Archive for the ‘Health Care Reform’ Category

This article is a reprint from Kaiser Health News and is by Julie Appleby, KHN and N.C. Aizenman, The Washington Post

Oct 19, 2010

The debate that preceded passage of the health-care overhaul resumed as a heated issue in the midterm elections. Politicians and advocacy groups seeking repeal of the law are making dramatic claims about its cost and effects. How valid are they? We evaluate some of the most common criticisms.

The Claim: The law amounts to a “government takeover” of health insurance and health care.

HOW TRUE IS IT?

The law signals a sharp expansion of the federal government’s involvement in health care. It requires most Americans to have insurance and imposes a raft of federal rules on insurers. It also vastly increases the number of people who will qualify for Medicaid, the federal-state program for the poor, and offers subsidies to others who can’t afford private coverage. Still, it falls far short of a government takeover.

Most people under 65 will continue to receive health insurance coverage through private employers and insurance companies. Medical care will be provided by private hospitals and doctors. Drug companies and device makers will continue to develop and sell their products. Prices in the private market will be determined by competition and negotiations; fees paid to doctors and hospitals by Medicare will continue to be set by the government.

Insurers will be barred from rejecting applicants with health problems and will be required to use a certain percentage of the premiums they collect on medical care — as opposed to administrative expenses or profits, for example. Premium increases will get more scrutiny but won’t be directly regulated by the federal government.

The law doesn’t create government-run insurance plans. But states (or the federal government) will run “exchanges” — marketplaces — where private insurers will sell insurance to individuals and small businesses.

The law also promotes the creation of consumer co-op plans, which would be member-run, nonprofit insurers. The government’s share of the nation’s health-care tab will continue to grow as more people sign up for Medicaid and the baby-boom generation hits Medicare age. By 2012, Medicare actuaries estimate, the government will be paying for slightly more than half the nation’s health-care bill, up from 48 percent in 2008.

The Claim: The law will gut Medicare by cutting more than $500 billion from the program over 10 years; seniors will lose benefits and won’t be able to keep their doctors.

HOW TRUE IS IT?

The gutting of Medicare claim goes too far. The new law slows the growth of Medicare spending over the next decade. But it doesn’t actually cut spending from one year to the next.

Medicare’s chief actuary, Rick Foster, estimated that the law could reduce projected Medicare spending by more than $575 billion over 10 years. The savings — which will help pay for the expansion of coverage to the under-65 uninsured — come from slowing the growth of fees paid to hospitals, home health agencies and other providers, and reducing payments to private Medicare Advantage insurance plans.

What this means for seniors is a bit murkier. None of the basic benefits provided under traditional Medicare will be eliminated; in fact, some new benefits have been added. But Democrats have downplayed the potential impact on seniors who have Medicare Advantage plans. Foster says the lower reimbursement to insurers means such seniors may pay hundreds of dollars more per year in out-of-pocket costs. The cuts, which begin in 2012, may well prompt the private plans to trim or eliminate extra benefits, which sometimes include vision and dental care and gym memberships. About 24 percent of seniors in Medicare are enrolled in private plans.

Some Medicare Advantage plans might shut down altogether. That would force enrollees to go back to traditional Medicare or switch to another private plan, which could also mean changing doctors. The nonpartisan Congressional Budget Office estimates that, because of the law, Medicare Advantage plans by 2019 might cover 4.8 million fewer people than the 13.9 million projected without the health-care overhaul law.

Some seniors have expressed concern that they won’t be able to keep their doctors or find new ones if they have to. And it’s true that some doctors are declining to accept new Medicare patients, saying the program doesn’t pay enough, a complaint that predates the new law. The doctors’ biggest headache is a 1997 law that will reduce doctors’ Medicare payments by 23 percent on Dec. 1 unless Congress postpones the cut, an action that most lawmakers believe is likely. Under the overhaul law, some primary-care doctors will also get 10 percent bonus payments in Medicare from 2011 to 2015.

The law also adds some new benefits to Medicare, including free preventive screenings and $250 rebates this year to seniors who hit the prescription-drug coverage gap called the “doughnut hole.” That means that the net Medicare savings generated by the law total less than the 10-year estimate of $575 billion.

