Sunday, November 28, 2010

"Don't Litigate, Innovate." How To Implement A Fully Funded Alternative To The New Health Care Overhaul -- And It's Already In The Law

This post of mine first appeared at Kaiser Health News last week.What if a Republican governor and a Republican legislature had the ability to implement their version of health insurance reform and the federal government would have to pay for it? It's a great idea. And I'm thrilled to say that a bi-partisan bill has already been introduced in the Senate by Ron Wyden, D-Ore., and Scott Brown,

Tuesday, November 23, 2010

Will it Be the Bond Market That Finally Forces Serious Health Care Financing Change?

When will the Congress and the White House finally make the hard decisions in order come to grips with the federal deficit problem?When will we finally deal with real health care reform and get the entitlements, and with them the private health care cost issue, under control?My focus on trying to answer those questions has always centered on what's going on in the health insurance market: When

Monday, November 22, 2010

The 300 Page MLR Rules—About as Valuable as Taking Your Shoes Off at the Airport

This whole medical loss ratio (MLR) provision in the new health care law is a fool’s errand. When it comes to controlling health care costs it is about as productive as taking your shoes off at the airport is valuable at improving air travel security.Without a doubt, the new health care law does far too little toward making health care costs affordable. And, marginal health insurance carriers

Sunday, November 21, 2010

Health Care—Tell Us the Truth Before You Tell Us Why You Are Right

This is post of mine that appeared last week at Kaiser Health News.Just after the election, I saw an exchange between CNN’s Anderson Cooper and the head of the Tea Party House Republican caucus, Michele Bachmann. Cooper tried to pin Bachmann down on just exactly what “specific spending cuts” she would make to get federal spending under control. When he suggested that Medicare was going to need

Wednesday, November 17, 2010

Amid Widespread Opposition, Some Find Light

While many surveys shows the country divided on the benefits, or failings, of health reform, the Consumer Perceptions of Health Reform Survey from Deloitte Center for Health Solutions found that 38% of U.S. adults said they are “not at all” knowledgeable about the Patient Protection and Affordable Care Act (ACA). Despite this lack of knowledge, most of the Deloitte respondents felt that the ACA will have a positive impact on the country. For example, 59% believe the ACA will increase access to affordable health insurance for the uninsured, 49% believe it will encourage consumers to live healthier lives, 45% said it will reduce overall health care costs, and 45% said it will reduce the cost of prescription drugs.

And a segment this morning on National Public Radio's Morning Edition reported on a study that found that the number of small firms with 10 or fewer workers buying health insurance rose by 14%, bouyed by the ACA-provided tax credit for these firms to buy health insurance. Still, the National Federation of Independent Business is fighting the ACA.

You think maybe the ACA has some helpful provisions to like?

Monday, November 15, 2010

More MIddle Income, Ailing Workers Are Uninsured

Recent results of the National Health Interview Survey reported by the Centers for Disease Control and Prevention (CDC) help to debunk major health care myths about health care coverage. These myths hold that only the poor, and young, healthy people are uninsured and that the young, healthy folks choose to not have health insurance.

Hear this: “Uninsurance of young and middle-class adults increased by 4 million people from 2008 to the first quarter of 2010,” reported Thomas Frieden, the CDC director, on November 10 in the CDC’s most recent Vital Signs monthly report. The Vital Signs report collected data from more than 90,000 interviews done through the National Health Interview Survey conducted in January through March 2010, just before the passage of the Patient Protection and Affordable Care Act.

According to Mr. Frieden, “Half of those who are uninsured are non-poor and there’s a serious impact on access to needed health care. Specifically, among adults age 18 to 64, the proportion who had no insurance for at least part of the prior year increased from 46 million to 49.9 million to be exact, 4 million more from 2008 to the first quarter of 2010.” Mr. Frieden also noted that the number of individuals who have been without health insurance coverage for more than 12 months also increased substantially from 27.5 million in 2008 to 30.4 million in the first quarter of 2010, an increase of 3 million in chronically uninsured adults.

