Drug prices to plummet | BenefitsPro

Drug prices to plummet | BenefitsPro.

House Panel Approves 2012 Budget, Including Medicare, Medicaid Cuts

The AP (4/7, Alonso-Zaldivar) reports, “The Republican-led House Budget Committee approved a $3.5 trillion budget for 2012 on Wednesday that was hailed by its GOP authors as an end to a federal spending binge but savaged by Democrats as an assault on retirees and the poor.” Notably, the “party-line 22-16 vote underscored the sharp partisan divide over the blueprint, crafted by the committee’s chairman, Rep. Paul Ryan, R-Wis., at a time of record federal red ink.” This budget proposal “lays the groundwork for a decade of cuts in spending, taxes and deficits, tempered by a shift in medical costs from the government to future retirees and a reshaping of the two chief federal health programs for the elderly and poor, Medicare and Medicaid.”
Ryan Plan Aims To Shift Rising Healthcare Costs From Government. The NPR (4/7, Goldstein) “Planet Money” blog reports that currently, “the federal government shoulders much of the burden” for increasing healthcare costs, “particularly for the elderly, who are covered through Medicare.” But, “Rep. Paul Ryan wants to change that. In the big budget plan he proposed yesterday, the government would pick up the Medicare tab at current rates,” which means “the burden would shift from the government to the elderly.”
The National Journal (4/7, Fernholz, Subscription Publication) reports, “Congressional Republicans have derided President Obama’s health care reform act since before it was enacted, arguing that it won’t work, doesn’t save money, and represents a government takeover of health care.” But, after Paul Ryan (R-WI) released his budget plan, “Obama’s work began to look only half-bad.” The Journal notes, “Over the next 10 years, Ryan’s plan would cut $1.4 trillion in expanded health-care coverage that Obama’s law would have provided and eliminate $520 billion in revenue increases that were supposed to pay for part of the bill.”
CQ HealthBeat (4/7, Adams, Subscription Publication) reports, “Because seniors would pay higher costs under the proposed system, the federal government’s share of Medicare spending would be the same in 2022 under Ryan’s plan as it would under current law. The nonpartisan CBO analysis said that out-of-pocket costs for Medicare beneficiaries would more than double in 2022 when compared with the current system.”
Liberal Group To Air Ad Against Proposed Medicare Cuts. The Hill (4/7, Fabian) “Blog Briefing Room” reports, “The liberal group Americans United for Change released a television ad Wednesday that goes after Rep. Paul Ryan’s (R-Wis.) plan to drastically change the Medicare entitlement program.” The Hill adds, “The 30-second ad, titled ‘Hands off Medicare,’ is set to air this week nationally on MSNBC and other cable news stations in Washington, according to the group. It says Ryan’s plan would transform Medicare…into a voucher program to subsidize the purchase of private insurance.”
Ryan’s Plan May Erode Senior Support For GOP. USA Today (4/7, Wolf, Kennedy) reports, “Republicans unveiled a budget-cutting plan Tuesday that would dramatically revamp the twin health care pillars of the Great Society, taking a huge political risk that could reverberate all the way to November 2012 and beyond.” Notably, “Medicare, the government-run health insurance program covering about 47 million seniors and people with disabilities, would be run by private insurers and would cost beneficiaries more, or offer them less.” Meanwhile, “Medicaid, the federal-state program covering more than 50 million low-income Americans, would be turned over to the states and cut by $750 billion over 10 years, forcing lesser benefits or higher co-payments. Social Security eventually would be cut, too.” The National Journal (4/7, Brownstein, Bland, Subscription Publication) also covers the story.

Small Business Tax Credit

A client of mine recently met with there accountant to go through the 2010 tax filing. One of the subjects was the small business tax credit for small businesses. He pays about $100k a year in premium of which he pays about 70% of the premium for the employees. His employees on average make about $38k per year. So based on the parameters of the tax credit the corporation should receive a nice credit on the taxes. The calculations produced a $600 tax credit for the year.
Thank you Obamacare.

Aetna Suing Six New Jersey Doctors Over “Unconscionable” Medical Bills.

Bloomberg News (3/24, Waldman) reports that health insurer “Aetna Inc. (AET) is suing six New Jersey doctors over medical bills it calls ‘unconscionable,’ including $56,980 for a bedside consultation and $59,490 for an ultrasound that typically costs $74.” Bloomberg News adds, “The lawsuits could help determine what pricing limits insurers can impose on ‘out-of-network’ physicians who don’t have contracts with health plans that spell out how much a service or procedure can cost.” In particular, Aetna’s “lawsuits, filed in superior court in Camden, New Jersey, over the last eight months, allege the defendants violated New Jersey Board of Medical Examiners rules against excessive fees, and seek triple damages under state insurance- fraud laws against filing false or misleading claims

Update on Grandfathered Plans

HCR Regulations on Grandfathered plansHere is a legislative Brief on updated information on Grandfathered plans. Please read over. There will be more changes as a result of the polictical landscape changing and the uninteded consequences of the Health care Reform Bill.

The 2010 Mid-Term Elections

The 2010 Mid-Term Elections

The recent elections, held on November 2, 2010, are bringing big changes to Washington. Results of a few races are still to be finalized in the days after the elections, but it is already clear that we are looking at a new political landscape.

Republicans have taken control of the House of Representatives, gaining at least 60 seats there. These wins give the party the largest House majority it has had since the 1940s. However, Democrats are set to maintain a slim majority in the Senate.

Potential Health Care Reform Changes

Many Republican candidates included promises regarding health care reform in their campaigns. These promises ranged from making changes to the law to outright repeal. However, employers and plan sponsors should keep in mind that such changes will not be automatic or immediate. Any changes to health care reform will have to go through the same legislative process that the initial reform package endured.

