A History of Reckless Endangerment Pays the Same as a Safe Driver of Any Age
-How The Healthcare Reform Will Affect Towers by Ralph Weber
The Healthcare Reform Bill and Reconciliation Act passed by the Senate and House will have far reaching consequences for towers for many years to come. Many towers are uninsured because they believe that health insurance costs too much. This bill will increase the costs even more within the next few years. Claims made that the bill will reduce the deficit come from comparing ten years of revenue (taxes paid by citizens) to only six years of costs (expenses from only six years of use). Imagine leasing a truck and paying on it for the first four years without being given the truck until after those first four years.
As of April 1st of this year, Medicare reimbursement rates have been cut by 21%, and will be cut by 41% total over the next 10 years….that is unless congress passes a “doc fix” bill which will halt the mandated decrease. Medicare rates for doctors are already set by CMS (Center for Medicare Services) at 10% below cost, so another 41% in cuts will likely make it very difficult for baby-boomers turned senior-citizen to find a doctor. How can any business be expected to survive working at 51% below cost? When providers are underpaid by one payer, they tend to shift those costs to other payers. Private insurance companies then shift those extra costs to higher premium rates.
The entire bill will take eight years to phase in, with tax increases kicking in first. Most benefits start in the next four to eight years. Some of the benefits that are starting this year include group coverage for all dependent children up to the age of 26, guaranteed-issue for coverage of minors with pre-existing conditions on family plans, limitations on deductibles for the small group market to $2,000 for individuals and $4,000 for families, and tax credits for small businesses (fax a request to 888-720-7261 for assistance with this credit if you currently offer coverage to your employees). All of these ‘benefits’ increase the expenses paid by the insurance companies, which will force premiums to go up. The removal of high deductible plans means the consumer has no way of controlling the cost of the premium.
Starting in 2011, the cost of your health coverage must be reported on a 1099 or W-2 form, and must be reported on your tax return. The penalties for not purchasing health coverage begin in 2014. According to Section 203 of ‘The Bill’ (HR 3590), a commissioned Regular Corps and Ready Reserve Corps will be established, reporting to the Surgeon General. All officers will be hand-picked and appointed by the President, and their pay will not be controlled by the same laws that control the pay of the other armed services. The purpose of this army, as stated in the bill, is “to improve access to health services.” How they will go about this task isn’t clearly outlined.
Two years from now, Comparative Effectiveness Research Taxes will be applied to health plans. This is only the research phase of Comparative Effectiveness so that they can gather data and prove that it is better for the payer (the insurance company or the government) to replace the transmission of a 2009 BMW than the transmission of a 1973 Vega if both are broken. So if they have two patients in need of a new heart, one is 25 and the other is 55, the surgery will be more “effective” on the 25-year-old, therefore the better place to put money for a better outcome. After all, he has a longer life-span ahead of him. This would have nothing to do with the fact that the 55-year-old man has as many people, if not more, at home who love him and want to see him well. The 55-year-old has also probably paid more in taxes during his life.
Four years from now, insurance companies will be required to issue insurance without excluding any pre-existing conditions. Imagine if you owned a car insurance company, and the government told you that from now on, you have to offer coverage to all drivers, even the reckless ones, and that you could no longer charge drivers with DUI’s or speeding tickets any more that you charged good drivers. Do you think you’d have to start raising rates on everyone? Without being able to give better rates to the young and healthy than someone with a life threatening illness who spends $2,000 or more each month on medications alone, insurance providers will be forced to cost-shift to their young, healthy clients. Or, the young and healthy can opt-out of this government program and pay a fine. Employer fines for opting out will begin, as well. This fine does not provide any health benefits to the payer, but they can always get coverage when they need it because of guaranteed-issue, also starting in four years.
According to our surveys, 60%-70% of towing companies in the US currently do not provide health insurance to their employees. The Healthcare Reform Bill and Reconciliation Act are not proposing free healthcare in four years. They are proposing mandatory healthcare in four years, with increased taxes starting now to reduce the deficit caused by Medicare users. Towers can expect a huge increase in the cost of group coverage four years from now when guaranteed-issue and mandatory acceptance of pre-existing conditions go into effect.
The best time to start looking into coverage is now, when rates are low and tax credits are available. Contact Ralph Weber at Route Three for more information including an evaluation of your existing plan or assistance in finding the best plan for you and your employees at the most affordable rate. In many states, companies with ten or more employees can participate in a partially self funded plan for even better cost effectiveness.
Email firstname.lastname@example.org for more information.
About the Author; Ralph F. Weber CFP, CLU, REBC, ChFC is a Certified Financial Planner and a Registered Employee Benefits Consultant. Having spent 8 years in the army as a heavy recovery tech, and 5 years with AAA as director of Emergency Road Service, Ralph has now been in the towing industry for 27 years. He founded Route Three Benefit in 1996s, a company which focuses entirely on group benefit plans and business succession planning for towers. Route Three insures over 500 towing companies in North America and also has cross border options. Ralph can be reached at 1-888-720-8889 or on the web at www.TowBenefits.com