Governor Arnold Schwarzenegger writes to Melvin J. Howard opposing Bill 840

From: governor@govmail.ca.govSent: Tuesday, October 10, 2006 9:03 AM To: Melvin J. Howard
Subject: Re:Senate Bill 840

Thank you for sending me your email opposing SB 840. Hearing from my fellow Californians is very important to me as I work to improve our great state.
After extensive and thorough deliberation from proponents and opponents of this issue, I have decided to veto this bill. Socialized medicine is not the solution to our state's health care problems. SB 840 would have required an extraordinary redirection of public and private funding by creating a vast new bureaucracy to take over health insurance and medical care for Californians. Such a program would have cost the state billions and led to significant new taxes on individuals and businesses, without solving the critical issue of health care affordability.

I want to see a new paradigm that addresses affordability, shared responsibility and the promotion of healthy living. I look forward to working with the Legislature in 2007 to develop a comprehensive approach to health care that not only provides affordable medical treatment to people when they are ill, but also strives to make sure people do not get sick in the first place. This approach should support cost containment and recognize the shared responsibility of individuals, employers and government.

As part of this comprehensive approach, I have worked hard to address preventative measures, such as fighting obesity by signing legislation that bans junk food and sugar-laden drinks in public schools. On the question of access, I've made children's coverage a priority, resulting in nearly a quarter million additional children covered by our Medi-Cal and Healthy Families programs. Most recently, I reached an agreement with the Legislature to provide discounts on prescription drugs of up to 60 percent for our most vulnerable citizens.

Thank you again for writing to me. Your active participation in the democratic process will help ensure a brighter future for California.

Sincerely,

Arnold Schwarzenegger

KYD CONNICK WHO IS HE

You will know him soon he has a blog coming out @ http://kydconnick.blogspot.com/

INSURANCE COSTS FOR YOUR MEDICAL PRACTICE GOING THROUGH THE ROOF SELF UNDERWRITE

Self Insurance for Physicians and Private Hospitals

By Melvin J. Howard

Captives

A Captive is an insurance company established (generally in a tax neutral jurisdiction) which is owned by one or more non-insurance organizations to underwrite the risks of those particular owners. A variant is an 'Agency Captive’, which is owned by independent agents who wish to participate in the underwriting results of the business they produce. A Captive can also be owned by a number of unrelated companies from within a particular industry , by a number of unrelated companies from different industries or by a trade or industry association (an Association Captive) i.e. Physician group to insure the risks of the group owners or association.
Rent-a-Captives


For this proposes you can use a Rent-a-Captive program. A Rent-a-Captive is an independently owned and operated insurance company that allows unrelated companies to use or "rent" its capital, surplus and corporate structure to enable those companies to participate in the underwriting results of the risks they insure into the Rent-a-Captive. Companies interested in utilizing a Rent-a-Captive include associations and independent agents. The Rent-a-Captive performs on a "turn-key" basis the same functions and achieves the same goals as a Captive insurance company, but the association or group ("lessee") does not own, control or capitalize the Rent-a-Captive.

The costs of capitalizing and operating a Captive insurance company (usually on an after tax basis) are typically higher than utilizing a Rent-a-Captive. Operating a Captive also requires more management time than participating in a Rent-a-Captive. Furthermore, programs in a Rent-a-Captive are much easier to exit than a Captive which requires formal liquidation or sale. In summary, participation in a Rent-a-Captive eliminates the substantial organizational requirements and the need to commit funds for capitalization.





Advantages


The advantages of using this program include the following:
i) the ability to participate in underwriting profits as a individual basis;


ii) the ability to purchase insurance related services on an unbundled basis;


iii) the ability to determine levels of risk assumption;
iv) the ability to reduce and control costs;


v) the ability to carry less administrative and legal costs than those passed on by the insurer;

vi) the ability to earn investment income on premiums paid; and
vii) To accumulate investment income on premiums received.
viii) The elimination of the reimbursement agreement between the bank and obligor (SPE).
ix) Tailor made policies for a particular coverage that is unavailable or in this case unacceptable priced in the commercial market
x) no feasibility study
xi) proof of coverage
xii) flexible operating covenants
xiii) easily can be incorporated into the preliminary official statement

