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top RAY STERNOT'S 1st 2/15/06 RESPONSE | RAY STERNOT'S 2nd 3/2/06 RESPONSE | BRUCE BECKMAN'S RESPONSE LETTER
On February 15, President Bush gave an address at Wendy's headquarters in Dublin, Ohio. He discussed the health-care crisis in America and proposed Health Savings Accounts in this address. Ray Sternot, AASBCR Vice President of Legislation responded to this address. Following is Ray's 2/18/06 response to this address.
February 18, 2006
President George W. Bush The
White House
Dear Mr. President,
I read the White House’s documented script from your visit to Wendys International on February, 15, 2006, where you discussed Healthcare in this country and in particular your proposal of HSAs as a fix to the problems. [www.whitehouse.gov/news/releases/2006/02/20060215-1.html]
Unfortunately, I think that your plan misses the mark on solving healthcare coverage and funding issues for the majority of Americans. In fact, I didn’t see where your plan really addresses the problem that many retirees with company sponsored healthcare coverage have.
Let me provide you with some specific examples of where I think your plan and talk are deficient:
As one of many retirees between 50 and 65 (pre-Medicare) and over 65 (Medicare eligible) with employer sponsored healthcare benefit plans, many of us find ourselves in our retirement years:
1.) Paying the ever increasing monthly costs for healthcare benefits to our former employers. In our working days, when we were of value, we were told these costs were in lieu of monetary compensation and pay raises (i.e., earned benefits). 2.) Paying all up-front cost of medical care under what is termed a high deductible plan while companies still continue to accept the higher monthly premiums for the privilege of having a company sponsored/negotiated plan and having the company possibly paying nothing additional until the employee/retiree reaches the highly deductible maximum. 3.) Being unable to truly negotiate doctor, hospital or procedure charges under an employer sponsored plan based on the fact that the plan based on contractual arrangement not between the consumer and the actual providers but under contracts between the company and the administrator (very profitable middleman) and the administrator and the doctors/hospitals and other providers.
I propose to you that many large companies in the U.S., contrary to your acknowledgement or beliefs, are pushing more healthcare costs onto retirees and ultimately onto the government by their actions rather than truly addressing how they can sustain employee/retiree healthcare plans as was presented to the general public in a Wendy’s venue.
With regard to your plan:
- Your plan talks about employer pooling (pooling of plan participants to achieve price and service negotiating leverage). The reality is that large companies are leaning toward segregating pools between current employees and retirees and driving up the costs to retirees. - Your analysis (Wendys example) assumes that employers are actually sharing cost (cost increases) of healthcare with all plan participants and that there is a joint effort to resolve the problem. In reality, many large companies have capped their healthcare plan contributions, especially for retirees, and have pushed off all cost increases in healthcare to retirees/plan participants. - Your plan/analysis assumes that consumers have actual control and can negotiate doctor prices/methods of treatment. The reality is that under an employer sponsored healthcare plan prices/costs are governed by contract between the companies (plan sponsor) and plan administrators (very profitable middle men – just look at insurance company profits) and between administrators and doctors/doctor groups and other providers of the actual medical service. At no time is the consumer party to those negotiations. Further, no pricing data is available to the average consumer of those services. Those contracts and pricing are proprietary between the parties. - Your plan example used elective Lasik eye surgery and consumer price negotiation and awareness. It assumed that doctor prices were known. In reality and for reasons stated above, doctor or hospital charges or procedural prices are not well known or readily available. If pricing were public, I might agree with you that costs for healthcare would go down due to competitive pressures. But, that isn’t happening and it isn’t something that is likely to be accepted by insurance companies or medical providers.