Mr. Frieden noted that “half of the uninsured are over the poverty level, and one in three adults under 65 in the middle income range (defined here between $44,000 and $65,000 a year for a family of four [who] were uninsured at some point in the year).” Furthermore, “about more than two out of five individuals who are uninsured at some point during the past year had one or more chronic diseases and this is based on just a partial list of chronic diseases. So the actual number may be higher than that.” The CDC reported that 15 million uninsured had one of three conditions: high blood pressure, diabetes, or asthma. The uninsured with asthma were five times more likely than insured individuals not to get needed care, and the uninsured with diabetes and hypertension were are six times more likely to not get needed care.

Since most people get their health insurance through their own or family members' employers, these results are not surprising given these tough economic times with high unemployment. Will the provisions of the Affordable Care Act help people get the care they need? We shall see.

Friday, November 12, 2010

No health insurance rebates yet, despite lower healthcare volumes

Wait ‘til next year!! This is a chant that we Chicago Cubs fans are often heard to say, sometimes as soon as May or June of each year. However, people with health insurance may be soon be saying the same thing, too.

You see, under the new health reform law, starting in 2011, health insurers must meet certain minimum “medical loss ratios,” which essentially require insurers to spend at least 80 percent (for individual and small group plans) or 85 percent (for large group plans) of the premiums they collect on actual medical care. If they don’t meet these rules, insurers have to send rebates to their customers. This rule applies to insurers offering both group and individual coverage and takes effect starting in 2011.

Now, you might be saying, “but my insurance premiums go up every year, how could this be?” Well, it’s like this.

In tough economic times, such as these, more than a few people tend to put off elective surgeries and otherwise skimp on their healthcare expenses. What this amounts to is what one analyst calls a “broad-based slowdown in health care volumes.” Fewer doctors’ visits, fewer lab tests, and fewer elective surgeries should mean fewer health insurance claims and, ultimately, reduced healthcare premiums, right? Alas, health insurance premiums are expected to increase by about 9 to 12 percent for 2011 but, down the road, some experts suggest that this could change if healthcare claims continue to remain flat.

Don't count your savings yet. Other factors could play a role in determining whether you get a rebate. Not to mention that deciding exactly what should count towards the minimum medical loss ratios has been a bone of contention, though recently, after much debate, the National Association of Insurance Commissioners (NAIC) sent its medical loss recommendations to the HHS.

Perhaps a “wait and see” approach is best but hey, it could happen.

For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

Thursday, November 11, 2010

Shame on AARP For Their Response to the Deficit Commission Co-Chairs' Report

The Co-Chairs of the President’s Deficit Reduction Commission are out with their preliminary recommendations.They’ve done a great job—they’ve offended about everyone!But we have a nearly impossible but unsustainable challenge in front of us if we are ever going to crawl out of this deep hole.It is not so much what is on their list as what this list tells us about just how fundamental the changes

Wednesday, November 10, 2010

How will employers respond to health reform?

The $64,000 question of health reform is this: What will employers do in response to health reform changes? Will they continue to offer health benefits to their employees or will they drop health insurance as an employee benefit altogether? Thanks to a new survey by benefits consultant, Mercer, we have a better idea of what will likely happen once the state-run health insurance exchanges become operational in 2014 when employers can opt out by paying a penalty.

Not likely to abandon plan sponsor role. When Mercer asked employers how likely they will be to get out of the business of providing health coverage to their employees, for most employers, the answer is “not likely.”  Survey responses varied by employer size, with larger employers most committed to their health plan sponsor role. In fact, Mercer says, only 3 percent of the largest employers (10,000+ employees) say that they’re likely to terminate their health plans and let employees seek coverage through insurance exchanges and only 6 percent of employers with 500+ employees say the same thing.

Why? “Employers are reluctant to lose control over a key employee benefit” suggests Mercer’s Tracy Watts.  After considering “the penalty, the loss of tax savings and grossing up employee income so they can purchase comparable coverage through an exchange, for many employers dropping coverage may not equate to savings,” she suggests.

