One Step Closer

This morning, just a few minutes after 7:00 AM eastern time, the Senate passed H.R. 3590, the Patient Protection and Affordable Care Act, by a vote of 60-39. All Democrats and two Independents voted for the legislation; all but one Republican voted against the bill (Sen. Jim Bunning (Ken.) did not vote).

This action brings the Congress one step closer to culminating more than 70 years of attempts by the federal government to expand health care access and coverage.

The modern era of government involvement in health began in 1965, when President Lyndon Johnson signed the Social Security Act of 1965, which established the Medicare program for individuals ages 65 and older and the Medicaid program for low income individuals.

During the next four decades, Congress and the White House attempted a variety of health care reforms, some successful, some not. Enacted legislation included the following:

• Medicare as secondary payor to employer plans, 1980


• Disproportionate Medicaid payments, 1981


• Medicare prospective payment system, 1983


• COBRA Continuation of Coverage, 1986


• IRC Sec. 89, inlcuding qualification and nondiscrimination rules for health care plans, 1986 (repealed in 1989)


• Medicare Catastrophic Coverage Act (MCCA), 1988 (repealed in 1989)


• Mandated Medicaid coverage for children birth to age 18, 1989 and 1990


• Health Insurance Portability and Accountability Act (HIPAA), restricting use of pre-existing conditions in health insurance coverage determinations, setting standards for medical records privacy, and establishing tax-favored treatment of long-term care insurance, 1996.


• Mental Health Parity Act, 1996, 2008


• Medicare Drug, Improvement, and Modernization Act (MMA), creating a voluntary, subsidized prescription drug benefit under Medicare, 2003.

Early this year, comprehensive health care reform became a priority both for President Barack Obama and the 111^th Congress.

Between July and October, five Congressional committees reported out versions of health care reform: H.R. 3200, America's Affordable Health Choices Act, with versions reported by the House Ways and Means, Energy and Commerce, and Education and Labor Committees; S. 1679, Affordable Health Choices Act, reported by the Senate Health, Education, Labor, and Pensions Committee; and S. 1796, America's Healthy Future Act, reported by the Senate Finance Committee.

The full House then considered H.R. 3962, the Affordable Health Care for America Act, which combined the earlier proposals from the three House committees. The House passed the legislation on a vote of 220-215 on Saturday, November 7.

H.R. 3950 was introduced in the Senate on November 19, amended by majority leader Sen. Harry Reid on December 19, and finally passed this morning.

Democrats continue to insist that a bill will be signed by the 2010 State of the Union Message, reportedly scheduled for January 26 or February 2 of 2010.

Substantial differences in the House and the Senate bills include the structure of a health insurance exchange, the nature of a public option, and financing mechanisms. A conference committee to reconcile the differences between the two bills will be necessary. Although pre-conference negotiations are likely to begin during the Christmas and New Year’s break, the House is not scheduled to reconvene until Jan. 12 and the Senate will not meet again until January 19, leaving little time for final passage before the State of the Union address.

Stay tuned.

Health Reform Talk Takes A Brief Break

As the Senate prepares to take a final vote on December 24, pass the Patient Protection and Affordable Care Act, and go home for the holidays, the authors of Health Reform Talk also are taking a brief break after today

After a series of procedural votes to move to passage, the Senate leadership agreed to a final vote scheduled for the morning of December 24, which would be the first Christmas Eve session in the Senate since 1963. Unlike earlier procedural votes that needed 60 votes, the final passage of the Senate health reform bill will require a simple majority.

The agreement on the early Tuesday morning vote by Senate Majority Leader Harry Reid (Nev.) and Minority Leader Mitch McConnell (Ken.) means that differences between the Senate proposal and the already House-passed bill likely will have to be resolved in a House-Senate conference committee, which would begin to meet in January 2010.

A less likely alternative procedure would be for the Senate to send its bill back to the House for immediate approval without amendments, which would avoid a conference committee and also avoid another struggle to get the 60 votes needed in the Senate for passage.

Health Reform Talk will resume its daily insights into health reform on January 4.

Happy Holidays and Happy New Year.

Will people wonder “what took so long?”

Assuming that the Senate’s health reform bill goes forward, as expected, on Christmas Eve, by year’s end, both the House and the Senate will have passed their own versions of health reform. A joint House-Senate conference will need to iron out the differences early in 2010.

Are these bills perfect? By any standard, the answer is a resounding no. Many opponents, of course, have loudly made it known that they believe that health reform should never see the light of day. Who can forget the summertime town hall signs saying “keep your government hands off my Medicare?” Now, even supporters are having their doubts over whether these bills go far enough and are worthy of support. Health reform supporters have to be wondering: Is half a loaf better than no loaf at all? Or are we better off starting over?

Senator Ted Kennedy is no longer with us but health reform, as his widow, Victoria Reggie Kennedy reminded us recently in Washington Post op-ed piece, was the cause of his life. As Kennedy pointed out, if health reform were easy, it would’ve been done long ago. Many presidents and Congressional leaders have tried but, until now, all have failed. Starting back with President Theodore Roosevelt and his Bull Moose Party in 1912, and, more recently, with Presidents Truman, Nixon, and Clinton, there have been many attempts to reform our health system but never have they come this close to becoming law.

As his widow points out, the senator “predicted that as the Senate got closer to a vote, compromises would be necessary, coalitions would falter and many ardent supporters of reform would want to walk away. He hoped that they wouldn't do so. He knew from experience…that this kind of opportunity to enact health-care reform wouldn't arise again for a generation.”

Personally, I like the analogy by Senator Tom Harkin (D-IA) comparing these bills to a starter home. Under this thinking, “this is not a mansion…it’s a starter home, with a solid foundation, a strong roof, and room for expansion.“ Putting a framework in place is key, according to this view, and there will be time for tinkering with it later. You have to wonder, though, whether upgrading the starter home will be any easier down the road. If health reform is signed into law, this might be it, for quite some time.

Senator Ted Kennedy often said: “when it’s finally done, the people will wonder what took so long.” I continually hear opponents wonder “why are they rushing this through?” I guess 98 years isn’t long enough for them. Many supporters already wonder why this didn’t happen long ago. Maybe someday, everyone will feel that same way.

Compromise Worth It?