One only has to look to the state of Texas to see an example employer taking a “leading edge” approach to providing healthcare insurance to its retirees and employees using the concepts I’ve discussed. [Retirees might say “bleeding edge”.] This company was a professed leader in HMO provisioning. It has, effective January 1 of this year, instituted a new model employer healthcare plan that will, by virtue of the monkey see – monkey do principle, trickle down to all companies with company sponsored healthcare plans as other companies follow suit. Suffice it to say, employer sponsored healthcare in United States is going away quickly with no alternative viable funding mechanisms in sight other than “retirees – you are on your own”. In effect, I propose, that this type of new and improved healthcare plan over time, will move more retirees to government sponsored plans right under the very noses and support of all Washington officials intent on limiting government plans by supporting business friendly alternative plans. And, it allows with a Government sponsored way out of providing promised healthcare to retirees to boot.
Given your observed inflexibility and apparent resistance to accept additional data on issues once you have gotten whatever input you have and made an internal decision on the matter (HSAs), I don’t expect that you or anyone else in your administration to look for additional facts relative to healthcare. So, I challenge you to come to Cleveland, Ohio to hear about healthcare concerns of other Americans, including retirees; get additional input on your healthcare fixes and allow yourself to gain a bigger picture of the Healthcare problem facing average Americans and especially retirees.
Sincerely,
Raymond F. Sternot VP-Legislation AASBCR
Following is Ray's March 2, 2006 response to this address.
March 2, 2006
President George W. Bush The
White House
Dear Mr. President,
On February 18, 2006, I wrote a letter to you about your February 15, 2006 visit to Columbus Ohio where you extolled the benefits of HSAs for Americans as a solution to healthcare problems in the United States. In my letter, I indicated that I did not agree with your HSA plan. The reason is that I felt that your plan failed to address the type of actions that, in addition to supporting HSAs, I think are necessary for you (and Congress) to support in order to begin solving the healthcare cost issues for retirees or seniors.
Some of the additional items and actions that I feel should be considered are:
- Allow retirees to move 401k/IRA dollars into an HSA account. The much heralded HSAs have limited value to retirees under 65 and are not permitted for Medicare recipients those over 65. Yet retirees under 65 and Medicare recipients are now being required to pay the same high deductible costs of the new “incentive based” health care plans offered by their companies. (HSAs were the main proposal in your speech that I criticized. But, not because HSAs are bad but because you didn’t address how retirees or those over 65 on their fixed income might fund them.)
- Companies should no longer be able to disadvantage retirees by establishing multiple health insurance pools between active employees and their retirees, and, at the same time, benefit from the Medicare drug plan. Use incentives to encourage pooling or enact penalties if they don’t. For example, take Medicare prescription dollars away from companies who push costs to retirees and on ultimately on to the government. (The use of insurance pools spreads risks. Segregating pools increases risks (and costs) for pool participants. Pushing cost increases to retirees pushes more costs on to the general public as retirees will opt eventually to go to some other insurance plan, if possible.)
- Make all retiree medical costs a credit on retiree income taxes versus keeping it as a limited deduction.
- Allow ALL over the counter drug costs to be deducted on taxes. (Many prescription drugs are now over the counter. The cost hasn’t been reduced. The drugs are just no longer covered under a retiree insurance plan. And, again, not all retirees can fund an HSA.) - - Sponsor and help promote the passing in Congress a safe drug re-importation bill so that today’s senior citizens aren’t saddled with the abnormally high costs of prescription drugs that are contributing to the ever increasing cost of healthcare. Allow seniors an opportunity to legally purchase drugs at the discounted international prices. Go down to the Mexican border and watch seniors cross it to purchase their medicines. It is ironic that while we see illegal aliens come here, our moms and dads are going there so they can afford to remain healthy and solvent.
- Allow business employers to pool with small business employer healthcare plans to achieve economies of scale when dealing with insurance providers or plan administrators. (Don’t large insurers need the competition?)
- Require doctors to advertise the charge (price) for their services. All plan participants, including retirees via their company sponsored fiduciaries, can then negotiate with doctors for necessary service relative to quality of service at the right price. (Wouldn’t the knowledge of competitive prices be good for consumers of healthcare? Right now, retirees cannot truly negotiate with doctors as long as a.) They don’t know the real costs; and, b.)They aren’t party to the contracted negotiations between either their primary insurer (company) and the insurance company (plan administrator) or the insurance company (plan administrator) and the doctor. Pricing knowledge will truly allow the market to control costs based on value just like it does for the stock markets.)
