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Follow up on The 3% Solution

How should an influx of new tax revenue to pay for chronically expensive health care services be distributed and what kind of premium reductions can be anticipated?

A little known fact is that there are no massive Medicare processing facilities staffed by government workers. Medicare claims are processed by private insurers who contract with the government. Blue Cross and Blue Shield, United Healthcare, CIGNA, AETNA and Humana are all in the Medicare Advantage business, while some of these companies process traditional Medicare Part A & B claims payments to providers. And it should be no surprise that many of these companies are also in the Medicaid business.

So the infrastructure is in place to administer payments once an additional 3% in payroll taxes is collected to pay for expensive, chronic medical care needs. Since payment of claims is tied to each individual patient, that should continue with tertiary care hospitals and insurers submitting applications for acceptance of patients to government plans developed to pay for high cost chronic care needs. Why would these parties be motivated to do so? Because private insurance plans for under age 65 Americans will implement coverage limitations for specified illnesses.

One of the reasons the ACA passed was that high risk pools existed in only 35 states. And many of those programs had pre-existing condition limitations. States had lost the ability to manage health care expenses for the very ill, who ended up with no employer insurance after exhausting $500,000 or $1 million maximum benefits. In time, they filed for bankruptcy after all personal resources were expended. Those who survived that trauma were then accepted under Medicaid. A very sad reality for the physically unfortunate, and it could have happened to any of us.

Although applauded by many, a problem caused by the ACA changing benefit levels to “Unlimited Lifetime Maximum Coverage” in private plans is that many hospitals have dramatically increased their charges for high cost chronic care. These cost increases, along with many patients who were in high risk pools transitioning to private insurance plans, has added to what we all know are unaffordable insurance rate increases.

Spread this high cost care risk across working Americans, and private insurance plan premiums should decline 25% to 35%, as multiple factors come into play relieving pressure in the proper payment for chronic, high cost care needs.

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