Christmas is almost here and the Senate may spend the holiday camped out in the halls of Congress trying to negotiate a(way) a health reform compromise bill. Although I appreciate my esteemed colleague’s December 18 post on the appropriateness of compromise in health reform, I feel that too much compromise is tantamount to “blackmail” or paying ransom—what of value to them are the “blackmailers,” or pirates, giving up in return and why reward them so they will do it again and again?

Satirist Andy Borowitz in his December 16 issue of the Borowitz Report tongue in cheek, and aptly, called the latest version of the Senate’s health reform bill CompromiseCare™ under which people with no coverage will be allowed to keep their current plan and uninsured 55 year olds will be able to enroll in Medicare as soon as they turn 65.

As Maggie Mahar observed in her December 15 Health Beat blog, ”the original goal of health care reform was “to provide high quality, affordable care for all Americans,.” but now “the goal has shrunk; the current Senate compromise aims only to make certain that 30 million uninsured Americans have insurance--which may or may not provide access to the care they need.” But she’s not giving up hope, she said: “Reformers have lost the game, not the match. This is just the first piece of health care legislation that you will see over the next three (or four) years.”

While the Senate bill as it currently stands may offer some benefits to many people, at a huge cost, the content of the final “compromise,” further whittled and compromised, may be less beneficial. Wait and see.

Employers Take Note, Part Three: Appeals Process Expanded, Reinsurance For Early Retirees In Health Reform

As the Senate proceeds with its debate on health reform, Health Reform Talk continues a series examining health reform provisions that will affect employer-sponsored health plans and would take effect soon after enactment of any legislation. This series will look at features of the legislation already passed in the House (H.R. 3962) and the bill being considered in the Senate (H.R. 3590). These are features likely to survive in health reform legislation and which will directly affect employers. Today an expansion of the employee appeals process and the establishment of a reinsurance program for early retirees are discussed.

Appeals Process

H.R. 3590: Sec. 1001 requires that a group health plan implement an effective appeals process for appeals of coverage determinations and claims, including doing the following:

(1) have in effect an internal claims appeal process;

(2) provide notice to enrollees, in a culturally and linguistically appropriate manner, of available internal and external appeals processes;

(3) allow an enrollee to review a file, to present evidence and testimony as part of the appeals process, and to receive continued coverage pending the outcome of the appeals process; and

(4) provide an external review process for such plans and issuers that includes the consumer protections set forth in the Uniform External Review Model Act from the National Association of Insurance Commissioners.

This provision of Sec. 1001 would take effect for plan years beginning on or after six months after the date of enactment.

H.R. 3962: Sec. 101 has an appeals process for a high risk insurance pool that takes effect on Jan. 1, 2010. Other appeals processes take effect after the Health Insurance Exchange is adopted.

Reinsurance For Early Retirees

H.R. 3590: Sec. 1102 establishes a temporary reinsurance program to provide reimbursement to participating employment-based plans for a portion of the cost of providing health insurance coverage to early retirees (and to the eligible spouses, surviving spouses, and dependents of such retirees). Early retirees are those aged 55-64.

Qualifying employer-based retiree health plans submit claims for reimbursement to the Department of Health and Human Services.  Reimbursements are available for 80% of costs between $15,000 and $90,000. Reimbursement may be used to reduce plan premium costs or to reduce premium contributions, co-payments, deductibles, co-insurance, or other out-of-pocket costs for plan participants. A total of $5 billion is appropriated for this program.

The program would be established within 90 days of enactment and ends on Jan. 1, 2014.

H.R. 3962: Sec. 111 is almost identical to the Senate version; however, the House bill appropriates $10 billion to the program’s operations.

When Compromise Is Necessary, And Sufficient

As the Senate winds up (winds down?) its work on health reform, any legislation that it might pass will be the result of a number of compromises; or as some critics would have it, a series of cave-ins and capitulations that have led to submission, succumbing and surrender.

We all know that Sens. Joe Lieberman (Conn.) and Ben Nelson (Neb.) have been successful in amending the legislation to their own particular needs. Unless you have just returned from a trip to Mars, you know that the public option is dead, a Medicare opt-in for those ages 55-64 is dead, a prohibition against annual medical limits may be dead, etc, etc.

And here’s Brian Williams from NBC Nightly News on a possible liberal revolt: “Even friends of the President, those most loyal to him, fear that the healthcare reform bill he wanted so badly has been pecked to death, and picked apart, watered down, and in the end, will be something nobody really wants.”

Really? I have been writing about health care for more than 25 years, and the health reform bill currently in the Senate represents, as Paul Krugman of the New York Times recently wrote, “the biggest expansion of the social safety net since Medicare, greatly improving the lives of millions. Getting this bill would be much, much better than watching health care reform fail.”

And here is Mr. Krugman on the perils of refusing to compromise: “Not to put too fine a point on it, America would be in much better shape today if Democrats had cut a deal on health care with Richard Nixon, or if Bill Clinton had cut a deal with moderate Republicans back when they still existed.”

The Senate is one or two Senators and one or two days away from agreeing to the following:

• covering 33 million more Americans,


• prohibiting preexisting conditions,


• limiting insurers’ profits,


• providing substantial tax breaks to small employers to help them provide health insurance,


• providing financial aid to other individuals without access to employer-provided insurance,


• establishing standards of health care coverage for all qualified plans


• providing long term care options to all Americans.

Republicans understand, possibly better than do the Democrats, that the opportunity for health reform will not come again for decades, and the unanimous Republican opposition to health reform has played well against increasingly fractured Democratic concerns.

What is before the Senate is real change in health care in the United States, and it’s now or (maybe) never.

There's room for improvement, group says

Earlier this week, the American Benefits Council (Council) – an association representing primarily large employers and other organizations that sponsor directly or administer health and retirement plans covering more than 100 million Americans – submitted a letter to Senator Reid and Senator McConnell indicating that it finds the current Senate legislation unacceptable.

The Council wrote, “We are unable to support the Senate bill in its current form and are increasingly disturbed that significant progress has yet to be made to address the problems it poses for employer-sponsored health care. Without significant improvements, we will have no alternative but to oppose the legislation as it is considered further by the Senate.”

