Thursday, September 24, 2009

Ask the Chairman (Governor) Kaine- Healthcare

WRVA 1140 (AM Radio) in Richmond hosted Tim Kaine today for his monthly "Ask the Governor" call in show and by all indication the current healthcare debate is certainly resonating with many in Central Virginia.

The majority of the questions served Gov. Kaine this morning were in the area of Healthcare Reform and the Economy. Virginia, like many States, has seen Unemployment rates climb steadily in recent years. Virginia still ranks in the Top 5 for Employment based on current rates where Virginia is approaching almost 7% unemployment. Virginia, in large part due to the growth of both the State and Federal government and appropriations and contracts flowing from Washington into the region has faired much better than most States.

One major admission made by Gov. Kaine this morning was his support for the implementation of health insurance access across State lines. This has been something that Republicans and Blue Dog Democrats in Congress have long supported and just may turn up in the final Healthcare reform bill.

However, Gov. Kaine's full endorsement of the "public option" seems very intriguing given at no time in his term as Governor has he proposed such a plan very similar to the Commonwealth of Massachusetts for here in Virginia. Kaine spoke to "portability" for the public, but failed to provide the impact of such programs would have on the bottom line regarding the funding of the public option.

While I think everyone would support "portability", it is a matter of record that there are already in place programs to do just that not only here in Virginia but also nationally. For example, the Federal Consolidated Omnibus Budget reconciliation Act (COBRA) requires group plans sponsored by employers with 20 or more employees to offer "continuation of coverage" for employees and dependents for up to 18 months following departure from the company. Of course, the individual would be responsible for the premium (whole) during the term but they would remained insured. Kaine also failed to mention that State employees under Code 2.2-2818 that Virginia shall provide a credit toward the cost of health insurance coverage for former State employees who have retired under the Virginia retirement System, State Police Officer's Retirement System, Judicial Retirement System, Virginia Law Officer's Retirement System and others. Thats quite a few systems to manage by the State.

Recently, the VRS has come under fire. Virginia is sitting with close to a four billion dollar shortfall in large part to increasing costs associated with retirees, benefits, workers comp and other insurance related areas that are outpacing inflation. We as citizens must understand that the impacts of growing State government is rarely felt in the early years of the creation of departments or jobs increasing the payroll but in the later years when those employees have reached there fifteenth anniversary and later retire.

It is also important to note that one retires with the benefits of the last highest position held with State government and its benefits are determined based on that grade during the enitre retirement. An example of this can be illustrated by a member of the General Assembly leaving political life and then taking a position in State Government as an unelected official. Regardless of how long the individual was say a Delegate or State Senator, after a few years in grade the retirement would be graded at the full benefit of that position and not the former elected office.

Kaine also failed to mention that in Virginia, we spent 9,224 per government employee enrolled in health benefits program in 2008 and in 2007 the State spent 614 million in medical, behavorial health and pharmacy for the States almost 100,000 employees. In 2008, that cost rose to 714 million.

Kaine had an opportunity to inform the public regarding the program COVA Connect, provided State employees through Optima Health (Sentara Healthcare) in the Beach region that is an experimental program covering 17,000 State employees. This two year contract is costing the State 5 million a year in "administrative" costs according to the Department of Human Resource Management. That contracted amount would amount to 10 million to cover 17,000 for two years. It begs the question what the real costs would be before savings to roll this program out to the roughly entire 100,000 active State employees. Do not misundertsand me, COVA Connect offers some real promise towards addressing the issues of preventative care. 20% of State employees are smokers and 35% do not exercise on a regular basis according to Optima.

An important aspect of the program however that can be set against the debate in Washington is the fact that the State employees , predominately in the Hampton Rhodes area ,are asked within the COVA Connect program to leave their doctors behind. Thats the rub. If we are experimenting with a program at the government level which would ask (force) employees to leave their doctors than what is the real notion behind what Kaine is endorsing in his idea of the public option where he states he thinks people will be able to keep their doctors and plans should they desire to do so. Why could not the COVA Connect be implemented in the same manner without having employees have to leave their doctors behind.

