128 Democratic representatives have cosponsored H.R. 5808 to establish a government run public option within the health insurance exchanges.

At this time it is unlikely for this bill to go anywhere. And the coming elections may bury its possibilities for quite a while. But the current and coming regulations on the health insurance industry will make health insurance more unpopular than ever. Expect large and larger rate increases as plans are required to cover more services, such as preventive care with no copay or deductible.

And unfortunately, they can expect declining levels of customer service. Due to minimum loss ratio requirements, there will be very little money available to pay for customer service people, and there will no doubt be many very frustrated clients. And, of course, there will be politicians ready to claim that this is another sign that private markets do not work, and that a government system is the only solution.

It is still not too late to start over. In fact, its what we have to do if we ever want the kind of health care system we deserve.

According to Wikipedia, “Propaganda is a form of communication that is aimed at influencing the attitude of a community toward some cause or position.” A great example is the “fact sheet” put out today by the department of Health and Human Services at http://www.healthreform.gov/newsroom/keeping_the_health_plan_you_have.html.

Amazingly, most people still see the government as a source of unbiased information. This so called fact sheet announces new regulations for “grandfathered” health insurance plans. In it, they claim that the new regulations will provide “…stability and flexibility to insurers and businesses that offer insurance coverage as the nation transitions to a more competitive marketplace in 2014 where businesses and consumers will have more affordable choices through Exchanges.” (italics added)

After all, “affordable” is in the name of the law. However, the “facts” don’t quite line up. Every insurance company in the country is planning on rather large rate increases as a direct result of the provisions in this law.

Here’s another good one from this fact sheet: “In the short run, individuals whose plan changes and is no longer grandfathered will gain access to free preventive services, protections against restricted annual limits, and patient protections such as improved access to emergency rooms.”

Funny, they forgot to mention that if someone is in a plan that is no longer grandfathered, the rates will take a big jump.

At this point, we are recommending all our customers stay with their current coverage if it makes sense at all, since we expect non-grandfathered plans to be having large increases starting in September, when many of these new provisions take effect.

As provisions of the law continue to be implemented, more Americans will personally feel the impact. Individual health insurance rates will be growing rapidly, while at the same time health insurance agents will be rapidly leaving the business due to a slash in commission rates. This will of course leave consumers with fewer resources to help them navigate these upcoming changes.

In recent polls, a majority of Americans now favor repeal of this law. That said, turning around a huge entitlement program is nearly impossible once it is fully enacted, and a constitutional challenge may be the best chance of stopping this debacle.

The Oklahoma House of Representatives just approved a resolution giving voters the opportunity to vote on an amendment which would opt them out of the health care reform law. It will be placed on the November 2 ballot.

Finally, a bill has been introduced in the House (H.R. 5424) that will repeal the new health care reform law. This bill would implement much needed liability reform, would allow individuals to purchase health insurance across state lines, and would enhance Health Savings Accounts. These are all actions that would help push down health insurance costs, an area that unfortunately is not addressed in the current law.

One of the main reasons that health care expenses are out of control is that no one involved in the purchase typically knows, or cares, what the real cost is. So doctors and hospitals rarely post prices, and in fact will be extremely reluctant to tell you even when you ask.

In general I’m not a big fan of additional government regulation. More often than not it causes more problems than it solves. But I am also for more transparent information, so interested parties can make rational decisions based on all available information.

Having doctors and hospitals disclose prices would probably be a very good thing. Though to really make it work, people should also have a vested interest in the outcome based on that pricing. In other words, the more people use health insurance to protect against catastrophic expenses, and the more they pay for smaller expenses and routine care themselves, the more carefully they will shop for medical care.

This type of consumer involvement results in greater price competition among providers, and everyone benefits. We can clearly see this working in areas of medical treatment where insurance is not typically involved – such as lasik surgery or cosmetic surgery. For years the price of lasik surgery actually decreased, and is still rising at a much slower rate than medical services that are usually paid for by a third party.

I expect the flow of people from standard plans to more catastrophic HSA-qualified plans to continue to increase, particularly as the rate increasing effects of health care reform become apparent. Hopefully we will all see more price transparency, and benefit from the increased competition among providers that this will inevitably cause.

So far, there are nineteen state attorneys general who have filed lawsuits challenging the constitutionality of the new law. Oxendine’s position is also that this is an unconstitutional expansion of the federal government. The main basis of the constitutional challenges will be related to the commerce clause – the ability of the federal government to regulate interstate commerce. Since health insurance is regulated within states, it is questionable whether the fed actually has the constitutional authority to do what they are doing. There of course will be further challenges questioning whether the government can force individuals to purchase something from a private company.

The odds of these challenges succeeding – well, probably pretty low based on past Supreme Court precedence. However, if we look instead at the constitution, it is difficult to see where the federal government actually gets the authority to do much of what they plan to do.

It is suspected that many small businesses may not take the IRS up on this offer, due to expected increases in health insurance costs and restrictions on high deductible plans.

This is as to be expected. The masses who believed Obama when he said words about making health insurance “more affordable” will soon be facing a rude wake-up call.

Now the nonprofit insurance companies in the state are losing millions and are in a situation where they cannot afford to keep insuring people without enacting a rate increase. And the state is in a situation where they are trying to force these companies to do business in the state.

It is a dangerous think when we have politicians who don’t have a clue about economics, trying to legislate things to be they way they want. Hey, why don’t we make a law saying health insurance is free, and another saying everybody is entitled to earn at least $100,000/year. Er, actually we seem to be already headed that way…

As a result of health care reform passed under Governor Mitt Romney, Massachusetts has the highest medical cost and health insurance rates (and the longest waits to see a doctor) of any state in the nation. And unfortunately for us, the federal health insurance reform bill was based largely on what they did in Massachusetts.

On Sept 23, there are new mandates that will drive health insurance costs higher.

-New plans will no longer have lifetime limits
-Children under age 19 will no longer be subjective to any exclusions based on pre-existing conditions
-Dependent adult children up to age 26 can stay on their parents’ plan
-New plans must cover certain preventive services without copays or deductibles

All of these changes will drive costs up, so we are expecting to see some big rate increases coming – this year and in coming years. All the misguided people who think health insurance is about to be free will be howling in protest to the politicians. The politicians who passed this incredibly bad bill will be howling in protest as well, claiming the insurance companies are once again taking advantage of the public. And there will be calls to “do more” by those oblivious to the irony of it all.

The only hope is that high deductible plans will remain available. As rates continue to soar, more and more people will flock to health savings accounts and high deductible plans, and consumer-driven solutions may still stand a chance at stopping the runaway health care inflation.

For more details and a timeline of what’s going to happen, you can read the last issue of Maximize Your HSA.