Current House Minority Leader John Boehner (R-Ohio) is expected by many to become Speaker of the House. In the wake of the elections, Rep. Boehner has indicated that Republicans would move slowly with changes to “lay the groundwork before we begin to repeal” health care reform.

With a divided Congress, any efforts to completely repeal the legislation will face obstacles. Even if a full repeal could make it through the Senate, President Obama could still veto any repeal legislation. Because of that probability, some Republicans have indicated that that they would try to repeal the health care law “piece by piece,” using strategies like blocking funding or regulations. Other Republicans have also said they may try to replace, rather than repeal, parts of the law.

Provisions of the law that are likely to be targeted for revision or repeal include:

· The requirement for businesses to report payments in excess of $600 on a Form 1099;

· The employer responsibility provisions, which provide that employers can face penalties for not providing a certain level of health coverage to employees;

· The individual responsibility requirement, which imposes penalties on individuals who do not obtain coverage;

· The Cadillac Plan tax on high-cost, employer-sponsored health plans;

· The tax on manufacturers of medical devices; and

· Cuts to Medicare.

Republicans have also suggested changes to the planned health insurance exchanges, which will take effect in 2014, to give states more power in designing the exchanges. However, members of the GOP have also said that they may want to keep some of the law’s provisions that are popular with consumers. Some experts have warned that keeping some parts of the law while repealing others may not be practical.

Democrats are standing behind the health care package and some exit polls show that the public is split on whether health care reform should be repealed. However, party leaders, such as President Obama and Senate Majority Leader Harry Reid (D-Nevada) have indicated a willingness to revise some portions of the law, especially if changes will bring faster and more effective reform to the health care system.

What’s Next?

Despite all these changes, and potential future changes, the health care reform law as we know it is the law. Employers and health plan sponsors should make sure they are implementing the requirements as they become effective. If any changes are made to parts of the law that have already taken effect, there will likely be time for employers and plan sponsors to put changes into place.

Survey on Healthcare Reform

HCR SurveyHere is a survey that was completed on Healthcare reform. We asked about 2400 businesses to participate in the survey. The survey was taken during the August/September timeframe. Please read the interesting results. Please click on the above blue link to open the document.

House GOP Plans Health Reform Repeal Vote In January.

Dow Jones Newswire (11/3, Vaughan, subscription required) reports that House Republicans intend to propose a vote to repeal the healthcare law early next year, although any such legislation will likely stall in the Senate, where Democrats are expected to retain the majority. Experts say that the real fight over implementation of the law will occur after that vote.

The Hill (11/3, Lillis) reports in its Healthwatch blog, “House Republicans plan to vote early next year on legislation repealing the new healthcare reform law.” Commenting on the vote, Rep. Charles Boustany (R-LA) said, “I believe we’ll see a vote very quickly. … Whether or not there’s a willingness of the Senate to move in that direction, it’s important to have the vote.”

Bloomberg News (11/3, Litvan, Armstrong) notes, “House and Senate Republicans already have written at least 30 bills to roll back provisions in the law. The success of some efforts would mean WellPoint Inc. and competing health insurers may escape regulations to set their patient care spending, while Boston Scientific Corp. and other medical-device makers dodge $20 billion in tax increases in the next decade.”

CBS News (11/3) reports in its Political Hotsheet blog, “Current House Minority Whip Eric Cantor, R-Va., is expected to be the new majority leader in the House with Ohio Rep. John Boehner as speaker.” CBS interviewed Cantor “following the news that the Republicans will take control of the House” in January, and Cantor said that “tonight’s election is about listening to the people, and that was the message that’s being sent across this land is they don’t like this healthcare bill, and they want to see us focus on jobs, and there’s just been no results that match the expectations of the people. … So I believe that when we take majority of in January, I hope that we’re able to put a repeal bill on the floor right away because that’s what the American people want.”

Reuters (11/3, Colvin, Mason) also quotes Cantor as saying, “We will repeal the trillion-dollar healthcare bill that threatens to bankrupt…this country,” and “we will get to work right away to reduce the deficit by cutting federal spending next year down to 2008 levels. That will save $100 billion in the first year alone.”

Administration May Consider More Employer Exceptions Under Healthcare Law.

Bloomberg News (10/25, Armstrong) reports, “Employers may be allowed to switch their health insurers and still be shielded from costly coverage changes mandated in President Barack Obama’s health-care overhaul, a White House official said.” The law states that “once companies change plans, they must provide added services, including preventative care,” but the “US is weighing whether to allow employers to avoid the requirements, even with a new insurer, as long as benefit levels stay the same, said a White House official who asked not to be identified because the talks are private.” Meanwhile, Jay Angoff, director of the HHS insurance oversight office, said, “We’re working with everyone from the business community to insurers to state insurance commissioners to consumers to ensure a smooth transition.”

Healthcare Reform Cartoon

How to read your medical bill

Medical bills are becoming increasingly complex and difficult to read. And charges from clinics and hospitals tend to be lumped together instead of itemized – making it very difficult to see exactly what you are paying for. With many medical facilities moving toward a paperless office, many patients are not even receiving the statements regarding the amount the insurer paid. This is resulting in a much greater chance of you being overcharged.

Controlling Costs
A big step in controlling your health costs is knowing how to read your medical bill. Because many medical bills contain billing errors as well as items that are priced much higher than their cost, reviewing your bills with a careful eye can end up saving you a lot of money.