Still, the savings mean the Medicare hospital trust fund will remain solvent until 2029, a dozen years longer than projected without the law, according to the latest Medicare trustees’ report. On the other hand, not all the savings may materialize, because Congress may tinker with the formula over time if enough medical providers have trouble getting by on the slower-growing payments.

The Claim: The law will cause 87 million Americans to lose their current coverage.

HOW TRUE IS IT?

Partly, at best. But evidence is limited.

Obama was certainly obscuring the picture. The law exempts plans in existence before its adoption from key requirements such as offering free preventive services, raising annual dollar limits on benefits and improving access to out-of-network emergency care.

But insurers can lose this “grandfathered status” by making such changes as restricting the coverage of particular conditions or raising plan members’ deductibles or other out-of-pocket costs 15 percent above medical inflation. The same goes for employers that switch insurance carriers or reduce the share of the premiums they cover by more than 5 percentage points. As a result, the administration estimates that by 2013, plans covering millions of workers will have fallen out of grandfathered status — not 87 million but 78 million workers according to the most recent figures.

Still, the Republican assertion that these workers will be forced to “drop their current coverage” implies the workers will be left with a worse plan or none at all.There’s little evidence for that. Many currently grandfathered plans already offer some or even all of the consumer protections required of new plans. So losing grandfathered status wouldn’t necessarily require them to raise premiums or make other changes. What portion of plans fall into this category? There are not enough data to say.
The research is also limited when it comes to assessing the impact on the share of plans that will need to add consumer protections as a result of losing grandfathered status. Republicans argue that the requirements could prove expensive and that many insurers or employers will be forced to pass the cost on to consumers or cancel the plans altogether.
However, government estimates suggest that the problem is not likely to be widespread. For instance, including coverage of preventive services generally increases a plan’s costs by less than 2 percent.

The Claim: The law is driving up costs and premiums and will continue to do so over the next several years.

HOW TRUE IS IT?

There may be very small increases initially. In the long term, any prediction is speculative. Figuring out how the new law will affect health-care costs — and therefore premiums — is among the trickiest issues surrounding the statute. Not many people think costs will decline; the question is whether costs and premiums would go up faster with or without the law.

In the short term, state insurance commissioners say some providers of individual and small-group coverage are raising rates for next year by up to 9 percent. These insurers and Republican critics say that the law’s consumer protection provisions, such as the prohibition on lifetime caps, are forcing them to raise premiums.

But the Obama administration, citing estimates from the Urban Institute, the human resources consulting company Mercer and others, says the law isn’t responsible for any increase greater than 1 to 2 percent. That assertion is supported by one of the first major surveys to forecast what might happen next year. Hewitt, a consulting firm, said that large companies’ premiums are expected to rise 8.8 percent in 2011 — 1 to 2 percent due to the law, the rest due to higher medical costs.
It’s almost impossible to predict the long term. Last November the Congressional Budget Office analyzed the Senate bill, which is not much different from the law that eventually was passed. It found that premiums for small and large employers would likely not be much higher in 2016 than they would be absent the law — and might actually be lower.
But the CBO projections are based on assumptions about how the law might help constrain costs, and it’s hard to know whether those assumptions are correct. Premium rates are driven by many factors, including what doctors and drugmakers charge, how many people need care (spending goes up during flu outbreaks), how much insurers spend on administration or keep in profits.

Many of the provisions aimed at restraining those factors, such as those devised to reduce a unnecessary hospital readmissions, may not pay off for years.

The law also requires insurers to spend at least 80 percent of revenue on direct medical care. And the consumer exchanges that will open in 2014 — essentially, lists of private plans available in a region and their premiums — may also foster competition. But it’s unclear how effective these steps will be at restraining costs.
What about people who buy their own insurance? The CBO projects that policies bought on the individual market will be 10 percent to 13 percent higher in 2016 than they would have been without the law, mainly because the coverage will be more comprehensive than what is often purchased on the individual market today. It estimates that about half of those buying their own coverage will probably qualify for government subsidies.

The Claim: The law’s expansion of Medicaid will put massive pressure on state budgets at a time when many are already in crisis.

HOW TRUE IS IT?