Suggested improvements. The Council suggests the following improvements:

• eliminate the tax on retiree drug subsidies,

• delete annual taxes on insurers, self-insured plans and other stakeholders,

• make the high-cost plan excise tax fairer and less disruptive,

• strengthen the cost and quality reforms,

• encourage all individuals to obtain coverage,

• allow a 90-day penalty-free waiting period for enrollment, and

•  include meaningful medical liability reform.

Penalty-free waiting period. One of the suggested improvements involves a bill provision that provides that employers who provide insurance would be required to make full-time workers eligible for coverage within a maximum of 90 days. If a worker is not eligible after 30 days, employers would face a penalty of $400, and the penalty would grow to $600 after 60 days.

Senator Landrieu (D-LA) has offered an amendment to this provision that would allow for a 90-day penalty-free waiting period before participant enrollment. The Council supports this amendment stating that it “will help many employers with high numbers of short-term workers to be able to continue sponsoring benefits for their employees.”

For just pennies per day…

How much would health reform cost us? To the average person, the huge numbers being bandied about seem totally beyond comprehension. However, a thought-provoking letter to the editor in the New York Times yesterday suddenly put it all into perspective for me.

Lawmakers in Washington are attempting to keep the cost of health reform to $1 trillion or less, over 10 years. Every new version of health reform has to be “scored” by the Congressional Budget Office and it seems like, whenever that happens, everyone (at least everyone in Democratic Party leadership) holds their collective breath until the CBO releases its new estimates.

One trillion dollars is an eye-popping amount of money by anyone’s standards but how much is it, really? That’s “only” $100 billion per year. I just have to throw this in but, when I think about such staggering sums, I’m reminded of the comment by the late Sen. Everett McKinley Dirksen of Illinois who famously stated “a million here, a million there, and pretty soon you’re talking about real money.”

Anyway, $100 billion per year truly is real money but there are a lot of Americans these days. In fact, according to the current U.S. population clock, from the U.S. Census Bureau, there are now more than 308 million of us. When you do the math, that $100 billion doesn’t seem like so much anymore. It works out to just under $325 per person per year, that is, $27 per month for every man, woman, and child in the U.S. or less than 90 cents per person per day. Now there’s a number all of us can get our arms around.

Surely, just about everyone has seen those TV commercials talking about how people can save a child in a faraway place for “just pennies a day.” It seems strange to me that no one is running a commercial touting that, for just pennies a day, “everyone” in the United States could have healthcare. Pennies a day could save a needy child far away or it could provide health insurance coverage to an additional 30 million Americans.

"Just pennies a day" sounds a whole lot better than $1 trillion, doesn't it?

No Lifetime Or Annual Limits, Except...

Subpart II of the Senate’s version of health reform, the Patient Protection and Affordable Care Act (H.R. 3590) is titled “Improving Coverage.” It includes ‘‘SEC. 2711. NO LIFETIME OR ANNUAL LIMITS” and reads as follows:

a) IN GENERAL.—A group health plan and a health insurance issuer offering group or individual health insurance coverage may not establish—
(1) lifetime limits on the dollar value of benefits for any participant or beneficiary; or
(2) unreasonable annual limits (within the meaning of section 223 of the Internal Revenue
Code of 1986) on the dollar value of benefits for any participant or beneficiary.

(b) PER BENEFICIARY LIMITS.—Subsection (a) shall not be construed to prevent a group health plan or health insurance coverage that is not required to provide essential health benefits under section 1302(b) of the Patient Protection and Affordable Care Act from placing annual or lifetime per beneficiary limits on specific covered benefits to the extent that such limits are otherwise permitted under Federal or State law.

Wait! What’s wrong with this picture? Doesn’t this Section 2711 say “NO lifetime of annual limits?” So then why does it go on to state in (a)(2) “unreasonable annual limits…on the value of benefits for any participant or beneficiary?” What does “unreasonable” mean anyway? This same paragraph cites “section 223 of the Internal Revenue Code,” that applies to high deductible health plans—does this mean that the annual limits could be the same as those that apply to high deductible health plans? According to a CCH tax analyst, this means that "A plan can put in place annual limits so long as they do not circumvent the deductible and out-of-pocket expenses limitations in Code Sec. 223."

And paragraph (b) says it does not prevent group health plan or insurance coverage to place “annual or lifetime per beneficiary limits on specific covered benefits.” The Senate giveth (or so it would appear) and the Senate taketh away. We’ve discussed this issue briefly in a recent post.

Americans seemed unaware of this coverage cap until a couple of days ago, when the American Cancer Society (ACS) and its Cancer Action Network (CAN), called the Senate out on this apparent discrepancy in coverage provisions and its potential adverse effect on people with cancer and other costly medical conditions.

Presumably, this annual cap provision was added to Sen. Harry Reid's manager's amendment at the behest of the Congressional Budget Office. The Senate leadership reportedly fears that prohibiting all limits could lead to higher costs and costlier insurance premiums. The House health reform legislation (H.R. 3962) ultimately prohibits lifetime AND annual coverage limits.

Furthermore, Consumers Reports claims in its December 14 Health blog that the Senate bill’s reference to “dollar value” in paragraph (2) in this section would let insurers limit certain types of care, such as physical rehabilitation sessions or mental-health counseling

Washington Post blogger Ezra Klein wrote on Friday, December 11: “The tradeoff here is slightly higher premiums for everyone versus total financial ruin for the people who absolutely need help the most,” Mr. Klein wrote. “Politically, choosing "everyone" rather than "people with cancer" makes sense, because the first group has more votes than the second. But on a policy level, it's nuts. Health-care insurance literally exists to protect us from the worst-case scenarios. This provision says that the Senate bill will protect everyone but the truly worst-case scenarios. If you assume that people support the basic concept of health-care insurance, then they don't, or shouldn't, support this.”

"If you can have annual limits, saying there's no lifetime limits becomes meaningless," Stephen Finan, ACS associate director of policy, is quoted as saying.
The Associated Press in a story released on December 11 reported that on the same day the White House agreed to “help close” the annual limit “loophole.”

"The president has made it clear that health insurance reform legislation should prevent insurance companies from placing annual limits on health expenditures that can force families into financial ruin," according to a White House spokesman. "We will continue to work with Congress on this policy."