How it Works
When you receive your medical bills there are three documents that you need to compare to help you understand if you are being billed only for the services you received:
- A list of services performed – this document is given to you when you leave the doctor’s office or health facility.
- The bill from the doctor or health facility – this is a list of services performed with the charges associated with each service (which should match the list of services performed document given to you when you leave the facility). Many health systems are no longer issuing itemized bills, which will help you find obvious errors much easier. You have the right to request an itemized bill from the facility.
- Explanation of benefits (EOB) (explaining how much of the bill paid for by insurance) from your insurance provider, Medicare or other payer.

Start by reading over each of the documents individually and noting any charges that you don’t understand or don’t think you should have been charged for.

Because these bills use codes for each of the services provided, it can make it even more difficult for you to read. To better understand what these codes mean, use a medical dictionary or encyclopedia (www.medilexicon.com). Then compare the documents against each other, making sure that the charges match up.

Checking for Errors
Make sure there are no data entry errors including numbers with an accidental zero added on (i.e., “10” instead of “1” X-ray). Also check for duplicate listings of procedures and medications that you do not think were administered.

If you find suspicious charges, don’t hesitate to contact the clinic or health care facility billing department.

A Proactive Approach
There are also a few best practices that you can utilize before your procedure or appointment.
- Make a log and write down notes as you are administered treatment, noting exactly what services are performed. Consider bringing a friend or family member to do this for you if you will be unconscious.
- If you’re going to be charged for a hospital stay, call the billing department before your procedure to ask if there are any supplies you can bring with you to avoid high charges such as a box of tissues, extra blankets or pajamas.

CLASS Act Long Term Care Benefits

Executive Summary
The Patient Protection and Affordable Care Act establishes a voluntary, consumer-funded long-term care insurance program known as the Community Living Assistance Services and Supports Program (CLASS Act or program). The goal of the program is to provide additional options for people who are disabled and require assistance to continue living as independently as possible.
Key points of the program include:
• Voluntary premium contributions by working adults. Individuals can choose to contribute by payroll deductions through their employer or directly to the program.
• Benefits for disabled individuals. Certain adults who have contributed to the program for at least five years will be eligible for cash benefits if they become disabled due to multiple functional limitations or cognitive impairments, along with advocacy services and advice, and assistance counseling.
• Flexible benefits for long-term care. The cash benefits available under the program can be used to buy non-medical services and items to help maintain residence in the community, as well as for assisted living or a nursing home.

The CLASS Program is effective on January 1, 2011. HHS is expected to establish benefits for the CLASS program by October 2012, and enrollment will be available sometime later.
This Cohen-Seltzer Inc Legislative Brief describes the major provisions of the CLASS program. Please read below for more information.
The CLASS Program
The CLASS program is a national program that gives working individuals an option for paying for certain long-term care services. By paying into the program on a monthly basis, individuals that meet employment requirements can be eligible for benefits if they later develop functional or cognitive limitations. These benefits are intended to help pay for items or services that will enable disabled people to maintain as much independence as possible, along with paying for institutional care if necessary.

Participation in the CLASS Program
Individuals who are at least 18 years old, are actively employed (including through self-employment), and are not institutionalized, are eligible to enroll in the CLASS program. People working for an employer that participates in the program will be automatically enrolled, unless they choose to opt out. Alternative enrollment procedures will be developed for workers who are self-employed, have more than one employer, or whose employer does not participate in the automatic enrollment process.
HHS will establish procedures to make sure that an individual is not automatically enrolled in the program by more than one employer. Individuals that do not enroll when first eligible will have to wait until an open enrollment period to join. Disenrollment for reasons other than non-payment of premiums will be allowed only during an annual disenrollment period.

CLASS program participants will pay monthly premiums to participate. The amount of the premiums will be determined by HHS and will be designed to ensure solvency of the program for 75 years. Low-income individuals and full-time students will pay a nominal premium, which will begin at $5 per month. The premium payments will be placed into the “CLASS Independence Fund” which was established by the Affordable Care Act and will be managed by the U.S. Treasury. Premiums may be adjusted in the future, if necessary to maintain solvency of the program.

Eligibility for Benefits
Individuals can be eligible for benefits if they have paid monthly premiums to the program for at least five years and meet employment requirements for three of those years. To obtain benefits, an individual must be certified by a licensed health care practitioner to have a functional limitation for a continuous period of more than 90 days. People with functional limitations are those that are unable to perform at least two activities of daily living (such as eating, bathing, dressing and using the bathroom) or who have a substantial cognitive disability that requires substantial supervision for health and safety purposes. Once an individual becomes ineligible for benefits, the benefits will cease to be paid.

CLASS Program Benefits
Benefits available under the CLASS program include cash benefits, advocacy services, and advice and assistance counseling. HHS will establish procedures for the payment of cash benefits, including payment into a “Life Independence Account” set up for each eligible beneficiary. Funds in these accounts will be able to be accessed with a debit card.
The amount of the cash benefit available under the CLASS program cannot be less than an average of $50 per day. The amount will vary depending on the scale of functional ability. The benefit is paid on either a daily or weekly basis and there is no lifetime or aggregate limit. Benefits can be rolled over from month to month, but not from year to year.
Cash benefits can be used to purchase non-medical services and supports needed to maintain independence at home or in another residential setting in the community. These services and supports include things like home modifications, assistive technology, accessible transportation, homemaker services, respite care, personal assistance services, home care aides, nursing support and compensation for family caregivers. Cash benefits can also be used toward the cost of assisted living facilities or nursing homes, as well as for assistance in choosing or making decisions about care.

Impact on Medicaid and Other Benefits
Benefits paid under the CLASS program will not affect eligibility for other programs such as Medicaid, Medicare, Social Security benefits, or Supplemental Security Income. The CLASS program benefits will generally supplement other program benefits.