The impact will probably be small, but it’s hard to say for sure. Technically, Medicaid is a voluntary partnership, with the federal government covering most of the cost and states paying a remaining share calculated according to their wealth. In practice, states would be loath to pull out of Medicaid because they would be giving up billions in federal assistance for their poorest citizens.

Until now, there has been wide diversity among the states on the question of who should be eligible for Medicaid. Some states limit assistance for adults to those who are disabled or truly indigent. Others have devoted extra money to cover, for instance, parents who earn up to at least 150 percent of the poverty level, or about $33,000 for a family of four.

Starting in 2014, the new law will require participating states to cover everyone earning 133 percent of the poverty level or less. It is estimated that this will bring 16 million to 23 million more people into Medicaid. The federal government will pick up nearly all the cost of these newly eligible beneficiaries, starting at 100 percent from 2014 to 2016 and gradually decreasing its share to 90 percent from 2020 onward.

The impact of this mandate could vary considerably. States such as Texas and Alabama that have had narrow eligibility rules will add far more people to their rolls. But they will also get a lot more federal dollars to cover the extra cost. States such as Massachusetts and New York, whose current rules are more expansive, may see fewer new enrollees, but initially they’ll get less federal help to cover them.

Such states could also see savings because many people they have been helping will be eligible for federal subsidies to buy insurance on state-based exchanges.

So what’s the bottom line? Estimates vary widely.

In a study for the Kaiser Family Foundation, the Urban Institute estimated that, not counting offsetting savings, between 2014 and 2019, total state spending on Medicaid will increase by $21 billion, 1.4 percent more than they would have spent in the absence of the new law. But that masks considerable differences across states. Four will spend less than they would have otherwise. Nine will increase their spending by 3 or even 4 percent.

While the Urban Institute’s analysis tracks with Congressional Budget Office estimates, several states have come up with substantially higher projections.

The Claim: The new law uses tax dollars to pay for abortions.

HOW TRUE IS IT?

Open to interpretation. Under the Hyde Amendment, which Congress has attached to yearly spending bills since 1977, federal dollars cannot be used to directly fund abortions, except in cases of rape or incest, or where the mother’s life is in danger.

This prevents abortions from being covered by insurance plans for federal employees, the Tricare plans for military families and the federally funded portion of Medicaid, the health program for the poor.

But the insurance system created by the new law does not lend itself to a straightforward segregation of federal funds in other plans.

In the state-based exchanges that the law creates, people without employer-based coverage will be able to buy private insurance using a combination of their own money and federal subsidies that most will receive based on their income level. Drafters of the law attempted to assuage both sides of the abortion debate through a compromise that ended up pleasing neither.
Insurers are allowed to include abortion coverage in their exchange plans, but everyone who buys such a plan must make two separate premium payments: one covering the bulk of the policy and another, far smaller one, as little as $1 per month, for the plan’s abortion coverage. Any federal subsidies can only be applied to the first payment.
Anti-abortion groups complain that the arrangement amounts to little more than an accounting gimmick. Unless plans that accept federally subsidized customers are barred from covering abortion, they say, the government will effectively be using at least some tax dollars to fund abortions.
To reassure them, Obama issued an executive order immediately after the law’s passage affirming his commitment to prevent federal funds from being used to pay for abortions. But the advocates complain that the order merely calls for compliance with the two-payment rule and is an “empty gesture.” Meanwhile, abortion-rights supporters worry that in practice few if any plans on the exchanges will end up offering abortion coverage because insurers will find the two-payment rule cumbersome and consumers will consider it bizarre and objectionable. They also note that the law allows states to prohibit plans on their exchanges from offering abortion coverage, an exception that could affect large numbers of women.

We at Small Business Benefit Solutions, LLC thinks the existing health Care Reform legislation is a travesty. Rammed through with little debate, and even less attention with several of the proponents admitting they didn’t even bother to read the legislation, this bill wastes trillions of dollars without ever actually addressing the biggest concern for all of us – frivilous LAWSUITS and the COSTS of medical care.  Without that conversation, there can be no true health care reform.

Our health care system is already imploding thanks to provisions of ObamaCare that insurers and employers cannot or don’t want to face.

Just six months have passed since the passage of Health Care Reform and our system of private insurance is already breaking apart at the seams; employers are dropping health insurance plans and private insurers are leaving the market.

