Will Awareness Kill Contempt?

The Department of Health and Human Services (HHS) recently announced that nearly $200million in new grant funds are now available to help states develop programs that will make health insurance premiums more transparent and provide "the power to stop unreasonable premium increases from taking effect."

This new funding is in addition to the $46 million awarded in August of 2010 to 45 states and the District of Columbia to control premium hikes. It also complements new rules proposed in December of 2010 to require insurance companies to publicly justify unreasonable premium rate increases.

The new funding will help states with their premium rate review programs to ensure that proposed health insurance rate hikes are comprehensively reviewed and to provide greater transparency and openness to the rating process.

The HHS would determine that a state has an effective rate review program, if the state does the following:

 collects enough information from insurance companies to determine whether rate increases are unreasonable;
 dedicates enough resources to effectively review that information in a timely manner;
 analyzes the reasons insurance companies give for raising rates based on whether they are valid and reasonable; and
 has a legal definition for a reasonable or unreasonable rate increase.

This national effort is part of the Affordable Care Act, otherwise known as “health reform”, but how many Americans are aware of this new protection from unreasonable health insurance premiums?

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

Health reform is still the law of the land, though many don’t realize it

A quick quiz. Is last year’s federal health reform legislation, the Patient Protection and Affordable Care Act (PPACA) still valid law? You’d think that most people would know the correct answer, yes, it’s still the law of the land.

According to a recent survey, “most people” do know it’s still good law, but only just barely. In fact, only 52 percent of respondents to a Kaiser Family Foundation (KFF) poll correctly knew that the PPACA is still in effect. An astounding (to me, anyway), 22 percent incorrectly believed that PPACA has been repealed and is no longer law.

Why would they think it’s been repealed? Certainly there’s been a lot of media attention on the recent vote by the House of Representatives to repeal the law. Perhaps people are forgetting what they learned in civics class. As one commentator suggested, maybe it’s time to bring back Schoolhouse Rock and let “I’m Just a Bill on Capitol Hill” help clarify the whole legislative process for a new generation. Of course, as was probably explained on one of those Saturday mornings long ago, a repeal wouldn’t take effect unless both the U.S. House and the U.S. Senate, now controlled by the Democrats, also passed repeal legislation and then President Barack Obama signed it.

Do those people who believe that the health reform has been repealed rely on the fact that two federal district courts have declared the individual mandate unconstitutional? (Interestingly, as of now, three federal district courts have ruled that the PPACA’s individual mandate is constitutional but we don’t hear as much about the courts that have upheld it.) Clearly, we have a long way to go until the legality of health reform legislation is settled in the courts.

Or do the respondents who think the law has been repealed just not know? We’ll never know what they were thinking when they answered but I wish the survey had followed up, asking them why they thought that health reform had been repealed. Perhaps someone else will ask this question in another survey.

Additional survey results. The KFF survey had some additional information. For instance, nearly one in three Republican survey respondents thought the health reform law had been repealed. One in four independents and one in eight Democrats thought the same. People with higher incomes as well as those with college degrees were more likely to have an accurate view of the status of the law.

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

Insurers' responses to health reform law emerging

How will health insurers respond to the passage of health reform, last year’s Patient Protection and Affordable Care Act (PPACA)? Earlier, we received some insights into how employers will respond to this legislation. A survey from benefits consultant Milliman has now clarified how insurers are expected to respond.

Health insurers will be changing some "fundamental aspects of providing health insurance" as a result of provisions of the PPACA, according to Milliman's 2010 Group Health Insurance Survey.

Insurer tools. Milliman's survey responses from more than 60 insurers indicate that the following insurer tools will become more common:

• Quality incentives and bonus programs for medical providers (often referred to as pay for performance) encouraging providers to use evidence-based medicine (69% of insurer respondents agreed that they would apply this strategy);
• Risk-sharing arrangements with providers (63% of insurers);
• More price transparency for members (62%) and more "aggressively" tiered provider networks based on quality, effectiveness, and price;
• Reduced insurance broker commissions (53%), as brokers' roles are redefined according to the PPACA.

Long-term strategies. In response to the ACA, health insurers are adjusting their long-term strategies as follows:

• Preparing to participate in the Health Insurance Exchanges beginning in 2014 (83% of respondent insurers);
• Strengthening self-insurance options for employers (66%); and
• Expanding into the markets for individual insurance (44%), and for small group and large group insurance (43% each). Few insurers were planning to exit those markets (12% from individual, 6% from small group, and 2% from large group markets).

Of course, only time will tell how these insurer responses play out.

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

Employers Take Advantage Of The Health Reform Law They Want Repealed

Although six in 10 employers hope health reform will be repealed, a recent survey reveals that seven in ten believe some parts of health care reform should stay in place and almost six in ten believe reform was long overdue. And at least one ACA program has proven very popular with corporate America.

The Department of Health & Human Services (HHS) expects to pay out about $3.6 billion in reimbursements for medical expenses for the Early Retiree Reimbursement Program in fiscal year 2011, which began on Oct. 1, 2010 and ends on Sept. 30, 2011.

According to the agency's budget for fiscal year 2012, as of Jan. 25, 2010, more than 5,000 early retiree medical plan sponsors had been approved for participation and about $1 billion had been paid. All Fortune 500 employers have applied for the program.

The remaining $1.4 billion balance of the $5 billion allocated for the program by the Patient Protection and Affordable Care Act (ACA) is expected to be exhausted in fiscal year 2012. Since late January, almost 300 additional firms have begun participation in the ERRP. A state-by-state listing is available here.