CLASS benefits will offset certain Medicaid benefits. A Medicaid beneficiary who is a patient in a hospital, nursing facility or other institution will be able to keep five percent of their daily or weekly cash benefit. The rest of the benefit will be used to pay for the cost of care. Medicaid will provide secondary coverage for the care. Individuals who receive Medicaid assistance for home and community-based services or Programs of All-Inclusive Care for the Elderly (PACE), will be able to keep 50 percent of the CLASS benefit. The remaining 50 percent will be applied to the state’s cost for providing the assistance and Medicaid will provide secondary coverage for the care.

New Pre-Existing Condition Insurance Plan (PCIP)

Find your states plan. I wonder how long these rates will last since they have been heavily subsidized. What are the benefits? Does it include Prescriptions?
Is some of the plans a straight deductible?

http://www.healthcare.gov/law/about/provisions/pcip/index.html

Administration Unveils New Rules For Employer-Sponsored Plans

The Los Angeles Times (6/15) reports, “The Obama administration Monday announced new regulations to discourage companies from scaling back their health benefits, a goal Democrats described as a top priority of the new healthcare law. These rules may have a profound effect on the health coverage that more than 160 million Americans get from an employer.”

The Washington Post (6/15, Hilzenrath, Aizenman) reports, “If you like your health plan, you can keep it. That’s what President Obama promised during the long months of debate over health-care reform,” and the new rules issued on Monday are meant “to fulfill that promise.” The Post adds, “The administration estimates that many plans will end up changing, prompting Republicans to accuse the president of breaking his word.”

According to the AP (6/15, Alonso-Zaldivar), “The Obama administration had a message Monday for employers who want to keep federal bureaucrats from rewriting the rules for their company medical plans: Don’t jack up costs for workers, and you won’t have to worry about interference from the new health care law.” HHS Secretary Kathleen Sebelius, who made the announcement, said, “What we don’t want is a massive shift of costs to employees.” The AP points out that this “new regulation that spells out how health plans that predate the health overhaul law can avoid its full impact.”

For instance, the “regulations empower the administration to revoke the so-called grandfather status of businesses that shift ‘significant’ new burdens onto employees — a considerable penalty that would subject those plans to all the consumer protections in the Democrats’ new healthcare reform law,” The Hill (6/15, Lillis) notes. Under these new rules, Sebelius said, “employers can make ‘routine and modest’ adjustments to their premium, deductible and co-pay requirements,” although “‘significant’ cost hikes or benefit cuts would cost them their exempted status. The goal is to ensure that grandfathered plans ‘don’t use this additional flexibility to take advantage of their customers,’” she added.

Kaiser Health News (6/15, Galewitz, Carey) reports, “Business groups gave mixed reviews Monday to new Obama administration rules limiting how much employers and insurers can change their health insurance plans — while remaining exempt from potentially costly new consumer protections.” Notably, “consumer groups praised the regulations, saying the rules would ensure that millions of Americans receive the full benefits of the new health-overhaul law.” In contrast, “business groups that opposed the enactment of the health overhaul law denounced the regulation.” Randel K. Johnson, a senior vice president at the U.S. Chamber of Commerce, stated, “Once grandfathered status is lost, employers will be forced to follow a number of expensive new insurance rules — which will increase costs for employers and employees, threatening the coverage Americans currently have.”

Reuters (6/15, Charles) notes that investors and analysts are paying close attention to these new rules, as well as to the others being issued as health reform is being implemented, in order to determine their impact on the health insurance industry. The USA Today (6/15, Kiely) “The Oval” blog also covers the story.

A couple questions come to mind:
1. What is a significant benefit change?
2. What percentage of change to employee payroll deductions is acceptable?

'Small Business Tax Credits for Healthcare'

‘Small Business Tax Credits for Healthcare’.

Why are Health Care Costs rising?

Health care costs – and consequently the rates your employer pays for your employee health plan – have grown four times the rate of inflation over the last decade. Employers have seen their health insurance premiums increase 119 percent since 1999. Total health insurance costs for employers could reach nearly $850 billion by 2019.

Why are costs rising so high, so fast? This edition of Know Your Employee Benefits explains the factors leading to the continuing onslaught of health care costs.

National Health Care Costs
As health care costs climb, the amount your employer must pay for your health benefits also increases. Unfortunately, the trend of health benefit costs rising faster than the rate of inflation is expected to continue.

Do you know how much your employer pays for your health benefits? According to the 2008 Hewitt Health Value Initiative, the average cost of health care benefits for active employees is expected to climb from $8,331 in 2008 to $8,863 in 2009. For a family of four, the cost is about $13,000 a year. That’s in addition to salaries and hourly wages, and any other benefits an employer provides.

Unpredictable and uncontrollable health insurance rate increases are having a very serious financial impact on most employers. To begin to understand why employee medical plan rates are rising so dramatically, you must first understand that the overall costs of health care are skyrocketing across the United States.

Why are Costs Rising?
Several market conditions working together have led to steep increases. Understanding these factors will help you be aware of the reasons behind any benefit or employee contribution (the amount you are required to pay out of your paycheck) changes your employer decides to make.

The Aging of America
It is an inescapable fact: the U.S. population is aging. According to the U.S. Census Bureau, the number of Americans age 65 and older is expected to nearly double by 2025, and the elderly population (80 and older) will increase 80 percent. As the population ages, there is a subsequent rise in the occurrence of chronic diseases like asthma, heart disease, and cancer, and a resultant need for more resources to fight these diseases. This leads to elevated utilization of prescription drugs and other medical services, and an overall increase in health care spending.

The Dramatic Rise of Prescription Drug Costs
Prescription drug costs continue to represent an increasingly large portion of health care expenditures. According to the Centers for Medicare & Medicaid Services (CMS), spending in the U.S. for prescription drugs was $216.7 billion in 2006, more than five times what was spent in 1990. The U.S. Department of Health and Human Services (HHS) projects U.S. prescription drug spending to reach $515.7 billion in 2017 – a 138 percent increase from 2006.

