The Grand Central Caf? in midtown Manhattan is a bustling nexus of business travelers and tourists, the kind of transient crowd that makes for an ideal venue to meet contacts and share ideas over a cup of joe. That is how I came to visit the Caf? in January, to sit with Tom Kozera, president and CEO of SKCG Group, one of the country’s largest privately held agencies. SKCG serves various markets, including employee benefits and group health plans. Obamacare is on Kozera’s mind a lot these days, especially the impact it is having on the industry’s distribution system. On people like him, really.
Kozera is joined by David Parker, SKCG’s treasurer and a partner with the firm. I have been invited to meet with them to hear what they have to say about the deficiencies of Obamacare–a once-derogatory term for health care reform that seems to have stuck as the official slang for PPACA–and how it fails to deal with what SKCG feels are the underlying cost drivers of our increasingly expensive health care system.
While Kozera and Parker are both knowledgeable and earnest about the health care industry, there is also a sense of quiet desperation about them. They are not here to try to sell me on their firm, or to pass off their latest product as an industry trend. They have the demeanor of those civil engineers in New Orleans before the levees broke, looking for someone–anyone–to hear them out on what they see as an impending disaster. Their passion on the subject reminds me of how many National Underwriter readers have also criticized Obamacare, and that it might destroy their businesses.
Kozera and Parker start by saying something that a lot of Obamacare’s detractors seem reticent to admit–that the law is not going away any time soon. Efforts to repeal it will get no farther than the House of Representatives. The court battles will ultimately be decided by the Supreme Court, which historically is reluctant to overturn that which Congress has made law. Justice Roberts, the bench’s swing, seems to favor of letting the law stand. De-funding Obamacare in Congress is the third rail of opposition, but even that is a less-than-total solution and does nothing to stop the various legal requirements and penalties for standards of practice, going forward. “The chances of this going backwards to the way it was before is not going to happen,” Kozera states emphatically. “That boat has left the dock.”
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According to Kozera and Parker, all Obamacare really did was bring to the surface an issue that was already coming to a head: runaway health care costs, driven by a variety of factors, including fraud, lawsuits, and heavy (even excessive) use of health insurance by the consumer. Add to that the 36 million or so uninsured who will go to the emergency room–the most expensive form of health care that there is–whether they have coverage or not, and you have a runaway train, economically. This, they add, is far more important than the constitutionality of the individual mandate, which is good political theatre, but fails to address the key issue with both Obamacare and health care itself: cost.
“There is a lot of debate as to how to pay for PPACA,” Parker tells me. “How do you pay for 36 million people getting coverage who didn’t have it before? How do you pay for all of the add-ons to coverage that didn’t exist before? It has to come from somewhere, and as politicians play with it, you’ll have real issues.”
Kozera goes even further. “The Obama administration says we should cover an additional 36 million people. We should add our children back on our policies until they are 26 years old. We should make preventative care free so there is no co-pay to arrange with the insurance companies. We should have mental health parity across the country. Morally, these are great things to do, but how are we supposed to do it, and how will it affect the overall cost of health care?”
Kozera and Parker see a grim scenario for all involved. Under fully fledged Obamacare, they suggest, two different kinds of physicians emerge: those who essentially work for the government for $90,000 to $150,000 a year, and those who opt out of the system and will work for cash or credit up front. This, in turn, they suggest will create a kind of medical class warfare, where those who can afford to, will pay top dollar for a medical concierge system while everybody else will stand in line not just to get worked on, but to handle the government reimbursement process.
In many ways, things are like that already, they say, but if fully implemented, Obamacare will make things far worse, perhaps even to the point where the United States will find itself importing doctors from abroad, since home-grown MDs will not be able to pay off their crushing medical education bills with what government work pays. (As for doctors making only $150,000 a year, how they are expected to pay for malpractice coverage remains to be seen.) “In the end,” Parker asks, “does that mean we really have better medical care, or more mediocre medical care for a greater number of people?”
And that is where the rubber meets the road on Obamacare. PPACA is not a horrible idea, Parker and Kozera say, but it has been poorly executed without regard to long-range implications. Case in point: Between medical loss ratios, coverage mandates and insurance exchanges, PPACA puts the squeeze on brokers and agents from different directions. And as it shifts costs back to the insurance industry, those costs in turn shift to the consumer, neither providing the better care that was promised nor giving the industry much room to maneuver. This, Parker and Kozera say, might have been the intent of PPACA all along: to simply phase out the health insurance industry altogether.
PPACA was sold on the premise that private industry was still running the delivery of health care, but when the system becomes easier and easier to mandate, Kozera says, eventually nobody really needs the insurance company anymore. The first sign of this is the diminishing role of the agent and broker.
“These mandates are giving insurance companies a reason to lower costs across the board and the agent and broker is on the front line of that,” Parker says. “When that happens, the consumer loses. The consumer needs an advocate and somebody to help people better understand the product they are buying. If you go to an 800 number or a website, you might not necessarily get an impartial opinion.”
At the moment, Parker and Kozera have more business than ever, mainly thanks to concerned clients who are trying to figure out their options as PPACA is implemented. But they realize that if the law is not significantly altered between now and 2014, they might not have a practice any more. In a world without brokers and agents, they say, what the consumer is left with is the medical equivalent of a trip to the DMV.