On the other hand, small employers, who have less purchasing power and are more vulnerable to large rate increases, are far more likely to terminate their health plans in response to health reform, with about one-fifth saying that they’re likely to do so. However, Mercer’s Beth Umland cites the experience in Massachusetts, where exchanges have been operating for 3 years, as evidence that small employers may not leave the health plan sponsor market, despite the low penalties under the Massachusetts “play or pay” rules.

Health reform’s cost impacts. Cost, of course, plays a key role in determining whether an employee will continue to offer health insurance to its employees. Though costs have been rising by about 6 percent for each of the past 5 years, Mercer suggests that “PPACA will generally increase cost, although the impact will vary from one employer to the next depending on their employee demographics and current benefit program design, as well as the health care markets in which they operate.” For most, Mercer believes, health reform provisions taking effect in 2011 will increase costs by 2 percent or less.

Cadillac plan tax is key concern. The excise cost on high-cost plans (the so-called “Cadillac plans”) is the health reform legislation rule that most concerns employers, Mercer says. When asked about their most likely response to the excise tax, about a fourth of employers (23%) with 50+ employees say that they’ll do whatever is necessary to bring their costs below the threshold amounts. An additional 37 percent of employers say they will attempt to bring the cost below the threshold amounts, but acknowledge that this might not be possible. Only 3 percent say they will take no special steps to bring cost below the threshold amounts, and the rest (37%) predict their plans won’t ever hit the cost threshold.

Interestingly, assuming current costs and 6 percent annual cost increases, Mercer found that, if employers make no plan design changes, 39% of employers with 50+ employees can expect to trigger the excise tax on Cadillac plans in 2018, the year the tax becomes effective. Seems like a lot, doesn’t it? But, as Mercer’s Watts points out, “it’s important to keep in mind that this new tax is still eight years out and a lot could change between now and then,” who added that “given how often ERISA, tax, Medicare and Medicaid rules are modified, there’s a good chance that the excise tax that takes effect in 2018 won’t be exactly the same as the sketch we’re working from today.”

For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform and other recent developments in employee benefits, just click here.

Monday, November 8, 2010

Health Care and the 2010 Mid-Term Elections--the Only Thing Now Certain is the Uncertainty

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Election’s over, what’s next for health reform?

Now that the mid-term elections are over, many people are wondering what’ll happen with recently-enacted health reform legislation. The Republicans have been talking about trying to “repeal and replace” or attempting to defund the law. However, starting in 2011, they control the House but not the U.S. Senate or the presidency.

After the election, Prresident Obama has suggested that he would be open to tweaking the legislation. He cites the 1099 provision in the law as something that “appears to be too burdensome for small businesses” and is an example of something that should be looked at. Likely new House Speaker, Rep. John Boehner (R-OH) pledged “we have to do everything we can to try to repeal this bill and replace it with common-sense reforms that'll bring down the cost of health insurance.”

Of course, no one can really tell what the future holds but here's a sampling of what some experts think about the future of health reform.

A benefits consultant’s view. From a leading employee benefits consultant, Towers Watson, there’s this:

“The results of the 2010 midterm elections have important implications for health care reform implementation. Repealing the health care reform law was a popular promise on the campaign trail, but repeal — and even significant change — is unlikely while President Obama wields the veto pen. Nevertheless, health care reform will remain a leading issue for the new Congress, creating an uncertain environment for employers as they plan for implementation of the law’s major provisions in 2014.”

Towers Watson also suggests that, while repealing health care reform is not likely, the law will remain in the spotlight. “Expect the new Republican majority in the House to increase oversight of the regulatory and implementation process, attempt to deny the funding needed to implement and enforce the law, and work to increase opposition to the law leading into the 2012 elections.”

A former health insurance industry insider’s view. Wendell Potter, a health insurance industry insider who helped plan the industry’s public relations/public policy strategies, is doubtful that health reform legislation will be repealed, according to an interview in Newsweek. Among other things, Potter says that “despite all the attacks on `Obamacare,’ the new law props up the employer-based system that insurers and large corporations benefit from so greatly.”