While prescription drug spending has been a fairly small proportion of national health care spending compared to spending for hospital and physician services (10 percent compared to 31 and 21 percent, respectively), it has been one of the fastest-growing components, until recently growing at double-digit rates.
The reasons for the increase in spending on prescription drugs are many, and include the following:
 Increased use – More people are using more prescription drugs, thereby driving up spending. From 1997 to 2007, the number of prescriptions purchased increased 27 percent.
 Increased prices – Prescription drug prices increased at 3.5 percent in 2006 (the most recent data available). In 2007, the average brand name prescription drug price was over three times the average generic price.
 Changes in the types of drugs used – If new drugs are used in place of older, less expensive medications, they can increase overall drug spending. This can also occur if new drugs supplement rather than replace existing drug treatments.
 Advertising – Prescription use in general and movement to higher-priced drugs can be influenced by advertisements. Spending for consumer advertising in 2007 was more than four times what was spent in 1996. Critics of direct-to-consumer (DTC) advertising feel that promotion of drugs to consumers instead of doctors creates inappropriate consumer demand and utilization of certain medications. In addition, many feel that drug prices could be lower if drug manufacturers did not spend huge sums of money on advertising.
 Profits – From 1995 to 2002, the number-one most profitable industry in the nation was pharmaceutical manufacturing. By 2007, it fell to third, but it’s still a significant factor in overall health care costs.
 Insurance coverage – Individuals with insurance are more likely to use prescription drugs than those without, and the growing prevalence of managed care plans – which usually offer generous drug benefits – has fueled increased prescription drug use.
 Conditions of senior citizens – With the general aging of the population, there is a higher incidence of chronic disease, and a resultant increase in the use of pharmaceuticals to treat those conditions.

The Consolidation of Insurance Companies
During the economic boom of the 1990s, competition among insurance carriers and managed care companies was fierce. In order to gain market share, many large insurance companies acquired smaller, weaker firms and kept their rates low in order to stay competitive. This practice has taken its toll, leading to dips in profitability and stock prices for a large number of insurance carriers. Now, those companies that have survived are faced with much less competition and are committed to returning to profitability, which has ultimately resulted in increased rates for employers.

The Weakening of the Managed Care System
Also in the 1990s, employers began offering plans that allowed patients to see out-of-network doctors or those that had less strict referral processes, such as Point-of-Service (POS) plans. In addition, many employers making health plan purchase decisions focused on keeping employees happy by ensuring that most doctors in an area were in a chosen network, rather than choosing narrower networks with deeper discounts. All of this has led to a general weakening of the managed care system. With the level of premium increases over the last few years, many employers have backed away from offering rich benefits, and instead have implemented a number of tactics to reduce costs.

Political Environment and Government Regulation
Health insurance, and more specifically managed care, is one of the most regulated insurance sectors on both the state and federal levels, and has become one of the most highly debated topics in the political arena. State and federal mandated benefits have increased twenty-five-fold over the last three decades. Often these mandates duplicate or conflict with each other, and usually come with increased costs for the health care system. There are over 1,500 mandated benefits at the state and federal level. Each of these has a cost associated with it, and together they have had a significant impact on health care costs.

Issues such as prescription drugs for seniors, Medicare reform, and coverage for the uninsured will also continue to play a big role on political and legislative agendas in the coming years, likely increasing costs as well.

Increased Utilization and Consumer Demand
Utilization of many health care services has risen over the last decade. A number of factors such as improvements in medical technology, the influence of managed care, elevated consumer awareness and demand, and a boost in the number of practicing physicians caused health services like the number of surgical procedures and the number of prescription drugs dispensed to rise significantly. Other services such as breast cancer screenings, immunizations for children, and diagnostic procedures like CT and MRI have also experienced sharp utilization increases.

Health Care Spending and Medical Cost Inflation
Overall health care spending and medical cost inflation are also ascending, due to many of the factors discussed above. By 2018, national health care expenditures are expected to reach $4.4 trillion – more than double what it was in 2007.

What Does it all Mean?
Your employer, like others, is undoubtedly trying to determine how to keep accelerating health plan rates from having a serious financial impact on your company. Many firms absorbed the increasing costs for years to avoid further burdening their employees. Now, most are realizing that they will have to pass portions of the costs on to employees in the form of greater contributions from their paychecks, or benefit designs that require them to pay more out-of-pocket for the medical services they use (increased coinsurance, co-payments, or deductibles).

Keep the facts in this brochure in mind if your employer reduces your health benefits, or asks you to pay more. These measures will go a long way toward keeping you and your company healthy for the long-term.

As Obama Unveils Health Reform Plan, GOP Cries Foul

Media coverage of President Obama’s healthcare proposal (which included reports on all three network newscasts) generally gives it little chance of becoming law. The plan was swiftly confronted with GOP charges that it amounts to a “government takeover” that “slashes Medicare for our seniors,” while Democrats are described in a front-page New York Times (2/23, A1, Stolberg, Herszenhorn) story as taking “a wait-and-see attitude.” Obama, the AP (2/23, Alonso-Zaldivar, Werner) reports, “knows his chances aren’t looking…promising,” and “realistically, he’s just hoping to win a big enough slice to silence the talk of a failing presidency.” The AP adds that “privately, a senior White House official sought to lower expectations” for Obama’s comprehensive plan, “saying a solid single is better than striking out swinging for the fences.” Publicly, meanwhile, David Axelrod, a senior adviser to Obama, “said the president had no intention of scaling back his vision — unless forced.”