Features of Rent-a-Captive


The primary cost reduction factor is the element of risk retention held by the group. Under a Rent-a-Captive structure, the association or group retains a portion of its own risk at a level mutually acceptable to both the association or group and the Rent-a-Captive. In the event of a loss or in this case default on the principal and interest payments due the note holders the association or group is responsible to pay claims up to that retention level. However, by "self-insuring" to this retained limit, the association or the group reduces its premium costs because the cost of obtaining coverage for limits of insurance above the retention is less than purchasing insurance that attaches at the first dollar of loss., i.e. without any retention. These reductions in costs take place over time and are generally not applicable to the association or group.
Risk Management
Risk management, or loss control, plays a major role in the Rent-a-Captive structure and provides a means for further cost reduction for the association or group. Good loss experience is reflected in the rates to participate in the Rent-a-Captive. By employing effective loss control measures at the association or group, you can reduce your insurance exposure thereby potentially increasing underwriting profits available to the association or group and, at the same time, keeping premium costs down. You can also benefit from risk management by improving loss control. A reduction in loss costs should result in increased funds available for investment to offset future claims.
Participation in Rent-a-Captives
There is no specific formula for determining who should participate in a rent-a-Captive program. However, the program is generally suitable to organizations having total annual premium costs in excess of $1,500,000, for agents who can direct a book of business in excess of $5,000,000 and for groups or associations having total annual premium costs in excess of $1,500,000.
Under a typical rent-a-Captive program, an insured or agent obtains primary insurance coverage from a direct insurer. The primary insurer will then cede, or transfer, to the rent-a-Captive a portion of the primary insurance coverage in an amount equal to the limit that the insured wishes to retain itself. The net premium received by the rent-a- Captive from the primary insurer for the risk transferred is tracked in a "separate account" maintained by the rent-a-Captive on behalf of the insured. Each entity in the rent-a Captive Program purchases an account certificate (the "Certificate") for a specified sum ("Purchase Price").

Distributions to your association or group
In the event a the association or group cell produces a profit (i.e. premiums plus investment income exceed losses and program expenses), distributions to the association or group are made pursuant to an Accountholder Agreement entered into between the association or group and the rent-a-­Captive. The association is entitled to a portion of the undistributed underwriting profit and investment income earned, to be paid at specific intervals as set forth in the Accountholder Agreement. Timing for distribution payments is typically agreed in advance between the association or the group and the rent-a-Captive, and the first such payment is not expected to be made prior to 24 months following the effective date of the Agreement. If you would like to know more about the Rent a Captive program feel free to contact the writer.

Canada's doctors choose a new leader in health care can he bring the system into the 21st century.

For-profit clinic founder is CMA's new president-elect
Laura Eggertson
CMAJ
BC physicians have elected the medical director of a private, for-profit clinic as the president-elect of the CMA.

"[W]e have the potential to design the best health system in the world." Photo by: Cambie Surgery Centre
Pending ratification at the CMA General Council in August, Dr. Brian Day, founder of the Cambie Surgery Centre in Vancouver, will serve as CMA president 2007–2008. The CMA presidency rotates among all the provinces, and members of each provincial medical association vote on the position when their turn arrives.
In 1996, Day, an orthopedic surgeon, founded the Cambie Centre, which treats patients willing to pay out-of-pocket, or those who are covered by third-party insurance or government plans, such as the Workers' Compensation Board or the RCMP. Those organizations pay for the clinic's services to avoid waits in the public system.
Day ran on a platform that included the need for doctors to have a greater say in reforming the health care system, and chastised governments for their "bullying" behaviour.
"We and our patients have suffered at the hand of governments. For 20 years they have tried to fix the system and failed. Now it is our turn," Day states on his Web site (http://www.brianday.ca/). "The exclusion of market forces has allowed increased demands for services to coincide with decreased practice revenue for physicians."
Day has previously stated that private health care should complement, but not replace, the public system. But Day was not a one-issue candidate, he told CMAJ in an interview.
"I think people voted for me because they support change. There's a lot of discontent with the way the government has allowed the massive shortage of family doctors to occur," he said.
The president of the BC Medical Association was one of 6 candidates who ran in the CMA election. Dr. Michael Golbey says he believes the surgeon won the election because "it just reflects the frustration that doctors in BC have in getting care for their patients."
"He comes along with a different way of looking at things and people just latched on to that," says Golbey.
Day is a well-respected figure in the medical profession who has spoken to audiences around the world and has been "extremely persuasive," says Golbey.
Day's position is "different" from what CMA's General Council has said over the years, and the president of the CMA is bound by what's decided at General Council, Golbey pointed out.
"He will absolutely bring a different perspective to the CMA."
However, "Dr. Day's solutions will not provide the relief that the Canadian public seeks," stated Dr. Sacha Bhatia, spokesperson for the New Health Professionals Network (NHPN), which represented 25 000 new health professionals. "On the contrary, they will only serve to make profits for some health care entepreneurs and bring some richer patients to the front of the line while decreasing access to health care for the majority of Canadians."
The fact that Day got only 17% of the total vote in BC "suggests that his ideological message does not have overwhelming resonance," stated the NHPN.
Day says that given Quebec's white paper calling for private health insurance for elective surgeries, Alberta's plan to introduce a "Third Way" and the BC Throne Speech calling for an update to the Canada Health Act, Canada is at a "pivotal moment" with respect to medicare.
"There is no question that reform is coming and we have the potential to design the best health system in the world," he says. "It's not a question of debating the pros and cons. It's more about taking the best from what we can learn about systems that work and also learning from the mistakes that other people have made."
Doctors should not only be at the table for that discussion, "we should be at the head of the table," Day adds. "Governments need more help from doctors than they've asked for or have taken in the past."
In a submission to Senator Michael Kirby's committee on health care in 2001, Day recommended repealing the Canada Health Act. "The Canada Health Act achieves the reverse of what it was set out to do. In fact, the people from lower social economic groups, people who do not have the ability to pick up the telephone and make a phone call, people who do not know how to wheel their way around the system are the ones who suffer in a system like this," he said at the time.
Asked if he still supports that view, Day responded that while there is nothing in the Act that is bad, "it has to be updated."

