If you listened to President Barack Obama and some members ofCongress talk about health care, you would most certainly believethat your premiums will miraculously go down now that they havepassed their very complex health insurance reform bill. On numerousoccasions during his presidential campaign, Obama stated that afamily would see its health insurance premiums go down by $2,500per year if reforms were passed. You also were told — and mightbelieve — that millions more Americans now will be insured and jobswill flourish.

I am going tell you why none of that will happen. (Please note:This article is based upon information that was available as ofMarch 25, and things are changing at warp speed.) Let's take a lookat the sections of the Senate bill that impact costs:

Minimum Medical Loss Ratios: Insurance carriers pay policyholdermedical bills in one of two ways: Either through the premiumdollars they collect or through investment returns. Currently, inthe individual health market, about 75 cents of every dollar ispaid out in claims. The balance goes to pay taxes, networkmanagement fees, set-asides for required reserves, marketingmaterials, rate filings, distribution fees, coordination of othergovernmental programs; about 2.2 percent is left over forprofit.

The Senate bill requires establishing a minimum loss ratio of 80percent for individual plans and group plans below 100 lives; 85percent for groups above 100 lives. What does that mean for thepolicyholder? Well, less involvement with insurance agents for astart. Agents are very likely to be eliminated from the entireprocess, or paid so minimally that it will be non-productive forthem to sell or offer health insurance for individuals or smallgroups. Policyholders also may see a reduction in services frominsurance carriers in areas such as case management, diseasemanagement, online tools, and the like.

Fees and Taxes: Beginning in 2011, the bill imposes a $6 billionfee/tax on health insurance companies with $50 million in profits,and assesses the tax on a prorated basis to insurance companiesbased on profits. For one of our major carriers here in Floridaalone, this new, non-budgeted tax amounts to $116 million.

Because all of the groups that were in effect and renewed priorto second quarter rate filings (April 1 to June 1) do not have theprovision to absorb this kind of tax built into the 2011 rates,policyholders will see a higher-than-expected rate increase in 2011to make up for the two years of taxes. Industry sources say thistax alone could increase a family's premiums by an additional $290to $360 per year.

Community Rating Models: In Florida, people currently payaccording to their age, gender, geographic location, familycomposition, and overall health as a group. Smaller groups pay by arate chart, and each person pays according to his own demographics.Larger groups simply blend those demographics into a single orcomposite rate.

If you look at a rating chart today, the lowest figure is for a20- to 24 year-old male; the highest, a 60- to 64-year-old female.The cost spread between these categories is typically 1:7 or 1:9times greater (i.e., if the male cost is $100, the female is $700or $900 on average.) The Senate bill says that this spread has tobe 1:3. So, if the lowest rate is $100, the highest rate is $300.The only considerations can be for tobacco use and geographiclocation.

Despite the big outcry that carriers must cover preventativecare at no cost to the member, premium considerations for wellnessare allowed on group plans only "under certain circumstances." So,if you are a 24-year-old male marathon runner in the best ofhealth, you will be subsidizing the cost of the 64-year-old,400-pound diabetic with a heart condition. Younger, healthy peoplewill be subsidizing the premiums of the old and the sick.

If the initial fines or penalties are as little as $325 per yearto take a pass on health-care insurance, most healthy people willwait until they get sick to hop into the system. The very people —the young and the healthy — who you want to participate in yourhealth pool will have very little incentive to do so, because thecarriers will have to cover pre-existing conditions immediately.This is the kind of thing that drives up rates for everyone.

Minimum Benefit Plan Designs: Many people have resorted topurchasing higher deductible plans to lower their premiums or havebeen taking advantage of lowering their taxes with preferentialtreatment of HSAs. However, under the Senate bill, a health planwith a deductible higher than $2,000 for an individual or $4,000for a family would not be considered "creditable." The bill alsowill prohibit annual limits or lifetime maximums on "essentialbenefits." All individual plans will have to cover maternity. Planswill have to cover oral and vision care for children — including"children" to the age of 26. Think about the cost of the plan youhave now and how much it would be to upgrade it to the minimumbenefit standards in this plan.