While the Wall Street Journal (2/23, Meckler, subscription required) reports that the plan would add about $75 billion to the cost of the measure passed by the Senate, the CBS Evening News (2/22, lead story, 1:30, Couric), which led with the story, reported that “this plan is $200 billion more than the existing Senate version,” and that it “will not be an easy sell.” CBS (Reid) added that “the White House claims they’re going to pay for that $200 billion mostly with increases in taxes on the wealthy. But it will be a tough sell and that’s not the only hurdle in the President’s new plan. He’s also proposing a brand new federal board called the Health Insurance Rate Authority and he wants to give the Federal government the power to block insurance companies from unreasonable rate increases.”

USA Today (2/23, Fritze) reports that the plan “includes several changes Obama hopes will ease friction among Democrats that has slowed progress on the effort for weeks.” On its front page, the Washington Post (2/23, A1, MacGillis, Goldstein) says that “Obama’s proposal takes the more modest Senate bill as his basic framework. But, in what is perhaps his proposal’s most notable feature, he scales back the Senate bill’s main revenue source, a tax on high-cost insurance that he has strongly supported. Instead, he would impose a new tax on the unearned income of the wealthy.” Obama “would expand subsidies to help working-class and middle-class families afford coverage. To win over some of the bill’s strongest skeptics — seniors and state officials — he would expand the Medicare drug benefit for seniors and Medicaid assistance for budget-strapped states.”

The Los Angeles Times (2/23, Levey) reports that the plan does “not include a government insurance plan — or public option.” The measure’s cost “would be around $950 billion over the next decade, offset by a mix of new taxes and cuts in federal Medicare spending. … Additionally, the president would give the government new authority to regulate the premiums charged by private insurers, a new proposal the White House made in response to steep rate hikes in California and elsewhere in recent months.”

Politico (2/23, Brown, O’Connor), the Washington Times (2/23, Haberkorn), Bloomberg News (2/23, Donmoyer, Gaouette), The Hill (2/23, Romm, subscription required), and McClatchy (2/23, Lightman, Thomma) also cover the story.

Critics of health reform eye Supreme Court challenge

The Washington Post (1/3, Pershing) reported that a “small but vocal contingent of legal scholars and many Republican lawmakers” are arguing that Democratic healthcare measures “are unconstitutional and will be ruled so by the Supreme Court. Their primary target: the individual mandate, which requires people to get health insurance or pay a financial penalty of at least 2 percent of their income to the government.” Critics say the bills “would force people to buy a particular product. Laws requiring drivers to carry auto insurance do the same thing, but people can choose not to own a car. The health insurance mandate includes no such alternative.”

Insurance mandate draws criticism. The Los Angeles Times (1/2, Oliphant) reported that the legislation’s “mandate for near-universal coverage is generating opposition not only from libertarians,” who “object to the guiding hand of government regulation in almost any form, but from some liberals — and even from some members of the insurance industry.” As “right-wing critics talk of legal challenges, critics on the left complain that Americans will be locked into buying a product that threatens to become ever more expensive — especially if, as seems likely, the final bill does not contain” a government-run public option.

As many as 23 million could remain uninsured under health reform plans. The Washington Post (1/2, Bacon) reported that “even as Democrats seek the biggest expansion of health coverage in decades, as many as 23 million people could still be without insurance by 2018, illustrating the complexity of achieving the long-held Democratic goal of universal health care.” The Senate legislation passed late last month, “which is expected to resemble closely the final bill that is hashed out between the House and Senate over the next month, would leave about 8 percent of the population under age 65 without health insurance,” according to the Congressional Budget Office.

Senate bill seen as inviting problems with state-based health insurance exchanges. USA Today (1/4) editorializes that insurance-exchange provisions in the health reform bills “could be a godsend. … But in neither the House bill nor the Senate bill would they go into effect” until 2013 or 2014. In part, the delay is a “budgetary gimmick designed to lowball the bill’s cost over the next 10 years. … The delay in the Senate is also due to needless complexity. While the House would create a single national healthcare exchange, with an opt-out provision for states…to create their own exchanges, the Senate would have each of the 50 states creating its own exchange.” The 50-state approach would “invite problems” with insurance competition and in “trying to get all 50 states to act,” especially considering that some state officials “are already trying to block implementation.”

Experts say states are best equipped to manage regional differences in medical expense. In the USA Today (1/4) “Opposing View,” National Association of Insurance Commissioners CEO Therese M. Vaughan and NAIC President Jane L. Cline point out that research has “shown large geographic variations in medical practice and expense,” evidenced by insurance policy pricing. There are also state-by-state differences in “labor markets, demography and economics” that effect pricing and regulation; and state-based exchanges “are best equipped to manage these regional differences.” State exchanges would “be run by officials with local understanding and experience, attuned to healthcare needs of their communities and motivated to respond quickly.” In addition, it is “unrealistic to expect a national exchange to yield meaningful premium reductions” because insurers “operating primarily in lower cost areas would have no incentive to pool risk with higher cost areas.”

Health Care Reform in the Senate—What in the World Is Going On?