An economist’s view. According to the Incidental Economist blog, it’s doubtful that health reform will be repealed, pointing out that “there’s a big difference between campaigning and legislating.” In 2012, they say, the “slogan on healthcare is `Repeal and Replace!’ but that’s not a plausible bill because it won’t satisfy the interest groups. Nor can it pass.”

Now what? As we at Health Reform Talk said so often during the legislative process, only time will tell what the future will bring. Let’s just wait and see.

For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

Friday, November 5, 2010

Feds Battle For Hearts And Minds

Feds Battle For Hearts And Minds

The federal government continues the battle for the hearts and minds of health care consumers in a new report stressing Medicare savings due to the Patient Protection and Affordable Care Act.

Average Medicare beneficiary savings in traditional (fee for service) Medicare will be approximately $3,500 over the next ten years because of changes made by the Patient Protection and Affordable Care Act (ACA), according to a report released on Nov. 4 by the Department of Health and Human Services. Beneficiaries who have high prescription drug spending will save much more – as much as $12,300 over the next 10 years. In comparison, Medicare beneficiaries with low drug costs will save an average of $2,400 over 10 years.

(HHS previously released a statement by Don Berwick, administrator of the Centers for Medicare and Medicaid Services, that beneficiaries in the Medicare Advantage program would have an average reduction in cost of 1% for 2011.)

The analysis on traditional Medicare, released by the HHS Office of the Assistant Secretary for Planning and Evaluation (ASPE), shows that the ACA helps lower costs for those on Medicare by slowing the growth of cost-sharing in Medicare. Closing the Part D coverage gap known as the “donut hole” will produce the greatest cost savings. Already, more than 1.8 million seniors and people with disabilities who have reached the donut hole in 2010 received a one-time $250 rebate check, and checks will continue to be distributed to those who enter the donut hole this year, according to the report. Next year, people in the donut hole will receive 50% discounts on covered brand name Part D prescription drugs. Also starting next year, seniors and people with disabilities on Medicare will have access to a number of recommended preventive services and annual wellness visits at no additional cost. 

Although all seniors and people with disabilities in Medicare are likely to see savings, the savings will be greatest for those with costly medical conditions or high prescription drug costs, according to the report. Total savings per beneficiary enrolled in traditional Medicare are estimated to be $86 in 2011, rising to $649 in 2020. For a beneficiary with spending in the donut hole, estimated savings increase from $553 in 2011 to $2,217 in 2020.

According to HHS Secretary Kathleen Sebelius, “The Affordable Care Act makes Medicare stronger and reduces the burden of health care costs on some of our most vulnerable citizens. The law improves benefits for seniors and people with beneficiaries who rely on Medicare and ensures that Medicare will be there for current and future generations by extending the life of the Medicare Trust Fund. These benefits and savings are only possible with the continued implementation of the Affordable Care Act.”

The entire HHS report is available here.

For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform and other recent developments in employee benefits, just click here.

The estimate saving for years 2010 through 2020 are as follows according to the HHS report:


Table 1. Estimated Affordable Care Act Annual Savings
per FFS Medicare Beneficiary

Beneficiaries Not Reaching the Donut Hole
Beneficiaries Reaching the Donut Hole
All Fee For Service Beneficiaries

Wednesday, November 3, 2010

Early Retiree Reinsurance Program Chugging Along

Despite the well-publicized discontent with health reform among employers, those few companies that continue to sponsor pre-65 retiree health care plans have moved quickly to cash in on the Early Retiree Reinsurance Program established by the Patient Protection and Affordable Care Act.

The Department of Health and Human Services (HHS) on October 28 released a list of additional employers and unions accepted into the EERP. Nearly 700 additional large and small businesses, state and local governments, educational institutions, nonprofit organizations, and unions have been accepted into the program i the last month, which reimburses employers for a portion of the cost of health benefits for early retirees' and their families. This brings the total number of organizations participating in the program to nearly 3,600 (click here for earlier accounts of ERRP’s popularity).