Reduction of Medicare Reimbursements to Providers: According tothe actuarial and consulting firm Milliman, Inc., every familyalready pays an average of $1,800 per year in health insurancepremium to make up for the underpayments of Medicare. This is oftenreferred to as "cost shifting." In order to get the total cost ofreform to come in below the $1 trillion mark, this reform billassumes a 21 percent reduction in Medicare reimbursements startingin 2012 and continuing through 2019 — the very time that many BabyBoomers are becoming Medicare eligible.

Employer Mandates: Employers do not have to offer coverage.However, if they employ 50 or more full-time equivalent employeesand have at least one full-time employee receiving a premiumassistance tax credit, they will be required to pay a fine of$2,000 per employee, the first 30 employees being exempt. Employersalso cannot make employees wait more than 90 days for coverage. Ifthey do, they will have to pay a $600 fine for every employee notpermitted to enroll within that time span.

Individual Mandate: Just because you don't work for a companythat employes 50 or more people, don't think you are home free.Under the Individual Mandate provision, you will be required topurchase a "qualified health plan" by Dec. 31, 2013. Failure to doso will result in an IRS penalty of the greater of one percent (twopercent in 2015) of your household income, or fixed-dollar amountsthat range from $325 per person in 2015 all the way up to $695 by2016.

Cadillac Plan Tax: As noted above, health premiums are made upof many factors, including age and geographic location. The federalgovernment picked an arbitrary figure of $10,200 if you are asingle person and $27,500 for a family, and decided that any planthat costs more than that per year must have been purchased by arich person, and imposed an additional 40 percent excise tax forhaving such a plan. Those figures include not only your healthinsurance premiums, but any employer contributions to an HRA, FSA,HSA, dental plan, vision plan, or other supplementary healthinsurance coverage.

However, the reality is that people who tend to have these plansare older people, labor union members, and employees of non-profitcorporations. This tax did not sit too well with the labor unions,who are big supporters of the Obama Administration and theDemocratic Party in general, and a "special deal" was cut. If youare a member of a labor union, including federal and state employeeunions, then you do not have to pay the tax until 2018.

Additional New Taxes in the Bill:

? A new $2 billion tax on the manufacturers of prescriptions

? A new 10 percent tax on indoor tanning services

? An increase on Medicare payroll taxes from 2.9 to 3.8 percent(that is a 31 percent increase) for single people making $200,000or more and married people making $250,000 or more per year

? A stipulation that you will no longer be able to use your FSA,HRA, or HSA to purchase over-the-counter drugs

? A new $2 billion tax on the makers of medical devices such aspacemakers

Expansion of Medicaid: One of the ways the federal governmentintends to get more people insured is by expanding the definitionof Medicaid eligibility to 133 percent of the poverty level.

The cost of Medicaid is shared between the federal governmentand the states. The problem is, states cannot print money and mosthave balanced budget amendments, so they cannot run a deficit. Ofthe estimated 4 million uninsured people in Florida, this expansionwould add approximately 1.7 million more people to the Medicaidrolls, costing our state billions.

How will Florida pay for that? Our Medicaid budget is alreadystrained to the limit. Will lawmakers have to raise sales taxes,property taxes? If they do not raise taxes, what services will haveto be cut? Schools, fire, police? Nothing is free. Regardless ofhow the state intends to pay for this additional burden, trust me,as a citizen, you will feel it one way or the other.

The bottom line is, health insurance premiums merely finance thecost of health care. There is nothing in any of these proposalsthat will greatly impact the cost of that care. There is no tortreform; there are no incentives to improve the quality or deliveryof health care; and until our society decides that living a healthylifestyle is important, we will continue to increase our incidencesof morbid obesity, diabetes, heart disease, and more. Insurance isexpensive because health care is expensive — there is no magic inthis.

Unemployment and underemployment today are about as bad as manyof us have seen in our lifetimes. Employers are struggling withreceivables and many are tapping into personal savings just to keepthe doors open. With the exception of growth in law firms, thefederal government and mental health facilities, most businessesare struggling.

What can you do? Be vigilant. Be informed. Call your senatorsand representatives. Let them know you will remember in Novemberwhat they did in March.

Terri L. Seefeldt, RHU, is the sales managerfor Rogers Benefit Group in Orlando. She is secretary-treasurer ofthe National Association of Insurance and FinancialAdvisors-Florida. She may be contacted [email protected].