It’s been a whirl-wind week in the United States Senate relative to health reform developments. On Tuesday, Senate Majority Leader Harry Reid (D-NV) announced that he, along with five more liberal Senators had come to terms on a plan that would replace the public option in the current Senate bill with a new national insurance plan offered by private insurers, and a chance for older Americans to “buy-in” to Medicare.
Much like when Reid announced he and key moderates and progressives had come to terms on the inclusion of a public option with a state-opt out provision (an idea which is apparently now off the table) no real details or legislative language on the “deal” have been released, not even to Senators. However, the group did agree to send information over to the Congressional Budget Office for scoring, a process that is expected to take the weekend and perhaps be completed Monday or even Tuesday, December 15. Reid has told reporters and his caucus that the final details of the proposal, which could be offered as a “Manager’s Amendment” to H.R. 3590 as early as mid-week next week, depending on its cost, will not be released until the CBO has completed its work. Some of the consensus details that are known include:
• The creation of a national insurance plan to be administered by the federal Office of Personnel Management,.
• A trigger option for a government-run plan if private carriers fail to participate in the new program.
• Expanded access to Medicare allowing people 55 to 64 to purchase coverage in the program. Details of who would be eligible within that age group, whether or not they would have to pay more to participate and when the new program would start are still a matter of conjecture.
• A medical loss ratio requirement for insurers to spend at least 90 percent of premium money on medical care, rather than on administrative costs or profits. It is unclear at this time if this requirement would apply to just the new national insurance program or to other markets/the exchanges as well.
• A reauthorization of the Children’s Health Insurance Program, which was set to expire in Oct. 1, 2013. It’s unclear at this time how the program would be impacted, including if the mandatory provision for states to establish programs to subsidize qualified employer-sponsored health plans that is in the current Senate bill will prevail.
Beyond the compromise discussions, the Senate has continued its work this week on amendments to the original bill, H.R. 3590. Currently, the Senate is locked up over an amendment on the reimportation of prescription drugs offered by Senator Bryon Dorgan (D-ND).
In terms of timeframe, there continues to be a tremendous push to get something passed by the Senate before Christmas, and House leadership has sent signals that they may be amenable to the potential compromise plan, and could potentially adopt the Senate passed legislation in order to truncate the conference committee process. However, it is unclear how the still-to-be finalized Senate bill, without a true public option and public financing of abortion language (which the Senate effectively rejected earlier this week), would sit with both the progressive and moderate members of the fractious House democratic caucus.
Other complicating factors include other bills on the Senate schedule, like Transportation Appropriations Conference Report and the other spending bills that have been passed by the House. They also need to address the debt ceiling. Furthermore, the lengthy CBO scoring process, potential concerns with the Democratic caucus about the “compromise deal,” and continued concerns about controversial issues like the abortion financing could all derail the Christmas plans. It is still anyone’s guess as to whether or not the Christmas deadline will happen, but it is important to note that the Senate leadership hasn’t met a deadline its set for itself yet!
Reform “Compromise” Details Seem to Please No One
The release by Senate Majority Leader Reid of some details of the “compromise” proposal on the public option and other issues agreed to by five Democratic moderates and five liberals earlier this week has ignited a firestorm of criticism from all sides of the debate. Already, confidential sources in the Democratic leadership have indicated that they are tweaking the proposal in response to member concerns.

Within the Senate, in addition to blanket opposition by the GOP leadership, several key moderates have announced varying degrees of concern about the proposal, particularly with regard to the proposed buy-in to Medicare for people age 55-64. Moderate GOP member, Olympia Snowe (R-ME), who was not consulted in the most recent negotiating process but is still being courted as a potential cross-over vote, said this week that she was disturbed by the potential increase in the cost-shift to private plans, due to the low reimbursement rates Medicare already pays to providers. She explicitly noted that this provision plus others would in all likelihood ensure her final vote in opposition.

Senator Joe Lieberman (I-CT) told reporters this week that he was growing “increasingly concerned” about the proposal. “I am worried about what impact it will have on the Medicare program’s fiscal viability and also what effect it will have on the premiums paid by people benefiting from Medicare now.”

Senator Ben Nelson (D-NE) noted that the Medicare buy-in has the potential to drive the country towards a single-payer system “which I do not like.” He continued by saying, “I wouldn’t be surprised if this thing does not become a viable option. I think it is going to be the lesser of the popular things, but I am keeping an open mind.”
Even much more liberal Senators whose votes are considered to be “safe,” have expressed concerns about the lack of detail in the proposal and the lack of a true public option and the potential harm to Medicare. Senator Barbara Mikulski (D-MD) commented on Thursday, “What is the impact on the stability of Medicare? If we are going to expand it to 3 million people, then how are we going to pay for it? One of the ideas of health reform was to ensure the stability and solvency and benefit package of Medicare.” And even Senator Russ Feingold (D-WI) who was one of the five liberal Senators negotiating the agreement has indicated to reporters that he hasn’t let go of the public option entirely and released a statement Tuesday indicating that he has also not signed onto the proposal.
In addition to the opinions expressed this week by members of the Senate, many other groups and news media outlets have expressed their strong concerns as well. The private health insurance community is unified in its opposition to the new “plan,” as are key business groups like U.S. Chamber, the NFIB and the National Retail Federation, the Business Roundtable and others.

The compromise is also drawing the ire of leading provider groups. The American Hospital Association, the American Medical Association, the Federation of American Hospitals and the Mayo clinic are all significant provider organizations that have objected to the new deal as described due to Medicare buy-in provisions and the potential payment reimbursement issue. Even AARP, which has previously endorsed versions of subsidized “buy-ins” to Medicare and the House-passed reform bill, said it did not know enough about the new initiative to take a position.