• Employers Are Dropping Health Insurance. Last week, 3M announced it would terminate its private health insurance plan for retirees. Instead, 3M will send them to an ObamaCare health exchange! 3M isn’t alone. Microsoft announced that they will have to force their more than 90,000 employees to pay for the coverage they provide. McDonald’s is considering dropping health care coverage altogether for its 30,000 employees, too. And you can bet the other fast food chains and major retailers are considering similar measures.
• Private Health Insurers Are Leaving the Market. Principal Financial announced this week that it was getting out of health insurance altogether, despite 60 years of service and customers in 31 U.S. markets. Principal is not alone. Celtic Insurance left one of their primary markets in New Hampshire and Harvard Pilgrim Health Care dropped 22,000 seniors this week from its Medicare Advantage plans.

Your private health insurance plan is at risk! Only six months after it’s passage, the highly touted benefits of ObamaCare are rearing their ugly heads.  Employers and insurance providers’ actions are talking louder than the Obama Administration’s words: Whether you get insurance from an employer or buy it on your own, one this is clear: whether you like your plan or not, you are unlikely to be able to keep it.

The Internal Revenue Service has announced that it will wait untl 2010 to enforce a health care reform law requiring employers to report the cost of health insurance coverage on employee's W-2 income statements.

Under the reform law, employers were to have provided this information beginning with 2011 W-2 statements that are distributed to employees in 2012.

Under the new ruling, health care cost information will have to be reported on the 2012 W-2′s, which are issued in 2013.

“The Treasury Department and the IRS have determined that this relief is necessary to provide employers the time they need to make changes to their payroll systems or procedures in preparation for compliance with the new reporting requirement,” the agencies said.

The IRS also noted that the W-2 reporting requirement is only for informational purposes and the amounts that are reported will not be taxable. Some health care reform critics have erroneously reported that the reporting requirement changed the tax status of employer-provided coverage. Other critics say that htis reporting will be used to enforce whether businesses are complying with the mandated coverage provisions.

That coverage is tax-free, though starting in 2018 a 40% excise tax will be imposed on health insurance premiums that exceed a certain amount, known as the”Cadillac Tax”.

If you plan to use your health care flexible spending account to pay for over-the-counter medications or supplies, you will need a prescription from your doctor to do so effective in 2011.

This is from a new rule imposed by the Internal Revenue Servcie thanks to the health care reform law that sharply restricts FSA reimbursements for OTC medications such as nonprescription pain relievers, cold medicines, antacids, bandages and allergy medications.

But will a doctor’s note be enough or will you need a real written prescription for an FSA to reimburse OTC purchases? The rules is not yet clear on that matter.

In the notice, the IRS says a prescription is required for OTC reimbursements. It defines a prescription as a “written or electronic order for a medicine or drug that meets the legal requirements of a prescription in the state in which a medical expense is incurred and that is issued by an individual who is legally authorized to issue a prescription in that state.”

While the rule created some uncertainty about the definition of “prescription” for over the counter medicines, the IRS did finally resolve some uncertainty involving the new OTC restriction on what are known as “grace period” FSAs.

Under rules the IRS issued in 2005, unused contributions made to FSAs in the current year could be rolled over to pay for expenses incurred during the first 2½ months in the following year. The new IRS rules say OTC reimbursements are banned from that provision effective Jan. 1, 2011.

It isn’t known what percent of expenses reimbursed through FSAs involve OTC medications.

The health care reform law’s restrictions on reimbursing OTC expenses from FSAs is the first of two major provisions affecting FSAs to take effect. The other provision will cap pretax contributions to FSAs at $2,500 effective in 2013.

Previously there’s be no annual limit on FSA contributions, though employers could elect to impose a contribution limit.

Congress imposed the new limits to raise revenue to help pay for other provisions in the reform law that will expand coverage, such as new federal insurance premium subsidies for the lower-income uninsured, beginning in 2014.

If you are unsure whether your plan allow for use of flexible spending funds, contact Small Business Benefit Solutions, LLC for information and guidance.  the rules are tricky and not all businesses or business people are eligible.

UnitedHealthcare, which owns and operates several smaller health plans including Oxford, has implemented provisions set out in Health Care Reform Legislation.