White House health reform director Nancy Ann DeParle in a phone call on December 11 told ACS officials that she would "work to change the Senate language. The idea would be to first narrow the range of limits that could be imposed, and then gradually phase them out altogether over several years."

Meanwhile, the Senate continues to whittle away at health insurance reform, until…

Employers Take Note, Part Two: Dependent Coverage, Expansion Of Disclosure Requirements, And Limits To Insurers’ Loss Ratios

As the Senate proceeds with its debate on health reform, Health Reform Talk continues a series examining health reform provisions that will affect employer-sponsored health plans and would take effect soon after enactment of any legislation. This series will look at features of the legislation already passed in the House (H.R. 3962) and the bill being considered in the Senate (H.R. 3590). These are features likely to survive in health reform legislation and which will directly affect employers. Today coverage of dependents, expansion of disclosure requirements, and limits to insurers’ loss ratios are discussed.

Coverage Of Dependents

H.R. 3590: Sec. 1001 would require a group health plan that provides dependent coverage of children to continue to make the coverage available to an adult unmarried child under the age of 26.

Sec. 1001 would take effect for plan years beginning on or after six months after the date of enactment.

H.R. 3962: Sec. 105 would require a group health plan that provides dependent coverage of children to continue to make the coverage available to an adult unmarried child under the age of 27.

Sec. 105 would take effect for plan years beginning on or Jan. 1, 2010.

Development And Utilization Of Uniform Explanation Of Coverage Documents

H.R. 3590: Sec. 1001 requires group health plans to provide summary of benefits and coverage explanation that accurately describes the benefits and coverage under the applicable plan or coverage. The summary may not exceed four pages in length, must be presented “in a culturally and linguistically appropriate manner” and utilize terminology understandable by the average plan enrollee, and must describe benefits provided in accordance with the essential benefits package outlined in the Senate bill.

The Department of Health and Human Services would have one year from enactment to develop standards for the summary, and benefit plans would have a year after that to provide the new summaries to participants.

H.R. 3962: Sec. 233 has similar requirements for health plans to provide summary information on health care plans; however, the House provision does not take effect until 2013 at the earliest (and 2018 for many existing employer-based plans).

Loss Ratio Limitations

H.R. 3590: Sec. 1001 requires that health insurers annually provide reports on the percentage of premiums spent on (1) reimbursement for clinical services provided to enrollees under such coverage; (2) for activities that improve health care quality; and (3) on all other non-claims costs, including an explanation of the nature of such costs, and excluding State taxes and licensing or regulatory fees.

If the percentage of premium in group health plans spent on all other non-claims costs exceeds 20%, each enrollee under the group health plan will receive a pro-rata rebate

This provision of Sec. 1001 would take effect for plan years beginning on or after six months after the date of enactment and would end after Dec. 31, 2013.

H.R. 3962: Sec. 102 also provides a rebate to participants in insured group plan in which the medical loss ratio falls below a certain level, in this case 85%.

Sec. 102 would take effect for plan years beginning on or Jan. 1, 2010, and would expire when health insurance is offered through the Health Insurance Exchange.

Extending Medicare: Effects On Employers, Employees

The recently proposed expansion of Medicare to cover individuals between the ages of 55 and 64 if they purchase the coverage could forge a final compromise Democrats are seeking in the Patient Protection and Affordable Care Act (H.R. 3590). So let’s take a look at employees and employer-based plans in light of this proposal.

The proposal, whose details will not be fully known until the Congressional Budget Office reviews the budgetary impact, was agreed to by 10 Democratic Senators charged with finding a compromise for health reform. The ten senators involved in the discussions were Chuck Schumer (N.Y.), Mark Pryor (Ark.), Sherrod Brown (Ohio), Thomas Carper (Del.), Russ Feingold (Wis.), Tom Harkin (Iowa), Mary Landrieu (La.), Blanche Lincoln (Ark.), Ben Nelson (Neb.), and Jay Rockefeller IV (W.Va.).

The Employee Benefit Research Institute notes that those ages 55–64 represented 10.6% of the total U.S. population in 2006, and is expected to represent 13% of the population by 2020. According to EBRI, “With such a large projected growth in this population, and Medicare’s projected funding shortfall, the ability of the Medicare program to provide adequate coverage for these individuals and for future retirees is questionable. Also, if a portion of the population entering Medicare is less healthy as a result of being previously uninsured, pent-up demand for medical services may increase Medicare costs.”

EBRI also states that “past research shows a strong link between the availability of health insurance coverage and retirement decisions. In 1998, 74% of workers reported that they would not retire before becoming eligible for Medicare if their employer did not provide retiree health benefits.  In fact, some potential retirees have chosen to remain in the labor force longer than planned. The percentage of the population ages 55−64 that is working has increased significantly, from 63.4% to 68.4% between 1995 and 2007

And Todd Swim, a consultant with Mercer, recently said that "those 55 to 65 are the most expensive for employers to cover, and they pay the most if they have to buy coverage on their own….Access to medical care is one of the biggest inhibitors to retiring early, and a lot of people are going to be looking at that as an option."

Three-fourths of the U.S. adult population support offering Medicare-buy in to cover those uninsured aged 55-64, a September Health Tracking Poll by the Kaiser Family Foundation found.

A Kaiser Family Foundation report also concludes that “a Medicare buy-in has the potential to bridge the gap for those without access to other sources of affordable coverage, and the design of such a buy-in will affect the number of people likely to enroll and the impact on Medicare spending. Given modest incomes of many uninsured older adults, few would be able to purchase Medicare coverage without fairly substantial subsidies. In the context of the current debate, a Medicare buy-in could provide coverage in a relatively short period of time, as early as 2011, and target help to those who are most likely to have difficulty purchasing coverage on their own in the individual market. If implemented in conjunction with other health reforms, key considerations include the extent to which Medicare premiums are subsidized, whether Medicare premiums for older adults are higher or lower than those of private insurers, whether older adults are required to have health coverage through an individual mandate, and the relative generosity of Medicare benefits relative to benefits offered by private plans.”

Break time – it's not just for coffee and cigs

I don’t know about you, but I think it’s just great when the federal government finally catches up with the states.

For several years now, dozens of states have had laws in place that provide protections for nursing mothers. For example, in Illinois, employers must provide reasonable, unpaid break time each day to an employee who needs to express breast milk for her infant. Many other states have similar laws.