The labor unions also stepped up their criticism of the proposed bill, particularly its proposed excise tax on high-cost health insurance plans. The Governors and state legislators are beginning to express their serious concerns too, particularly over the potential expansion of Medicaid and how it could financially cripple the states, most of whom are already facing record budget deficits.
Finally, and most significantly the American public’s support for the Senate’s work continues to fall. According to CNN’s survey this week, just 36 percent favor the Senate bill while 61 percent oppose it. Seventy-nine percent Americans surveyed also said the bill would increase the deficit and 85 percent said the bill would increase their taxes. Fox reports this week that their survey shows that 57 percent oppose health reforms and 34 percent favor them. Also, their poll indicates 41 percent want Congress to pass reform while 54 percent said they’d rather Congress do nothing. A New York Times survey released this week shows that 34% of the public think the current reform proposals will hurt them versus the just 16% who think it will help them.
According to the Rasmussen polling organization, for the second week in a row only 41% of U.S. voters favor the health care plan proposed by President Obama and Senate Democrats. These two weeks at 41% approval follow a week of 38% approval over the Thanksgiving holiday–the lowest extended period of support for the plan yet. Rasmussen reports, “With the exception of a few days following nationally televised presidential appeals for the legislation, the number of voters opposed to the plan has always exceeded the numbers who favor it.” This week’s Rasmussen survey also shows that 51% oppose the plan, including 40% who strongly oppose the plan, with just 23% strongly in favor.
Wyden and Collins File Joint Amendments with the Potential to Harm the Employer-Based System
Senators Ron Wyden (D-OR) and Susan Collins (R-ME) filed three bipartisan amendments to H.R. 3590 on December 10. They include a variation on Senator Wyden’s previously proposed “Employee Free Choice Amendment,” which could have a devastating impact on the employer-based system of providing health insurance coverage. The amendment would require employers to give their lower-income employees a voucher to use in the individual market or exchange who would normally be ineligible to purchase subsidized coverage through the exchange instead of participating in the employer-provided plan. The employee can also keep amounts of the voucher in excess of the cost of coverage elected in an exchange without being taxed on the excess amount. Under the Wyden-Collins version of the amendment, any employer offering its workers vouchers would have access to the exchange in 2015 rather than 2017, which is the schedule for employer access in the bill.

In addition to the employee choice amendment, the two Senator have also filed an amendment to expand the exchange even further and make it possible for individuals who are not eligible for a subsidy, to purchase a catastrophic plan in the exchange, regardless of age. Their third amendment would amend the $6.7 billion annual fee or national premium tax that will be imposed on all health insurance carriers beginning in 2010 based on premium volume. The amendment does nothing to reduce the overall amount expected to be generated by the new insurer tax, but it does modify the fee structure to create an incentive for insurers to hold down rates. Under the amendment, starting in 2010 the fee per insurer could be varied by as much as 50% based on how aggressively they control costs.

Based on the bipartisan nature of these amendments, and the continued hope of the Democratic leadership to convince at least one GOP Moderate like Senator Collins to vote for their overall plan, there is a very good chance that these provisions will be included in any “Manager’s Amendment” offered by Senate Majority Leader Reid in the coming weeks. If this is the case, we will let you know as soon as possible so that you can get involved in the opposition campaign!

Senate Democrats’ coalition on health reform said to be fracturing

With debate on the Senate healthcare bill to begin this week, media reports indicate that Senate Majority Leader Harry Reid (D-NV) faces a difficult challenge in herding the 60 votes needed to advance the legislation. The AP (11/30) reports, “The 60 votes aren’t there any more. With the Senate set to begin debate Monday on healthcare overhaul, the all-hands-on-deck Democratic coalition that allowed the bill to advance is fracturing already.” The AP notes the fractures include divisions on abortion and the public option, and the stakes for Reid. The public is “ambivalent about the Democrats’ legislation. While 58% want elected officials to tackle healthcare now, about half of those supporters say they don’t like what they’re hearing about the plans, according to a new Kaiser Family Foundation poll.”

Politico (11/30, Brown) reports the “next phase in the Democrats’ healthcare push will be waged in the privacy of the Senate leadership office,” where Reid “will attempt to do something that has eluded him all year: negotiate a compromise on the public insurance option that can garner 60 votes and win over a public still leery of reform.” Republicans want “six weeks of debate — which would be enough to push the final vote past Christmas — and have an arsenal of stalling tactics. But Democrats can short-circuit the debate all at once, simply by reaching a deal on the public option and filing cloture on the bill, which would set up the final crucial test vote before final passage.”

The Hill (11/30, Young) lists seven issues likely to come up in the amendments to the Senate bill, including the public option, abortion, the health insurance excise tax on “high-cost health insurance plans,” which “may enjoy support in the White House but many Democrats and labor unions remain staunchly opposed to what they view as a middle-class tax hike”; prescription drugs, affordability, insurance exchanges and Medicare cuts. The Wall Street Journal (11/30, Bendavid, subscription required) also reports on amendments that will likely affect the course of the bill, noting that proposals made by both conservative and liberal lawmakers will complicate the bill’s progress. Meanwhile, USA Today (11/30, Fritze) discusses the senators who are expected to play a key role in the debate.

Senate leaders face challenges in passing healthcare reform. CQ Weekly (11/30, Wayne, Armstrong, subscription required) reports, “Despite a narrow and hard-won victory in their quest to bring healthcare overhaul to the floor, Senate backers begin this week effectively facing an impasse over the legislation.” CQ adds that the “Democratic leadership barely mustered the 60 votes — on strict party lines — needed to keep Majority Leader Harry Reid’s bill alive and move it forward.” Notably, moderate Democrats who supported Reid have “served notice…that he cannot count on them to vote for passage unless the legislation is made more to their liking.”

Senate bill would delay implementation of many reforms. The Washington Post (11/30, Hilzenrath) reports, “Measured against the promises President Obama and congressional Democrats have made about healthcare reform, the bill the Senate begins debating this week could be setting Americans up for disappointment: Some of the main reforms would not take place for several years, and even when they do, some observers say, the bill does too little to make sure they would be enforced.” Until 2014, “insurance companies could continue to deny coverage or charge higher premiums based on people’s medical history.” Another “highly touted reform — banning annual and lifetime limits on coverage — would take effect in 2010, but it would permit significant exceptions.”