctor wants more money for that particular service.

Soon after this change of claim processing, physicians not only haddifficulty collecting money for past services from patients, but alsofaced difficulty in collecting from insurance carriers on past servicesprovided. During this time, physicians had the opportunity to workwith pharmaceutical companies on making additional streams ofincome by prescribing prescription drugs to patients. Physicians notonly got money back for drugs prescribed, but there also were nicetrips and kickbacks given to them by pharmaceutical companies.For a short time, these helped physicians with supplementing theirincome until now.

You see, part of the reason health care costs are so high is manyAmericans use prescription drugs. As a result, the cost of prescriptionmedications spending in the U.S. was $259.1 billion in 2010 and isprojected to double over the next decade. The current rate ofgrowth has slowed from the highs of the 1990s and early 2000s toa more modest rate, but it is expected to increase sharply in 2014after the individual and family insurance coverage mandate in eachstate becomes effective. In 2010, 90% of seniors and 57% of non-elderlyadults had a prescription drug expense. Additionally, asthe number of medicines being prescribed increased: from 1999to 2011, the number of prescriptions rose 43% (from 2.8 billion to4 billion), outpacing U.S. population growth by 9%. Although stillonly a modest part of total health care spending in the U.S (10%),with so many people relying on prescriptions, the cost implicationsloom large for the American public and health insurers.

Prescription drugs are a huge cost to health insurance carriers.One of the things we will see to reduce the cost is tier prescriptiondrug models that are manage by pharmaceutical providers likeCVS and Express Script. These providers create a tier system thatallows patients to get brand-name prescriptions only by moving upthrough several tiers of preferred generic drugs before they are allallowed to purchase expensive brand-name prescription drugs.

I had the chance to check out the system myself in the spring of 2013.I was on a brand-name drug for acid reflux for a year through theinsurance of my husband's old employer when he enrolled to thesame insurance carrier in a PPO plan similar to what we had before.However, this plan had a different pharmaceutical administrativecompany. My access to the brand-name drug that I had beenusing was now denied. When I asked why the pharmaceuticaladministrative company denied it, they said it was because I hadnot gone through the lowest tier yet. When I asked for clarification,they told me that I needed to try a prescription drug-genericprescription tier 1 and if the drug wasn't effective, I would needto go through the appeal process. Once the appeal process wascomplete on my end and approved on theirs, they would allow meto go to the next tier. This tier contained strengthened versions ofthe first tier drugs. When I asked how many tiers it would take forme to appeal to get brand-name drugs, I was told three.

I was very unhappy with this approach and the results. I personallydon't like taking prescription drugs for any reason unless I needthem to function. I only wanted to function on my healthy dietwithout feeling like my digestive system was in pain all the time.So for the next few months, I was busy going through the appealprocess. My doctor had to submit the appeal paperwork to thepharmacy and the pharmaceutical administrative company. Then wewould just wait to make sure they received proper paperwork andmake a decision on my request for an appeal. The Pharmaceuticaladministrator approved my third request for appeal in three months.I was glad they approved my request but I was very disappointedwith the process.

From a company perspective, I understand that they were tryingto cut health care costs for everyone by using this system that hasbeen utilized by the military for many years. On a consumer side, myhusband and I pay for our own health care through his employer.If the company wants happy employees, then their best bet is tonot give the wife of an employee the run around when she needsher existing prescription drugs. The company has since changedthe pharmaceutical administrator due to employee complaints. Itwas nice to know that I was not the only one who had an issue withthe new drug tier system. It is also nice to know that my husband'semployer acknowledged and changed company policy to makesure staff and their families were happy with the results. In this case,change was a good thing.

Today, a once simplified health insurance system is so complicatedthat it took the U.S. government months to create a 1000-pagedocument explaining the new PPACA health care reform law.Consumers who once trusted the insurance carriers and saw themas the hero when consumers needed to use their insurance are nowweary after past reports show that insurance carriers drop ill patientsfrom insurance policies. Granted, there were some individuals whofalsified information on their applications, such as not disclosingillnesses that were required by law, and the carrier would dropcoverage and retroactively collect the amounts covered by theinsurance. However, some of the people who the insurance carriersdropped did not falsify their applications.

Physicians and Hospitals

When the American health care system was created many decadesago, a physician's main purpose was to heal the ill with traditionalWestern medicine. The American Medical Association (AMA)was created by physicians to find ways to best care for people ineach community. Prior to the formation of AMA, physicians hadan issue with providing care to clients who had no money to payfor their care. The dilemma for physicians was that they weren'table to pay their business expenses to continue caring for theirclients. As a solution to the issue, the first health insurance planwas established in Houston, Texas. Blue Cross was a prepaid healthinsurance program similar to what most Americans use on a dailybasis today. The goal of the plan was to help physicians receivepayment for services prior to patient visits. It helped patients witha pay-as-you-go plan that was strictly used for medical expenses.

This program was such a success that it spread across the nation likea wild fire. With new regional locations being added to the programand new insurance carriers repeating the same structure or creatingalterations to the structure, insurance carriers became the heroesof the communities in which they worked. They helped connectphysicians and hospitals for the purpose of helping the communityby caring for the ill. This concept created a way to see the patientsbefore they were chronically ill. Today, physicians' current insurancepayments that they once applauded have shrunk, and as a result,physicians and hospitals get less reimbursement for their providedservices. Furthermore, most physicians and hospitals must havea staff or collection agency to collect the payment promised bythe insurance carriers for the services. As a result, these solutionincrease that physician expenses and pressure to see more patientsor find alternative routes to increase their revenue.