- Fund the training of more doctors and nurses through educational incentives such as grants and government or military training, so that cost pressures on that resource will be less in the future.
- Require doctors to publicly identify their cost components at least once a year. (Wouldn’t open cost awareness help with controlling costs?)
- Require hospitals to publish their cost components once a year and identify but exclude any unrecoverable costs due to uninsured patients. Identification of and elimination of any costs that apply to non-insured patients should not be pushed to only the insured population but should be paid for via the federal government because of issues of under-employment or unemployment caused by globalization and the greedy actions of large businesses. (i.e., include only true costs for actual services rendered and not passed on non-collectible costs.)
I hope that you will take these additional inputs into consideration when you finalize your healthcare improvement plans.
Sincerely,
Raymond F. Sternot VP-Legislation AASBCR
Bruce Beckman, President of the AASBCR, is sending his response, a copy of which follows below.
Dear Senator/President/Governor/Congressman:
The Vice President-Legislation of the Association of Ameritech/SBC Retirees, Inc recently sent a letter to President George W. Bush expressing his frustration with what appears to be a lack of understanding and commitment by him on issues concerning the welfare of today’s and tomorrow’s senior citizens.
While the Association Vice President’s frustration might appear to border on contempt for the institutions of our government leadership and after some contemplation of his comments, I must say that I share a great deal of his concern for the future of the retiree’s world and what needs to be done so that you and I and even our children can live a decent life in our and their senior years.
We’ve decided to share some ideas of what legislation you could enact to improve society’s environment for those who have fought for our country, raised children to be decent citizens and invested in America to keep our economy strong. Now as they gaze upon their later years, they see nothing but broken corporate promises and government indifference to these concerns.
I recently met with some federal legislative aides and shared what we believe to be prudent avenues of legislative action so that seniors can be more assured of the future. What we heard were terms like “Big Pharma”; saying that you could not support these changes because Corporate America would oppose them. As I heard these comments, I thought: “Whatever happened to ‘Of the People, By the People and For the People”.
So now I take some of our suggestions to you (this is not brain surgery):
Health Care: - Allow retirees to move 401k/IRA $ to an HSA account. The much heralded HSA have limited value to under 65 retirees and are not permitted for Medicare recipients yet Medicare recipients are now being required to pay the same high deductibles of the new “incentive based” health care plans.
- We believe companies should no longer be able to disadvantage retirees by establishing multiple health insurance pools between active employees and retirees. Use incentives to do so or enact penalties if they don’t such as take Medicare prescription $ away.
- Make all retiree medical costs a credit on their income taxes versus a limited deduction.
- Allow small business employers to pool with other small business employer healthcare plans to achieve economies of scale.
- Permit Doctors to advertise their charges for service. .
- Require Doctors to identify their cost components once a year and allow them a reasonable rate of return.
- Pass the drug re-importation bill so that today’s senior citizens don’t indirectly contribute to the high cost of healthcare and they have an opportunity to legally purchase drugs at discounted costs. Go down to the Mexican border and watch seniors cross it to purchase these medicines. It is ironic that while we see illegal aliens come here, our moms and dads are going there so they can afford to remain healthy.
- Require hospitals to publish their cost components too but eliminate any costs that apply to non-insured which are paid for via the federal government. (i.e., true costs and not passed on non-collectible costs.)
- Have non-insured costs covered by the government and not spread out among all people hospitals and doctors see.
Pensions:
- Corporate matching 401K grants must parallel the individual employee’s 401K investment choices or if the corporation is permitted to match contributions with corporate shares, employees automatically gain proxy rights, can choose to convert dividends to a money market fund and will be permitted to move corporate shares to other investment choices after three years.
- Enact legislation that permits corporations not to cost out future pension benefits.
These are but a few suggestions. While I’m sure there are more, I’d say doing these things would be a good beginning.
I appreciate your reading my thoughts and look forward to hearing from you on yours.
Sincerely, [Original Signed Bruce Beckman, President of the AASBCR]
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