NARAB: A Blast from the Past

Gosh but I miss Ray. Years ago, one of our most popular CE classes was a comprehensive update of various legislative "accomplishments" in life and health insurance. Back in 1999, the Gramm-Leach Bliley Act (primarily focused on financial services) introduced the National Association of Registered Agents & Brokers (NARAB). We discussed it at length, specifically because there was already an organization which (it seemed to us) performed many of the intended functions.

Founded three years before GLB, the National Insurance Producer Registry (NIPR) was designed to function as a sort of national licensing clearinghouse for insurance agents. Interestingly, it's only been in the past few years that agents have been required to register for their National Producer Number (even now, individual states still issue licenses). It's not so much a regulatory body as a way to centralize a lot of costly administrative functions and allow folks both inside and outside the industry to track agent licensing.

It's "governed by a 13 member board of directors" including folks from the NAIC and the insurance industry.

Very interesting, Henry (not really), but why the heck are you regurgitating this?

Well, it seems that the NARAB idea never really died, and has been reincarnated as NARAB II. As Elizabeth Festa notes at LifeHealthPro:

"Bipartisan legislation to introduce National Association of Registered Agents & Brokers Act of 2013 (NARAB II), which would streamline the insurance agent licensing process legislation has been introduced in both the House and the Senate ... The new licensing entity, if created by law, would be governed by a 13-member panel of state regulators and insurance industry representatives." [emphasis added]

Looks familiar, no?

And what are the key benefits of this new agency? Well, that would be:

"[T]o create a national agent/broker licensing entity for nonresident licensing on a multistate level."

We should just call this the "Large Insurance Company Expense Relief Act."

Currently, large carriers (with national presence) find it expensive to administer the licensing requirements for its agents. The NARAB would not only duplicate many (most?) of the functions of the existing NIPR, but it would afford these large carriers a welcome break in their cost of doing business.

How's that, you ask?

Because it's industry-funded, which means a non-trivial portion will be borne by smaller, regional carriers to subsidize their larger competitors (whereas the NIPR generates the bulk of its revenue from access and transaction fees).

No wonder "the industry" loves it.

Health Wonk Review: Chew on this edition

Fresh off hosting last week's Cavalcade of Risk, uber-wonk David Williams presents this week's Health Wonk Review. As usual, David adds his own insights and context (which I appreciate).

And a hearty Mazel Tov to David as his excellent blog turns 8!

Government Healthcare just the way Maggie likes it

Maggie Mahar has always been a huge fan of government healthcare, doesn't really matter which flavor, as long as the government is running it. For years she has touted the VA as a shining example of a great healthcare system, a model to replace inefficient private insurance.

While most people would find revolutions like this unacceptable;

"Department of Veterans Affairs officials purposely manipulate or hide data that would support the claims of veterans from Iraq and Afghanistan to prevent paying costly benefits, a former VA researcher will tell a House subcommittee Wednesday afternoon."

Maggie probably sees it as proof of efficiency and a job well done.  The same way NHS in England is still held up as a model and people still claim Medicare is a shining example of cost efficiency.

“There is no general mandate under Medicaid to reimburse providers for all or substantially all of their costs,” the administration said.

That's the last sentence of this NY Times article.

That sentence corroborates - as if further corroboration were needed - the existence of the so-called cost-shift.

The cost-shift occurs because the feds (and the states, in the case of Medicaid)  do not reimburse medical service providers “all or substantially all of their costs.”  Because the law does not require it.  The government uses its market power not to negotiate fair reimbursements, but to dictate inadequate reimbursements for Medicaid.  Same is true for Medicare.

As a result, the medical service providers naturally seek to make up what they can by increasing their charges to patients who can pay - patients who have better insurance than Medicaid or Medicare.  That would be private insurance. 

Unsurprisingly the feds' tactic to hold down federal insurance cost has the simultaneous effect of increasing private insurance cost.  Since at least 1970, a parade of actuaries has rather consistently estimated this cost-shift from federal to private insurance adds something like 15% to the cost of private insurance.

More here.

By the way, the Times article also reminds us that when the subject is insurance and medical care, one should always read to the very end of the article.  Important stuff is too often buried down there at the end.

61 Pages

Come 2014 everyone is required to buy health insurance. As it now stands, it appears you can buy on the exchange (HIX) or outside the exchange.

Taxpayers that want a subsidy to help in paying the enormous Obamacare premiums will be required to buy through HIX and complete a 22 page application.

But to show you the government has a heart, they have provided this 61 page document explaining the application process.

Didn't someone say buying health insurance on the exchange would be like booking a trip through Travelocity or making a purchase on Amazon?

You might need the Obamacare Survival Guide if you plan on buying health insurance in the future.

You can buy it on Amazon with just one click . . .

The New Transparency

Longtime IB readers know of my interest in (bordering on obsession with) transparency in health care financing. How cool would it be if your doc not only told you the price of his services up-front, but even posted them on-line? Well, that's precisely how Dr Ryan Neuhofel rolls:

"Direct primary care," which is the industry term for Neuhofel's business model, does away with the bureaucratic hassle of insurance, which translates into much lower prices ... He consults with his patients over email and Skype in exchange for a monthly membership fee of $20-30"

Whether one calls it "direct primary" or "concierge" care, the model seems to be catching on. Last fall, we interviewed Dr Rob Lamberts about his new practice, which employs a similar model. In a sense, it's a response to the changing face of health care, especially the ObamaTax and its myriad of new directives and restrictions.

One thing no one seems to be discussing, though, is the interplay between these direct care models and the new requirement that everyone purchase insurance. What this means is that, for those who can't afford both the insurance and the cash pricing, provider options are going to become quite limited. The result will be an even more pronounced two-tier health care delivery system: direct care providers for folks with bucks to burn while the rest of us scramble to find any provider willing to take us (and our shiny new ObamaTax coverage).

Yippee.

Why Medicare will continue to be wrought with fraud

It has long been illegal to pay beneficiaries to receive services paid by Medicare. The fear being since the individual pays little of the cost or premium for Medicare any inducement to receive services could quickly lead to fraud. Countless court cases have held providers to account when they have engaged in this sort of activity. You would think a change would require our legislature to discuss the issue and pass a law changing precedent. Not with Obama's HHS they don't:

"The Department of Health and Human Services has given qualified approval for a Medicare provider to give away $20 grocery gift cards to induce seniors to get more taxpayer-funded health screenings, despite concerns the promotion could run afoul of federal anti-kickback laws."

“First, such programs can corrupt the decision-making process, resulting, for example, in over-utilization, increased costs, or inappropriate medical choices. Second, there is potential harm to competing providers and suppliers who do not, or cannot afford to, offer incentives to generate business. Third, these practices could negatively affect the quality of care given to beneficiaries,” the report noted.  “As providers and suppliers race to the bottom by offering increasingly valuable goods or services, the incentive to offset the cost of these inducements by cheating on the quality of the Medicare or Medicaid item or service increases proportionately.”

This is not some new phenomenon, we know exactly what happens when programs like this are allowed, that is why they are illegal. But just like Obama's naive belief in community rating and welfare, the politicians and academics behind this think they know better then everyone else.

Just another trainwreck waiting to happen. On the bright side, since it is only an HHS opinion, the next qualified individal to run HHS should be able to undo it quickly.