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Price transparency in health care has long been a recurring theme here at IB, going back to our earliest days:

"Recently, I had the opportunity to interview Dr Dexter Campinha-Bacote, Aetna Medical Director. He’s the “go to guy” for Aetna’s new transparency pilot program ... employers asked Aetna to develop tools that their employees could use to make “better informed decisions.” One of these tools is the pilot transparency program."

But we also know that for transparency to work, there has to be buy-in from health care providers, as well. And so:

"Makary is part of a movement of medical professionals who want healthcare to reflect the free market, with transparent pricing and clear information on quality, allowing patients to decide which entities succeed and fail, rather than the insurance companies"

The Free Market Medical Association (FMMA) now boasts over 20 chapters nationwide, and now offers "an online pricing tool where patients can find prices and quality information for cash pay physicians."

That last bit is important: I've never had a client ask about how to find the cheapest brain surgeon.

Pretty cool.

[Hat Tip: Brandon Dutcher]

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Now that summer storm season is in full swing (stay safe, folks!), we can expect to see a lot of stories about downed trees. So how does one's homeowner's insurance work when that happens?

[ed: as usual. coverage varies by plan and state, so  be sure to consult your own agent about your specific coverage]

The fine folks at Cincinnati Insurance have put together a helpful video about the subject:

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Shot:

"In a first-of-its-kind study, researchers examined every regulation issued by HHS from 2001 through 2017: ... 71% of HHS rules are unconstitutional based on who finalized and issued them." https://t.co/yEKIAEh8I3

— AssocAmerPhys&Surg (@AAPSonline) June 5, 2019

Chaser:

The ACA was passed on 3/23/2010. 2,800 pages of instructions to federal agencies. These pages have spawned around 90,000 pages of FAQs, IRS, DOL, and IRS regulations.The employer mandate sections (26 US 4980h) went fully into effect on 1/1/2016 for every business in America. 1/3

— Michael Bertaut (@MikeBertaut) June 6, 2019

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I attended an interesting Continuing Education class yesterday on Understanding Tax Implications of voluntary group products (like dental and vision, etc). One question that came up was about the wisdom/pitfalls of running these premiums through one's POP plan, and we'll explore that in another post.

But it reminded me about this post from my Answers.com gig; it's an explanation of what a Premium Only Plan is and why it can be a valuable extra benefit:

Because of wage controls put in place during the Second World War, many of us get our health insurance benefits through our employers. As times have changed, and the cost of these benefits has risen, most employers who continue to offer group insurance coverage have required employees to foot more and more of the premium burden.

Typically, this involves deducting the employees' share from their paychecks. So, along with FICA and FUTA and the like, one also sees a deduction for health insurance coverage.

The employer's share of the premiums are generally tax deductible to the company, which reduces its net cost. An employee's share can also be tax deductible, but there are some hoops through which the employer and the employee must jump. Employers contract with Third Part Administrators (TPA's) to set up so-called "POP" plans (for "Premium Only Plans"), which are allowed under Section 125 of the Internal Revenue Code. POP plans are relatively simple, straightforward documents that enable employee premiums to be deducted pre-tax; that is, from gross wages rather than after-tax.

There are a number of immediate benefits to this process, and a few drawbacks. The primary advantage is that deducting premiums pre-tax effectively lowers the employee's net taxable income, saving tax dollars. This also lowers the employer's tax liability, so it's a win-win. The employee ends up with a few more spendable dollars as well as health insurance coverage.

There are also two potentially significant drawbacks:

First, by reducing taxable income, the employee is also reducing his (or her) Social Security income. That is, a lower gross wage can result, over time, in a lower Social Security benefit at retirement time. Most people aren't aware of this, and those that are may not be very concerned: after all, retirement may be many years away, and a higher paycheck today is an immediate pay-off.

The second challenge is that once an employee elects to participate in a POP plan, he's generally locked into it for the rest of the year. So if his circumstances change, it may be difficult or even impossible to opt out of the plan in the middle of the year. For example, if Bill signs up for his company's group coverage in January, and then decides in March that he'd really like to drop it because it doesn't fit his needs, he probably won't be able to opt out of the POP plan until the end of the year.

On the other hand, if he (for example) gets married and elects to switch to his spouse's plan, that's a "qualifying event" and he can make that change mid-year.

This "lock-in" provision takes on new urgency with the Affordable Care Act (ACA). While most POP plans run from January through December ("calendar year plans"), many others are set up on a non-calendar year basis. Many employees currently covered under their employer's group plan may elect to cancel that coverage in favor of one of the new Exchange-based individual medical plans. If their employer has a non-calendar year POP plan, they may not be able to make that change in January.

There's good news, though: the IRS has stated that employers with non-calendar year based POP plans may amend them to allow employees to drop off of (or join!) these "cafeteria" plans effective January 1, 2014. The employer has to determine whether or not to allow this change, but it seems reasonable to presume that most (if not all) of them will.

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As usual, FoIB John Goodman has the definitive takedown of why so many on the left just don't 'get' the economics of health care [ed: To be fair, lots of rocket surgeons on the right are equally ignorant]. In his latest Forbes essay, John points out that:

"Editorials like the one in the Times tend to treat a dollar spent on health care as though it is different from a dollar spent on something else. It isn’t. It’s the same dollar ... In a Public System, Patient Needs Compete against Taxpayer Needs"

He also notes something else that often goes unremarked: that Medicare plans are generally administered by private (commercial) insurance companies.

And why is that?

Well, you'll want to read the whole thing to see why that actually makes a lot of sense.

[Hat Tip: Co-blogger Bob V]

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As regular readers know, it's become somewhat the norm for carriers to drastically cut, or even abolish, agent compensation. And it's also commonplace for so-called agent associations to ignore this. That's because the dirty little not-so-secret is that they're run by and for the benefit of the carriers, not the agents. With one notable exception.

In the event, UHC decided to completely do away with agent commissions on larger group health cases. Unfortunate;y for the carrier, however, the "notable exception" had already successfully lobbied to make that move a lot more difficult:

"Louisiana Insurance Commissioner Issues Cease and Desist Order to United HealthCare."

The commish issued that order to derail UHC's plan to "implement the removal of producer commissions from upcoming renewals of certain group health insurance products."

On the one hand, kudos to HAFA for pushing legislation that curtails this abuse, and to the Pelican State for enforcing it.

On the other hand, lest folks ink this is an altruistic move by the DOI:

"... may additionally violate the insurer’s obligation to pay tax on its annual premiums under R.S. 22:842"

So there you have it.

It's all about the (tax) Benjamins.

#Surprise

[Hat Tip: Co-blogger Bob V]

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Shot:

"In some cases, [UK physicians and surgeons] end up paying the NHS to work. Doctors respond to these perverse incentives the same way all rational actors do: by closing up shop." https://t.co/k7tWVxIfF8 HT @msingletonmdjd

— AssocAmerPhys&Surg (@AAPSonline) June 2, 2019

Chaser:

The UK is seeking to save their healthcare debacle by instituting a model similar to DPC. ⁦@TPPF⁩ ⁦@RightOnHC⁩ #free2care https://t.co/DLHLtTUe91

— David Balat (@DavidBalatHC) June 2, 2019

Hunh.

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