Believe it or not, the Senate’s health care reform bill (H.R. 3590) contains a provision (Act Section 4207 on page 1239) that would require employers to provide reasonable, unpaid break time for an employee to express breast milk for her nursing child for 1 year after the child’s birth each time such employee has need to express the milk. Employers must provide a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, where an employee may express breast milk.

Employers with fewer than 50 employees wouldn’t be subject to these requirements if they would impose an undue hardship by causing an employer significant difficulty or expense when considered in relation to the size, financial resources, nature, or structure of the employer’s business.

In addition, this provision would not preempt state laws that provide greater protections to employees than this provision would provide.

Alternative medicine could go mainstream

Alternative medicine practitioners might hit the jackpot, if a provision in the Senate bill were to advance into the final legislation. This represents another battle in the long war between traditional medical practitioners and alternative health providers.

Under the Senate bill, a team of health professionals, which can collaborate on patient care, may include “physicians and other professionals, such as a nurse care coordinator, nutritionist, social worker, behavioral health professional, or any professionals deemed appropriate by the State.” This provision would allow doctors to include alternative medical providers in treatment plans.

In fact, some believe that the bill would require insurers to provide coverage for alternative therapies, which might include such things as chiropractic care and massage therapy. The basis for this view is another Senate bill provision which states that a health insurer ”shall not discriminate with respect to participation under the plan or coverage against any health care provider who is acting within the scope of that provider’s license or certification under applicable State law.”

According to the Chicago Tribune, the nondiscrimination provision can is subject to varying interpretations. It cites insurance industry officials who say that the provision might mean that if they cover a physician's treatments for back pain, for example, they must also cover treatment by any other state-licensed health provider, or face a possible legal challenge. The Tribune points out, for instance, that in Illinois, massage therapists, chiropractors, and acupuncturists are state-licensed but exactly who is covered varies by state. Under current law, most states require chiropractic coverage but far fewer mandate coverage for acupuncture treatments.

Even without mandatory insurance coverage, alternative medicine is already quite popular. Americans spend nearly $34 billion annually on alternative medical treatments, amounting to more than 11 percent of total out-of-pocket medical expenditures. Nearly 40 percent of Americans already use alternative medical treatments so what’s the fuss?

There’s plenty wrong with this alternative medicine provision, according to doctors’ groups and health insurers. As quoted in the Los Angeles Times, "these provisions are anti-science and anti-consumer," says Dr. Steven Novella, a professor of neurology at Yale School of Medicine, who is organizing opposition to the Senate bill. Further, a coalition of 19 doctors’ groups wrote to Senate Majority Leader Harry Reid (D-NV) to protest the nondiscrimination provision, claiming it "would create patient confusion over greatly differing levels of education, skills and training among healthcare professionals."

Health insurers also oppose the provision. The Los Angeles Times reports that Robert Zirkelbach, a spokesman for America's Health Insurance Plans, believes that "requiring health plans to provide access to unproven therapies would increase costs and reduce the quality and safety of patient care.”

So, which side is correct? Should alternative medicine be covered by insurance, just like other medical treatment? These are just a few of the questions to ponder as you prepare for the holidays or search for your snow shovels and cold weather gear in anticipation of bad weather ahead.

Employers Win or Lose?

Nearly two-thirds (63%) of employers responding to a recent Mercer survey said that they would cut health care benefits to avoid paying the excise tax included in the Patient Protection and Affordable Care Act, H.R. 3590, which currently is being considered by the Senate. In general, excess annual costs under the legislation are those above $8,500 for employee-only coverage or $23,000 for family coverage, starting in 2013. Mercer estimates that one in five employers offer health care coverage that would be deemed “too generous”and thus would be subject to the Act’s 40% nondeductible tax on the excess value.

Seven percent of plan sponsors would terminate those plans. About one-fourth of the respondents (23%) said that they would maintain their current plan but pass along the cost of the tax to their employees; and 2% said that they would keep their plan but absorb the new tax themselves

Many employers, particularly the largest ones, also would terminate their contributions to employees’ flexible spending accounts, health reimbursement arrangements, and health savings accounts: 19% of all respondents,, but 25% of employers with 5,000 or more employees, would terminate their contributions.

Some who support the excise tax have argued that it would lead employers to cut benefits and return the savings to employees in the form of higher wages. But fewer than one-fifth of the Mercer survey respondents (16%) said that they would raise wages in response to lower health care plan costs.

More than half of responding employers (52%) favored the individual mandate included in the House and Senate bills, 37% opposed it, and 11% had no opinion. The largest employers (those with 5,000 or more employees) overwhelmingly (65%) favored the individual mandate, but fewer than half (45%) of the small employers supported it However, the majority of employers (86%) agreed that if individuals were required to have coverage, Congress should allow employers and insurance companies to offer low-cost catastrophic plans. Limited coverage catastrophic plans would not be allowed under the current House and Senate proposals.

As health care costs continue to rise, the proposed tax is predicted to apply to about one-fifth of all employers if it becomes effective in 2013, Mercer noted. The percentage of employers affected by the cap would increase annually because the Act proposes that the baseline trend be raised by the annual Consumer Price Index plus 1%, which is about half the average health care trend, Mercer explained.

“For many employers, it’s a matter of when, not if, they will hit the cap,” said Linda Havlin, a partner with Mercer. “While some policy analysts expect the cap would prompt employers to make major changes to cut back on excessive health care spending, it’s important to note that not all the plans that would be subject to the tax are particularly generous. There are other factors beside plan design that drive up cost.”

In a fact sheet it released yesterday, the U.S. Department of Health and Human Services listed potential benefits to business of health reform, using a Congressional Budget Office (CBO) report issued last week (and discussed in one of our posts). The CBO. estimates that, under reform, large business premiums will drop by $100 per single policy and $200 per family policy. With 134 million people enrolled in such coverage, this translates into at least $13.4 billion in savings in 2016 alone, HHS noted. And at least $13.4 billion in savings for large businesses. Opening up health insurance options also would ease job-lock which prevents workers from moving to other jobs or entrepreneurship for fear of losing health insurance.