The following provisions are required to be in place by September 23rd, regardless of a health plans grandfather status, and will be effective upon new contract or renewal on or beyond 9/23:

• Dependents will now be covered to at least age 26, or to an older age based on specific state laws
• Pre-existing condition exclusions will be removed for any enrollees under the age of 19
• Lifetime and certain restricted annual coverage limits will be removed on what the legislation calls “essential health benefits”

UnitedHealthcare is also implementing the following non-mandated reform provisions with the same September 23 date:

• 100% coverage of “preventive care” benefits
• Modifications to ensure that claim and appeals processes are compliant with health care reform provisions
• Access to OB/GYN services without a referral, selection of pediatricians as PCP, coverage of emergency services in accordance with the new rules (e.g., without pre-authorization) and other patient protection provisions
• Dependents will be eligible for coverage to age 26 regardless of access to their own employer-sponsored health plan.

These initial provisions have no effect on grandfathered status. While these changes will apply to all small business health insurance plans, the changes will not, by themselves, impact grandfather status for any plan seeking to maintain grandfather status.  UnitedHealthcare intends to provide updated Schedule of Benefits and Explanation of Coverage Amendments as soon as possible reflecting all of these changes to their policies and procedures.

With the implementation of  The Patient Protection and Affordable Care Act (PPACA), American employers will have to be very cautious about how they adress medical insurance for their employees or face penalties – some stiff and others laughable. The Congressional Budget Office’s Joint Committee on Taxation estimates that the employers will pay $52 billion in the next decade 10 years for non-compliance of this mandate.

Now, this is, by all means, a huge responsibility, especially for “large” employers who have more than 50 full-time employees.

Based on a report entitled “Critical Employer Issues in the Patient Protection and Affordable Care Act published by Labor, Immigration & Employee Benefits Division—U. S. Chamber of Commerce” the below chart lays out the trouble spots these large employers will need to be awarer of:

Here are the specific penalties that could be imposed:

• Penalty for employers if the coverage is not offered to the employees:

Beginning in 2014, a large employer will have to offer the health coverage to it’s employees. If the employer fails to offer coverage  and at least one employee is eligible for any tax credit or government assistance coverage, the employer will face penalties. The penalty will be an excise tax equal to the number of full-time employees over a threshold of 30-employees multiplied by 1/12 of $2000.

IMPACT: If my math is correct, this penalty will equal $166.67 per employee 31 through the total number of employees.  In comparison to the costs of coverage, this penalty seems more palatable.

• Penalty for employers even if the coverage is offered to the employees:

Beginning in 2014, large employers offering health insurance coverage may face penalties if at least one employees is eligible for any tax credit or government assistance coverage. The penalty will be $3000 per employee who receives the tax credit.

• Penalty for employers even if the coverage is offered by the employees receive government benefits:

Beginning in 2014, if the employer offers coverage but one or more than one employee got enrolled in health insurance coverage through an exchange; receives tax credit or cost-sharing reduction because the employer-sponsored health insurance is unaffordable; the employer will face penalties equal to 1/12 of $3000 (or $250) for each employee who receives a tax credit of cost-sharing subsidy through an exchange.

• Free Choice Vouchers

Beginning in 2014, employers are required to offer choice vouchers to each qualified employee. A qualified employee is the one who does not participate in the health plan because the share exceed 8% but is less than 9.8% of their household income, and whose household income is less than 400% of the federal poverty level. The amount of voucher is equal to the largest portion that the employer otherwise would have paid to the employee for the health insurance coverage.

• New Employee enrollment obligation:

Employees with more than 200 employees are obligated to enroll new employees in the health plan.

Please read about more detaisl on employer obligations and penalties at the Robert Wood Johnson Foundation website or by reviewing their pamphlet here: http://www.rwjf.org/files/research/66768biz.pdf

Why Most Americans Get Health Benefits From Employers

In the early 1900′s, most Americans paid for their own medical care with cash, through a barter of goods and services offered to their doctor or through a Blue Cross non-profit health insurance plan which was created by hospitals to offer individuals guaranteed service in return for a fixed fee.

This form of medical coverage really did provide a type of insurance against medical losses by paying only for major hospitalizations and surgeries that people could not afford to pay for themselves.