Bono, Bill and Melinda Gates congratulations Time Persons of the Year!

Bono, Bill and Melinda Gates Are Time's `Persons of the Year'

 

By Melvin J. Howard

Time Warner Inc.'s Time magazine named Microsoft Corp. Chairman Bill Gates and his wife, Melinda Gates, and rock star Bono as its `Persons of the Year' for 2005 for their commitment to charity and poverty relief.

The Bill & Melinda Gates Foundation, the world's biggest charity with a $29 billion endowment, gave away money more quickly this year than ever before in history, the magazine said in a statement. Bono, the lead singer of the band U2, helped persuade world leaders to forgive $40 billion in debt owed by poor countries.  I would like to congratulate Bono, Bill and Melinda Gates for stepping up to the plate. The commitment these individuals made to world health and poverty relief only goes to show you can do more then just sit and debate about the state of world poverty and health. You can do something about it.

Congratulations on a job well done continue success!

Eastern Europe A Health Care Market Worth Looking At

ROMANIA’S PRIVATE HEALTH CARE A NEW FRONTIER

 

By Melvin J. Howard

 

 

The Romanian healthcare system is in a transition period, the Government taking determined measures for the rehabilitation, restructuring and privatisation of a part of the healthcare services. The public health expenditure in Romania is relatively low, about 2% of GDP or about US$ 46 per capita (out of which ca US$ 20 per capita is spent on pharmaceuticals).

 

There are 414 hospitals, with a few private ones as an exception. There are about 600 polyclinics, 80% of them public. The number of private polyclinics has continuously increased during recent years. The total number of hospital beds was 164,500, equal to about 7.3 per thousand inhabitants. However, the number of hospital beds gives only a limited indication of the quality of healthcare provided. Most of the public hospitals are struggling with financing their day-by-day operations under the constraints of an insufficient and frequently delayed budget; in most cases very little has been actually done for facilities and equipment modernisation, except for few cases where international grants or loans have been received. The rehabilitation of the public hospitals involves a huge financial effort, which will be supported partly by international financing institutions, among which World Bank has had the prominent role so far.

 

Due to the existing demand for a quality alternative to the public healthcare system, the private system started to develop; I strongly believe there is an emerging affluent class that affords and looks for high quality – high cost healthcare. On top of this local affluent class in towns like Bucharest there is a significant expatriate community, many of whom can afford and welcome private hospital care.

 

 

             The most visible private healthcare initiatives are outlined below:

Medicover – set up by Oresa Ventures in 1995 (similar to operations owned in Poland, Hungary, Estonia), has reached a turnover of Euro 5.2 million in 2001 (a 42% increase compared to the previous year). The company has over 10,000 patients on a subscription basis and its laboratories conducted 2.3 million tests in 2001. It has healthcare units in six Romanian cities. Target clientele: affluent physical persons, entrepreneurs, staff of multinationals, etc.

 

Medsana Medical Center – owned by Greek investors, made US$1.4 million in net revenues in 2001. Is planning to invest in building a private hospital.

 

Unirea Medical Center – has two clinics in Bucharest and a network of partnerships in 17 towns.

 

Biomedica – besides outpatient clinic has rented six hospital rooms from the public system in order to be able to provide more complete services to its patients.

 

Doris Medical Center – a private clinic with a special focus on social security/ labour healthcare planning to extend but delaying the decision due to its inability to raise ca US$ 5 million.

 

Interamerican, a Greek insurance company is expected to start the building a private hospital, a project estimated at US$ 13 million.

 

        On top of these, there are also numerous dental clinics. I should note that all these private healthcare centres are still dependent on public hospitals for providing more complex surgery; a high quality/high price hospital is for sure the missing link in this top tier healthcare system. As a general rule, such private healthcare operations have developed in urban areas exclusively, occupying first the most lucrative market niches (diagnosis, dental care, beauty centres, cosmetic surgery) and to a lesser extent the “acute” healthcare, such as hospitals.

 

        Private medical services have gained impetus during the last years, the market being estimated at a few tens of millions of dollars. The development of private medical insurance will contribute significantly to the development of this sector.

        The 2001-2004 Romania’s Government Privatization Strategy (annexed), opens a whole new prospective to the health care business development opportunities in Romania. This program came just along other existing privatization programs of Eastern Europeans’ Governments. You will find this situation in Croatia, Bulgaria, Slovakia, Ukraine, Hungary and Czech Republic.

        As of now the Privatization Strategy allows the private sector to:

 

1.    Invest in new facilities.

2.    Invest in public hospitals and take over their management, totally or partially without the sale of the assets,

3.    Enter into management and administration contracts with public owed hospitals.

 

        At this moment, the Romanian Government intends to go full speed ahead with private initiatives to see what would be the best method and best suitable way for private capital participation in the health care sector.