The State and Optima are said to be tracking the program and will evaluate the program to determine viability for the entire government pool and the Virginia Governmental Employees Association is also very interested in the results.

By the way, this program replaces Anthem's COVA Care in the Hampton, Virginia Beach region which may attribute to the situation regarding which doctors are in the current program and which ones were available through Anthem. Not exactly a true "option" regarding physician selection.

In listening to the conversations Gov. Kaine was engagin in this morning the more and more I am convinced that if the State truly wants to solve many of its problems regarding costs related to healthcare it must go the route of full "self-insurance".

What does it mean to be "self-insured"?

The rising costs associated with healthcare as pointed out by Kaine are a direct result of the lack of competition or bids for the State plan and in many areas some insurers have a monopoly. The only way for sel-insurance to work is through large participation to begin with and pool funding at the onset by the General Assembly to implement to measure. The benefit is that most people pay more IN premiums than they spend out in claims. Basically, State employees would pay in a set amount per period just as if they were paying an insurance premium through payroll deduction or buying an alternative health policy. Instead of those proceeds going to the insurance company they are directed to the "pool". Funds are then drawn out of the pool to cover the medical expenses for those enrolled. How can the State handle this?

The State can simply contract the administrative service or claim aspect out which would also create jobs in the greater economy. These are known as third party adminstrators. In some aspects there is also the ability to go the route of re-insure as well in other areas of insurance as well.

The key to self-insurance for the State which undoubtedly would save millions of dollars is wellness. The State would have to determine to make wellness and fitness a priority which would mitigate claims and costs associated with poor health.

Self-Insured plans are subject to the Federal Employee Retirement Income Security Act of 1974 (ERISA), handled by the Department of Labor.

Kaine's objective today it seems was to support Obama's Healthcare agenda or at the verty least the Congressional plan as it appears as though Obama really has not released a plan yet of his own for the nation to review and yet across the board within State government never seemed to take responsibility for the rising costs of State government and the shortfalls with the budget othern than to say that costs are spiraling out of control.

Frankly, as long as we allow the government to expand at both the State and Federal level "costs" will never be reigned in. In healthcare alone, we are spending today over 9,224 per State employee and the more we expand government and grow its ranks the larger that number will become. How will we fund those expenses?

According to Kaine, taxes will certainly be raised in Virginia. Yeah, just not on his watch. I guess is better politics to leave that burden to the next adminstration by leaving those shortfalls to the budget, but then why should we be surprised Kaine's predecessor in Mark Warner did the exact same thing to him.


James in Bon Air said...

Interesting post Alter. I would not expect too many constituents to follow-up with Kaine or anyone on the matter simply because of the nuance nature of insurance. There is no doubt that the retirement and health benefit issue at the State level needs some attention, but it will not get it from lawmakers. The lobbies and interests, especially Anthem are too large.
If memory serves when the GOP controlled the Governorship they left Warner with an unemployment rate below 3% and now after eight years under Warner/Kaine is almost 7% and that does not include the thousands who simply have given up the job search and are not accounted for in the data.

Anonymous said...

"Chairman" is right. kaine has not really been vested in the interests of the Commonwealth since Obama secured the nomination last year for the Democrat Party.

Kaine has spent more time out of Virginia than in it this last year and has done very little to impact the job loss experienced here, especially SW Virginia.

Martinsville unemployment has hit 20% and other areas in the West will follow.

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Anonymous said...

I wish I had not been forced into COVA Connect. Anthem is a superior health care provider and I thinks its unfair that a co-worker, who just happens to reside in Williamsburg (outside the mandated area) was able to keep Anthem. My medications co-pay is $20 more under COVA Connect. I can't wait for the trial 2 year period to be over and hopefully my family can return to Anthem COVA Care.