[Business] “Roundtable companies sponsor health insurance for some 35 million employees,” a December 6 Wall Street Journal editorial titled “CEOs and ObamaCare,” noted. “Not only would their wages continue to be depressed as costs continue to accelerate [under the proposed health care reform legislation], but large and unpredictable costs would remain on corporate balance sheets.” The Business Roundtable is an association of chief executive officers of large U.S. companies The Journal claims that the Roundtable’s member employers are activating for stronger public opposition to the current health reform proposals.

So, which will it be?--Will employers be winners, or losers, when pending health reform legislation is enacted?

Financial Woes Ahead For Unemployed As COBRA Subsidies Wind Down

As the COBRA premium subsidy begins to end, unemployed families on COBRA could see their premiums increase from $389 per month to $1,111 per month, according to a new report from Families USA. Monthly premiums of $1,111 would consume 83.4% of the average unemployment check, according to the report, Expiration of COBRA Subsidy.

The federal COBRA subsidies pay 65% of the cost of COBRA premiums for up to nine months. The first subsidies became available on March 1, and these were scheduled to expire on December 1. For those who started receiving subsidies after March, the expiration will be nine months after the subsidy begins. Employees involuntarily terminated through Dec. 31, 2009, and whose COBRA would be effective by that day, are eligible for the subsidies.

“When workers lose their jobs, they often lose their health coverage as well,” said Ron Pollack, executive director of Families USA. “For millions of laid-off workers and their families, the federal COBRA subsidies have been a health care coverage lifeline. It is essential, therefore, that new jobs legislation extends those subsidies.”

Mr. Pollack noted that pending health care reform legislation would provide a permanent source of help to laid-off workers. The health care reform bills pending in Congress would enable laid-off workers and their families to obtain health care coverage through newly created marketplace exchanges, and families with low incomes would receive tax-credit subsidies to help pay the premiums.

According to the Families USA report, average monthly family COBRA premiums vary quite significantly from one state to another—ranging from $979 in Idaho and $989 in Iowa to $1,232 in Minnesota.

In nine states, the average family COBRA premium exceeds the average unemployment insurance benefit. In Mississippi, for example, the average monthly unsubsidized family COBRA premium is 22.4% higher than the average monthly unemployment insurance check: The average family COBRA premium in the state is $1,027, while the average monthly unemployment insurance check is $839.

The eight other states in which the average family COBRA premium exceeds the average unemployment insurance check are: Alabama ($1,005 vs. $903); Alaska ($1,209 vs. $1,032); Arizona ($1,111 vs. $941); Delaware ($1,209 vs. $1,125); Florida ($1,147 vs. $1,010); Louisiana ($1,013 vs. $968); South Carolina ($1,090 vs. $1,061); and Tennessee ($1,112 vs. $975).

High unemployment due to the recession and the previous lack of a COBRA subsidy can seriously affect COBRA elections, according to the 2009 COBRA Survey completed by Spencer’s Benefits Reports. This survey, which was conducted before the subsidies were in effect, clearly illustrates that in a recession, as more employees are laid off and become eligible for COBRA, fewer sign up for the program because of cost.

In the 2009 survey, 16.87% of employees (270,921 individuals) became eligible for continuation of coverage. The 16.87% COBRA eligibility rate is 1.5 times greater than the 20-year average of 10.37% and is the highest recorded in the 20 years of the Spencer survey.

In addition, only 9.69% of beneficiaries eligible for COBRA actually elected the coverage. The number electing (as a percentage of those eligible) was less than half of the 20-year average of 19%, and the 9.69% rate of election was the lowest recorded in the 20 years of the Spencer survey.

The 2009 COBRA survey is available with a subscription to Spencer’s Benefits Reports (for information on ordering, click here).

Recent evidence also suggests that COBRA elections increased substantially after the subsidies took effect.

Subsidy Extensions Proposed

In addition to overall health care reform legislation, three bills pending in Congress specifically would extend the COBRA subsidies.

In the Senate, Sen. Sherrod Brown (Ohio) has introduced S. 2730, which would extend eligibility through June 2010 and increase the subsidy period to 15 months. S. 2730 also would boost the subsidy to 75% of the COBRA premium. The bill was referred to the Committee on Health, Education, Labor, and Pensions (HELP).

In the House, H.R. 3966, introduced by Rep. Andre Carlson (Ind.) also would extend for six months, through June 30, 2010, the period of eligibility for COBRA premium assistance. The bill was referred to the Education and Labor, Ways and Means, and Energy and Commerce committees.

H.R. 3930, introduced by Rep. Joe Sestak (Pa.), also would extend the period of eligibility for COBRA premium assistance through June 30, 2010. In addition, H.R. 3930 would make the following changes:

• Extend the duration of 18-month COBRA qualifying events to 24 months for any termination of employment (voluntary or involuntary) or reduction of hours that occurred between April 1, 2008, and Dec, 31, 2009.


• Qualified beneficiaries for whom COBRA coverage already has expired before the law is passed would have a second election right to obtain an additional six months of coverage.


• COBRA subsidies would continue for up to 15 months, instead of the current nine months. However, all subsidies would end after Dec. 31, 2010.

H.R. 3930 also was referred to the Committees on Education and Labor, Ways and Means, and Energy and Commerce.

Employers Need To Be Prepared For Preventive Services Mandates In Health Reform

After four days of generalized sniping at each other, the full Senate began yesterday to vote on the scores of amendments already filed for the Patient Protection and Affordable Care Act, H.R. 3590.

A preventive services expansion and a Medicare benefits guarantee were the first amendments agreed to by the Senate.  The Medicare benefits guarantee is a feel good measure that passed 100-0 and simply confirms that health reforms will not reduce guaranteed Medicare benefits and that Medicare savings will be used to extend the solvency of the Medicare program.

The preventive services expansion, on the other hand, reinforces the potential changes employer group health plans will need to make quickly if health reform passes.

Sen. Barbara Mikulski (Md.) proposed the amendment that would expand the legislation’s first dollar coverage of preventive health services to include additional women’s preventive care and screenings “in comprehensive guidelines supported by the Health Resources and Services Administration.”

The bill already would require group health plans to cover, with no cost sharing, the following:

• certain evidence-based items (with A or B ratings) in the recommendations of the United States Preventive Services Task Force;


• immunizations  recommended by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention


• evidence-based preventive care and screenings for infants, children, and adolescents provided for in the comprehensive guidelines supported by the Health Resources and Services Administration.

