From the October 2009 issue of Investment Advisor • Subscribe!

October 1, 2009

Danger & Opportunity: Healthcare Reform Picks Up Momentum

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from The Advisor's Professional Library
  • Updating Form ADV and Form U4 When it comes to disclosure on Form ADV, RIAs should assume information would be material to investors.  When in doubt, RIAs should disclose information rather than arguing later with securities regulators that it was not material.
  • Use and Misuse of Social Media Social media is an inexpensive and effective way to communicate with established and prospective clients.  Nevertheless, when RIAs utilize social media to promote their advisory practices, they risk compliance problems for their firms.

Healthcare reform is still moving ahead, despite opposition from Republicans and well-covered populist discontent over the plan. President Obama spoke with a sense of urgency during his televised address to a joint session of Congress September 9 about the need for a healthcare overhaul, and then promptly laid out his healthcare agenda. A week later, on September 16, Senate Finance Committee Chairman Max Baucus (D-Montana), introduced his version of a healthcare reform bill, "America's Healthy Future Act," which Baucus said would help to "lower costs and provide quality, affordable health care coverage." Baucus introduced his bill without support from the three Republican Senators on the committee who were part of the core Senate panel debating healthcare reform. The Senate Finance Committee was expected to begin voting on the bill the week of September 21.

The Administration's plan, Obama said, would meet three basic goals. "It will provide more security and stability to those who have health insurance. It will provide insurance to those who don't. And it will slow the growth of healthcare costs for our families, our businesses, and our government." The Administration says its plan will cost $900 billion over 10 years, promises it will not add to the deficit now or in the future, and that most of the plan can be paid for by finding savings within the current healthcare system, which he said is full of waste and abuse, particularly within Medicare and Medicaid. Obama said the rest of the reform plan can be paid for by charging insurance companies a fee for their most expensive policies, which might be passed on to the highly compensated employees who tend to have such coverage. Baucus's bill, which he said will cost $856 billion and will also not add to the federal deficit, does not include a public option.

Obama went on to detail aspects of his proposal, stating first that those Americans who already have health insurance through their job, Medicare, Medicaid, or through the Veterans' Administration, will see little or no change. Baucus's bill supports similar measures.

Both Obama and Baucus's legislation would also make it illegal for insurance companies to deny individuals coverage because of a pre-existing condition. Obama and Baucus would also create new insurance exchanges that will provide a marketplace where individuals and small businesses can shop for health insurance at competitive prices.

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