AALU Gearing Up For Release Of
New Treasury Rules On Split-Dollar
The Association for Advanced Life Underwriting is gearing up for the imminent release of new Treasury Department rules regarding split-dollar life insurance arrangements.
AALU President Bob Plybon says the rules will likely be released fairly soon, probably by the end of this month.
AALU, he notes, has made a strong case for requesting a one-year extension of the current safe harbor provisions.
The problem, Plybon says, is that many clients have been sitting on the fence waiting to see what the final rules say. Moreover, he adds, insurers have not established systems for illustrations.
Whatever the outcome, Plybon says, AALU will be doing a teleconference as soon as the final rules are issued where members will be able to get information on what options are available, what other practitioners are doing and new marketing opportunities.
Turning to the health front, a congressional leader on health care says that without a fundamental change in the structure of health care financing in the United States, there will be more and more demands for a government run system.
Speaking before a symposium sponsored by the Washington-based Health Insurance Association of America, Rep. Jim DeMint, R-S.C., says the only way to prevent the socialization of health care is to fight for consumer freedom and to protect the private market.
The current system, he says, which is based on a pre-payment paradigm, creates no vested interest among consumers to care about costs, and no incentives for physicians to control costs.
DeMint notes that he has sponsored legislation aimed at altering these incentives by establishing consumer-directed, or consumer choice, health plans that provide individuals with more control over health care decisions.
“If we dont reform health care, we will have a one-payer system,” he says.
DeMint dismisses concerns that consumers are not smart enough to make health care financing decisions. Currently, he says, information on health care financing is written with an eye on those who have the money–namely, insurers.
When consumers gain control over their own health care decisions, he says, information will be presented with individuals in mind.
DeMint, who is running for the open Senate seat in South Carolina, says visits to his constituents reveal how much dissatisfaction exists with the present system.
“Americas health care system truly hangs in the balance,” he says.
The HIAA symposium featured a presentation by Bill McInturff, a partner with the Alexandria, Va.-based polling firm Public Opinion Strategies, who says consumers react favorably to “consumer choice” health plans and many would consider changing from their current plan.
McInturff notes that these types of health plans, such as Medical Savings Accounts and Health Reimbursement Accounts, traditionally have been termed “consumer driven” health plans.
However, he says, his polling indicates individuals react much more favorably to the term “consumer choice” than “consumer driven.”
More substantively, he says consumers react very favorably to descriptions of consumer choice plans.
Consumers, McInturff says, like it that consumer choice plans provide more choices than many current plans of providers, allow health care expenses to be paid with pre-tax dollars and allow money in health savings accounts to roll over year to year.
However, he says, consumers are concerned about high deductibles and they find consumer choice plans confusing.
Employee benefit executives, McInturff says, also expressed concerns that the plans offer too much choice to employees, who may not be comfortable making these types of decisions.
In addition, he says, benefit executives believe they may be difficult to implement, with employees having different premiums and networks.
Still, he says, early feedback from employers who do offer consumer choice plans suggests very high employee satisfaction rates.
HIAA President Donald Young says the study clearly shows consumers are ready to look at new alternatives for health care and consumer choice plans should dramatically increase in importance in the next five years.
But McInturff cautions that primary care physicians may offer significant resistance to consumer choice plans, and some of the core concepts associated with them, such as quality measures and price comparisons.
He says surveys indicate physician criticisms of health maintenance organizations had an impact on consumer perceptions of HMOs.
Before this negative loop is created again, he says, more research and communications with physicians is an appropriate next step.
Ron Pollack, executive director of Washington-based Families USA, a health care advocacy group, says the desirability of these plans depends on the details. These include the size of the deductibles and what health care expenses can be paid for with the accounts, he says.
He says he is very skeptical about suggestions that these types of plans will achieve savings by encouraging better health care shopping by consumers.
If the plans are just a pretext for more cost shifting, Pollack says, they will not be popular among consumers.
Finally, he says, one of his major concerns is what he calls the “flip side” of consumer choice, which is segmentation. While it is not a bad thing in other markets, he says, he worries about it in the context of health care.
Pollack says he is concerned segmentation would make things worse for people who are already more vulnerable.
Reproduced from National Underwriter Life & Health/Financial Services Edition, September 15, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.