The Mikulski amendment, which passed the Senate by a vote of 61-39, includes a provision from by Sen. David Vitter (La.) that would exclude controversial November 2009 recommendations from the Preventive Services Task Force regarding breast cancer screening, mammography, and prevention.

One of the most important provisions is that employers would be required to comply with these preventive services mandates within six months of enactment of H.R. 3590.

This means that employers will have to review the previous recommendations of the Task Force and be prepared to offer a variety of preventive care with no cost sharing permitted.  Here are just a few of the recommended services with the required A or B ratings which employers would have to offer and provide with no deductibles or coinsurance:

• screening adults for depression;


• intensive behavioral dietary counseling for adult patients with known risk factors for cardiovascular and diet-related chronic disease;


• oral fluoride supplementation to preschool children older than 6 months of age;


• screening for high blood pressure in adults aged 18 and older;


• screening and behavioral counseling interventions to reduce alcohol misuse by adults, including pregnant women, in primary care settings.

Senate bill would create simple cafeteria plans for small employers

Small employers aren’t always able to offer the same employee benefits that larger employers can. One such benefit is a cafeteria plan. The Senate health care reform bill (H.R. 3950) would create a new vehicle called a simple cafeteria plan, which would make it easier for small employers to provide tax-free benefits to employees.

What’s a cafeteria plan? Your first thought when you hear the term “cafeteria plan” might be about food and those mysterious items they serve for lunch in grade school. But that’s not the cafeteria we are talking about when it comes to employee benefits.

A cafeteria plan is a written benefit plan maintained by an employer under which all participants are employees and each participant has the opportunity to select the particular benefits that he or she desires among a range of offered benefits. Under a cafeteria plan, employees may choose among two or more benefits consisting of cash (a taxable benefit) and qualified nontaxable benefits. A common qualified nontaxable benefit is coverage under an accident or health plan.

A cafeteria plan can be funded by employer or employee contributions or a combination of both. Employee contributions for qualified benefits under a cafeteria plan generally are made on a pre-tax basis through salary reduction.

What are the rules? Cafeteria plans are subject to various rules, including what’s called “nondiscrimination rules.” Generally, this means that a plan may not discriminate in favor of highly compensated individuals as to eligibility for the plan or as to contributions and benefits.

What’s the new plan? The Senate bill would provide for a “safe harbor” from the nondiscrimination requirements for cafeteria plans for small employers. The safe harbor would require that the cafeteria plan satisfy minimum eligibility and participation requirements and minimum contribution requirements.

Definition of small employer. Employers that would be eligible for the simple cafeteria plan would be those that employed an average of 100 or fewer employees on business days during either of the two preceding years.

Eligibility and participation. The Senate bill’s eligibility and participation requirements for a simple cafeteria plan are met if:

(1) all employees who had at least 1,000 hours of service for the preceding plan year are eligible to participate, and

(2) each employee eligible to participate in the plan may, subject to terms and conditions applicable to all participants, elect any benefit available under the plan.

Contributions. The contribution requirements are met if the employer is required, without regard to whether a qualified employee makes any salary reduction contribution, to make a contribution to provide qualified benefits under the plan on behalf of each qualified employee in an amount equal to:

(1) a uniform percentage (not less than 2 percent) of the employee’s compensation for the plan year, or

(2) an amount which is not less than the lesser of—

(a) six percent of the employee’s compensation for the plan year, or

(b) twice the amount of the salary reduction contributions of each qualified employee.

CBO premium report offers mixed picture

Surprise, surprise. The nonpartisan Congressional Budget Office (CBO) has issued its long-awaited analysis of how health reform would affect premiums and both sides in the debate are claiming victory, using the CBO analysis to bolster their own cases. The CBO analysis, which compares health insurance rate estimates under current laws as they'd be in effect in 2016 vs. what they’d be if health reform were fully implemented, shows that health reform could substantially reduce costs for many individual insurance market purchasers (while causing premiums for others to increase) but would not substantially affect premiums for most Americans who receive employer-based coverage.

The facts. First, the facts. These are not in contention. For employees of large company employers (a group that makes up 70 percent of the insurance market), premiums would hold steady or drop by up to 3 percent. For small group employees, who make up 13 percent of the market, the effect would vary. For some small group members, rates could drop by up to 2 percent while others could see a one-percent increase. A portion of small group employees—about 12 percent--would qualify for tax credits, which would cause their premiums to fall by 8 to 11 percent, according to the CBO.

The effect on the individual market would vary even more, depending on whether the buyer is eligible for a subsidy. Some people buying their insurance in the individual market would face moderate premium increases, while others—people who would qualify for subsidies--would pay much less than they do right now. According to the CBO, about 57 percent of the 32 million people expected to buy their coverage in the individual market would qualify for a subsidy and, the CBO says, these people would see their insurance premiums drop by 56 to 59 percent. However, people in the individual market who are ineligible for a subsidy would pay, on average, 10 to 13 percent more if health reform were enacted vs current law.

Why would premiums increase? According to the CBO says, if health reform is implemented, insurance policies would be more expensive for two reasons. They would cover more benefits (the scope of insurance coverage would increase) and the share of coverage (that is, the actuarial value) would increase, resulting in reduced out of pocket costs for individual market buyers.

The spin. Though the CBO results are not really in dispute, the meaning of the CBO report is being interpreted differently by each side. In effect, both sides are claiming victory. Though this would seem odd, I believe it does bolster each side, at least a bit, in a sort of health reform glass is half full or half empty sort of way.

For example, the CBO report “indicates that whether you work for a small business, a large company or you work for yourself, the vast majority of Americans will see lower premiums than they would if we don’t pass health reform,” according to Senate Finance Committee Chairman Max Baucus (D-MT). Some centrist Democrats have been pleased that the CBO did not predict a big increase for the employer-provided market.

However, Senate Minority Leader Mitch McConnell (R-KY) claims that health reform legislation would result in substantially more costs and yet “most people will end up paying more or seeing no significant savings.” After looking at the CBO report, I agree that most people probably will not see significant savings (emphasis on the word "significant.") However, I think it's misleading to imply that "most people" will end up paying more, at least if the CBO is to be believed. It seems pretty clear to me that the Republicans will have a tougher time spinning the CBO report in their favor but it can be done.

