The Sky is Falling

Many agents these days are fearful about the nationalization of health care in this country. And not in the “sky is falling” sense.

I asked three people, whom I respect, to offer an opinion of what the health insurance industry will look like in five years. The first person had 40 years in the business, the second ran a very large agency and the third started in the business less the two years ago.

All three said the same thing: If the insurance industry fails to fight the myths and urban legends, then the federal government will undoubtedly have a much larger role in the day-to-day health care of an average citizen. Forty-six percent of the population is already covered by government-sponsored plans through Medicare and Medicaid. It’s not that much of a stretch for the feds to step in and open Medicare up to everyone.

If Medicare becomes the “National Plan” as proposed by many in President Barack Obama’s administration, many doctors will leave the practice simply because they would become federal employees. How would that happen? Simple: Medicare sets the reimbursement rate. The government gets to say what a doctor or hospital may charge. No negotiation, no validation, no reconciliation. They name the price. If a doctor charges more, it’s Medicare fraud.

Medicare reimbursement rates are approximately 25% of what would be considered a usual and customary charge. Instead of $100 per office visit, the doctor would get $25. Assuming an eight-hour day, where a doctor can see six patients an hour, that works out to be $1,200 per day in revenue. Deduct all the nurses’ salaries, utility bills, office supplies, rent and liability insurance and that leaves somewhere around $200 for the doctor to keep. While $25 an hour is a very good living for many of us, it leaves little room for a doctor to repay the hundreds of thousands of dollars of student loans incurred during their six to eight years of school. Why would anyone bother?

Hospitals are already struggling. Many are being absorbed by the large national hospital chains as their only way to survive. Hospitals would also suffer at the 25% reimbursement schedules. Many would likely be forced to close.

The government-run health plan supporters try to make the case that if we cut out all the administrative costs, such as insurance company salaries, agent commissions and the billing staff of the providers, we would save millions. You might shift millions of dollars, but you won’t eliminate anything. In fact, it might cost more if these three million people are suddenly out of work. What happens to the federal tax revenue? What happens to local businesses when people can’t or won’t shop for fear they have lost or might lose their jobs? We currently have a pretty good idea what can happen to the economy when people are scared.

What can we, as agents, do to help stop this fiasco from happening?

• Educate yourself. All agents and brokers need to understand the consequences of a nationalized plan and not just what it does to their incomes. Think about what will happen to your own health care if this becomes reality?

• Educate Congress. Right now it’s a mob mentality. All you hear is “there are 45 million uninsureds” and “we’re the only country in the industrialized world without a nationalized plan.” Dispute these lies! Forty-five million is the number only because it includes people who were temporarily not covered. If someone lost a job and thought about taking Cobra during the first 60-day election period, they would be counted toward the 45 million. So would a recently graduated student waiting to get insurance from a new employer. The government also counts illegal aliens in that total.

• Educate your clients. Businesses need to know what the final plan will look like and how it will affect their employees and their own families. Congress will listen to them because they vote.

All of the agent associations, including the Big “I,” NAIFA, NAILBA and NAHU, have resources available that agents can use to educate themselves and all the parties involved. Log on to their Web sites.

We can argue the merits of Medicare, single-payer, pay-or-play or any of the more likely scenarios, but the bottom line is that if brokers and agents don’t take the lead and educate all affected parties, the plan that finally emerges, the plan thrust upon us, will be the one we deserve. Do nothing, get nothing. Chicken Little was right.

Ed Zurek (ezurek@netstudy.com) is president of InsuranceStudy.com, an online continuing education provider, and has been a life health agent for 25 years.