In 2009, only 28% of all employers with 500 or more employees even offered retiree health care to pre-65 retirees, so the numbers in the program are even more impressive.

A total of $5 billion has been allocated to ERRP, and when that money is exhausted, so is ERRP.  A complete list of approved applicants and other information is available here.

In addition, HHS has just published a revised application for the ERRP, along with corresponding revised instructions for completing the application. HHS also published a revised "Dos and Don'ts" document for completing and submitting the revised application.

HHS notes the following for those who already have completed an application, those who are in the process of completion, and those who will not finish until after November 9:

  • Sponsors that have already submitted an application, using a version that was appropriate as of the date of submission, should not submit another application for the plan referenced in that submitted application.

  • Sponsors that have started to complete the most recent prior version of the application that had been posted on the ERRP website on Aug. 9, 2010 (see News, Aug. 12, 2010, HHS Provides Relief For Incomplete Applications To The Early Retiree Reinsurance Program), but have not yet submitted the application, may submit that version of the application if postmarked by Tuesday, Nov. 9, 2010. A sponsor completing that version of the application should also use the most recent prior versions of the application instructions (posted August 24, 2010) and "Dos and Don'ts" (posted August 9, 2010). Sponsors can contact HHS' ERRP Center if they need copies of those two documents.

  • Sponsors submitting an application postmarked after Tuesday, November 9, 2010, must use the revised versions of the application, application instructions, and "Dos and Don'ts", all of which were posted on November 2, 2010.

The revised application, application instructions, and "Dos and Don'ts" are posted on the How to Apply for the Program page on the ERRP website.

For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform and other recent developments in employee benefits, just click here.

Monday, November 1, 2010

FAQs Increasingly Important In Health Reform Implementation

Grandfathered health plans under the Patient Protection and Affordable Care Act (ACA) can comply with the required disclosure requirement if they include the model disclosure language whenever a summary of the benefits under the plan is provided to participants and beneficiaries, according to the most recent questions and answers released by the Department of Labor’s Employee Benefit Security Administration.

This is the fourth in a series of frequently asked questions (FAQs) released by EBSA in order to “answer questions from stakeholders with a view to helping people understand the new law and benefit from it” (see Part I, Part II, Part III, and Part IV). EBSA and other agencies increasingly are turning to FAQs and other non-regulatory releases to provide guidance that helps employers and individuals comply with federal laws and regulations (see here, for example).

In “FAQs About the Affordable Care Act Implementation, Part IV,” this question is posed, “Must a grandfathered health plan provide the disclosure statement every time it sends out a communication, such as an EOB (explanation of benefits), to a participant or beneficiary?”

EBSA notes that “many plans distribute summary plan descriptions upon initial eligibility to receive benefits under the plan or coverage, during an open enrollment period, or upon other opportunities to enroll in, renew, or change coverage. While it is not necessary to include the disclosure statement with each plan or issuer communication to participants and beneficiaries (such as an explanation of benefits), the Departments encourage plan sponsors and issuers to identify other communications in which disclosure of grandfather status would be appropriate and consistent with the goal of providing participants and beneficiaries information necessary to understand and make informed choices regarding health coverage.”  In other words, ongoing communication may not be required but certainly is encouraged.

The EBSA release also confirms that certain plans that offer nonessential benefits under the ACA may impose lifetime limits in these plans. According to EBSA, the following type of plan, which imposes a per-child lifetime dollar limit on benefits provided under such plans, does not violate the lifetime limit prohibition:

  • operated before enactment of the Affordable Care Act ),

  • reimburses expenses for special treatment and therapy of eligible employees’ children with physical, mental, or developmental disabilities,

  • operated separately from the employer’s primary medical plans,

  • employees who are otherwise eligible may participate in the plan without participating in those primary medical plans.

More guidance in the form of FAQs can be expected on grandfathered plans, nonessential benefits, and other aspects of the ACA.

For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform and other developments in employee benefits, just click here.