End result. Let me put this into perspective…for 83 percent of the market (the large employer group and the small employer group) premiums would hold fairly steady with just a small percentage change, either way, according to the CBO. In the individual market, 18.24 million buyers would save a bundle on insurance premiums, thanks to subsidies. 13.76 million individual market buyers who are not subsidized would see 10 to 13 percent increases. Despite the premium increases, this unlucky group would at least be getting better coverage for their money.

When it comes to health reform, nothing is simple. Just as with every development, people can read into it what they will and the CBO premium report is no exception.

Public's Views On Reform Vary Depending On Whom You Ask

Several survey results released at the end of November purportedly present the American public’s varied views of health care reform as currently debated n Congress. Of course, it depends on whom you ask and when.

Many Americans are tuned in to the health care reform debate, and the majority think that current proposals, if enacted, would have little, if any, direct effect on them. But of those Americans who do expect to be affected, most anticipate a negative effect. These are among the conclusions of a Robert Wood Johnson Foundation survey of 500 American adults. The majority of RWJF respondents (57%) think their access to health care would remain the same after reform and 61% think their financial situation would be unaffected.

Among those who do expect a change, 28% said they thought their access to care would get worse, while 15% said they thought it would improve. On finances, 27% said they thought the health care bill would make them worse off financially, while 12% expected an improvement.

When asked about changes in store for the nation as whole, fewer than 30% thought things would stay the same if Congress passes legislation. But expectations on whether or not access to medical care would improve around the country were split at 35 each. The federal budget was a major concern, with 39% saying the nation's finances would be worse off, compared with 33% saying the legislation would improve the balance sheet. However, the great majority (71%) of the RWJF respondents consider health reform necessary to address the nation's economic crisis.

At the same time, the poll found that consumers' confidence in their health insurance coverage and ability to access care rose sharply in October to 104.4 points, an 8% increase from 96.6 points in September. Researchers attributed this change to better news about the economy and progress on health care in the Senate at the time the poll was conducted.

"The majority of Americans do have health insurance, so to the extent they see the reform debate as a way to expand coverage for the uninsured, they may not see that they stand to gain as much from it," said Brian Quinn, a senior researcher with the foundation, which supports the general goals of health care reform.

The results of a Gallup Poll released on November 30 shows that Americans are nearly split between supporting and opposing the current health reform initiatives: 49 % of respondents said they would urge their Congressman vote against the bill or lean that way and 44% say they want their member of Congress to vote for the bill or lean that way. The results of the survey are similar to a Gallup poll taken earlier this month, but both are a reversal from October, when 51% of respondents said they backed the bill and 41% opposed it.

Gallup's report on the poll notes that since they started surveying people about health care reform earlier this year "there has never been a strong public mandate in favor of passing a law this year," but noted "opinion on the issue is far from settled." Still, nearly one-quarter of independents (27%) and Democrats (24%) are undecided, “which at least improves the odds that legislation could wind up getting majority public backing,” Gallup noted.

Also released on November 30, a Rasmussen Reports national telephone survey found that 41% of voters nationwide favor the health care reform plan proposed by President Obama and congressional Democrats. More than half (53%) are opposed to it. Those figures include 22% who “Strongly Favor” the plan and 40% who are “Strongly Opposed.”

Support for the legislation has risen three percentage points from the prior week. Rasmussen claims that the number of voters opposed to the plan has always exceeded the number who favor it. More than half (56%) of survey respondents say the plan will increase the cost of health care, and only 17% believe passage of the plan will lower costs. Half of respondents (50%) believe passage of the legislation will lead to a lower quality of care while just 18% believe quality will improve.

Nearly two-thirds (63%) of voters nationwide responding to the Rasmussen survey said guaranteeing that no one is forced to change their health insurance coverage is a higher priority than giving consumers the choice of a "public option" government-run health insurance company. And, pray tell, how do you offer such a guarantee? The majority (68%) of Americans younger than age 65 get their health insurance through employment and those insurance options, along with plan design and costs, can change from year to year based on employers’ decisions. Nearly half (46%) of the Rasmussen respondents favor a public option but not if it would encourage companies to drop private health insurance coverage for their workers.

Hispanic voters, on the other hand, overwhelmingly support not only health care reform, but also a public plan option. This is not surprising since the rate of uninsured is by far highest (41.3%) among Hispanics. A national survey by Latino Decisions, the Robert Wood Johnson Foundation Center for Health Policy at the University of New Mexico (UNM-RWJF Center), and impreMedia of 1,000 Hispanic registered voters found broad-based and overwhelming support (86%) for health care reform legislation, and for a plan that includes a public option to compete with private insurance programs (74% of respondents, 67% say health care should be made available regardless of citizenship or legal residency, and 61% would still like to see universal health care (61%). The results of this survey also were released on November 30.

A substantial a majority of Americans (59%) responding to the Kaiser Family Foundation’s Health Tracking Poll in November said they support having a public plan to compete with private insurers. CNN and CBS surveys in mid-November each find 56% and 61% of the Kaiser survey respondents favored inclusion of a public plan option. Furthermore, 58% favor tackling reform now compared with 36% who said that the U.S. cannot afford it. Substantial majorities among Democrats and Independents (85% and 74%, respectively) recognize the need to address health reform now, while only 43% of Republicans agree. More than half (54%) said they think the country as a whole would be better off with health reform

A new survey by the Pew Research Center for the People & the Press and the Pew Forum on Religion & Public Life also found the public split over the health care proposals in Congress, with 42% in favor and 39% opposed, but those figures represent a shift. Earlier in November, before the House voted on its bill, 38% supported the reform proposals and 47% opposed it.

Among the Pew survey respondents, supporters of reform cited the expansion of coverage to the uninsured (32%), the need for change (17%) and the need to control costs (14%) as most important to them. Opponents of reform mainly cite either the cost (27%) or the increased role that government would play (27%). Other reasons for opposition include the complexity of the legislation (8%) or skepticism that reforms won't work (8%). Very few (3%) cite abortion coverage as their reason to oppose health care reform.

So, which survey results represent the American public’s true view of health care reform? And where do you suppose these survey respondents’ get their information on reform?