The ACA established the ERRP as a temporary measure to reimburse part of the claims costs for participating employment-based plans that provide health insurance coverage for early retirees ages 55 through 64, and their eligible spouses, surviving spouses, and dependents. The ERRP will reimburse for 80% of a plan's individual claims that are between $15,000 and $90,000, indexed for inflation. The program is effective June 1, 2010, and ends on the earlier of Jan. 1, 2014, or when the $5 billion appropriated for the program is exhausted.

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

Angel Or Devil? Budget Process Highlights Health Reform Divide

The health reform battle has a new venue beginning this week—the debates over the 2012 budget and Congressional continuing resolutions to keep the government running while the budget debate continues. And if you think the Democrats and Republicans are fighting the battle in two different universes, you are right.

Here is President Barack Obama’s 2012 budget statement on the Patient Protection and Affordable Care Act (ACA):

“The Administration is committed to implementing the ACA swiftly, efficiently, and effectively, and will work with the Congress to ensure that the resources are available to do just that.”

And here is House Speaker John Boehner (Ohio) blogging on Republican pushed continuing budget resolutions:

“We're going to do everything we can in this bill to make sure that there's no money for ObamaCare. But this is a continuing resolution. This deals with what we call discretionary spending. And within the rules of debate for a bill like this, we're going to do everything we can to make sure there's no money.

“You'll see us work all year at bringing to light just how destructive ObamaCare is going to be on our health care system, on the American people, and on our future debt. And you'll see us move systematically to do everything we can to make sure this law never, ever has a chance to be implemented.”

Mr. Obama’s budget makes the following case for the ACA:

“The ACA empowers Americans who are insured with information about the cost and quality of care and gives them the stability and security they need by ending many discriminatory and abusive insurance industry practices; expands coverage to more than 30 million Americans who lack insurance; cuts waste and reforms health care so that higher-quality care is delivered; and does it all without adding a dime to the deficit. In fact, according to CBO’s latest analysis, the ACA will cut more than $200 billion from the deficit over the next 10 years and more than $1 trillion over the second 10 years. Considering that rising health care costs are driving up our national debt and thus are a drag on future economic growth and the Nation’s overall competitiveness, the ACA puts in place much-needed deficit reduction.

“Americans already are enjoying many of the protections put in place by the ACA. For instance, in the past, if a person became ill, insurance companies could deny payments for health services by retroactively finding an error or other technical mistake on their previously accepted application; this is now illegal. Insurance companies are now prohibited from imposing lifetime dollar limits on essential benefits, such as hospital stays. And because of the ACA, insurance companies can no longer deny coverage to children under the age of 19 due to a pre-existing condition. Finally, if a consumer does have a problem with an insurance company’s coverage decisions, the ACA ensures consumers have a way to appeal coverage determinations or claims to their insurance company, and establishes an external review process.

“Beyond curbing the most egregious practices of the insurance industry, Americans have realized other benefits. Since ACA’s passage, as many as 4 million small businesses could be eligible for tax credits to help them provide insurance benefits to their workers. The first phase of this provision provides a credit worth up to 35 percent of most employers’ contributions to employees’ health in­surance. This provision also provides up to a 25 percent credit to small nonprofit organizations. For 2010, an estimated 4 million seniors who reached the gap in Medicare prescription drug coverage known as the “doughnut hole” qualified to receive a $250 rebate. For those individuals who have been uninsured for at least six months because of a pre-existing condition, there is now a Pre-Existing Condition Insurance Plan to pro­vide them with coverage options. This program serves as a bridge to 2014, when all discrimina­tion against pre-existing conditions will be pro­hibited. And all new private-market health in­surance plans now must cover critical preventive care services such as mammograms and colonos­copies without charging a deductible, co-pay, or coinsurance.

And here is a recent Republican analysis:

“ObamaCare’s cost-increasing and job-destroying regulations are an economic albatross inhibiting a return to prosperity. In addition to the well-documented cost burden of its “1099 provision” requiring excessive IRS forms from small businesses, ObamaCare discourages growth in other ways, such as the $2,000 per employee tax on businesses with more than 50 employees that fail to offer health insurance. Unfortunately, this employer mandate will disproportionately affect the most vulnerable workers in the economy. The Congressional Budget Office (CBO) noted in its August 2010 Budget and Economic Outlook:

‘Those penalties, whose amounts are based on the number of full-time workers in the firm, will, over time, generally be passed on to workers through reductions in wages or other forms of compensation. However, firms generally cannot reduce workers’ wages below the minimum wage, which will probably cause some employers to respond by hiring fewer low-wage workers.’…

“An analysis by the House Budget Committee estimates that implementation will result in $2.6 trillion of spending. The bill will cost drastically more than the original CBO estimate due to the accounting gimmickry mandated in CBO’s analysis. The House Budget Committee estimates that ObamaCare will actually increase the deficit by $701 billion over the next ten years. This sobering figure comes on top of CBO’s own admission that ObamaCare “does not substantially diminish” the pressure of rising health costs on the federal budget during the next few decades and beyond.”

Budgetary estimates typically are inaccurate, and all economists have difficulty in predicting the future under the ACA.  What is less difficult is gauging the effect of the reforms already put in place. How do you think those reforms are going so far?

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

States Struggle With Health Reform Implementation

A recent letter from 21 state governors to Health and Human Services (HHS) Secretary Kathleen Sebelius has asked for six specific changes to give states more control over insurance exchanges established under the Patient Protection and Affordable Care Act (ACA).

The letter recognizes that neither the courts nor Congress may ultimately repeal health reform, and thus the governors “face the decision of whether to participate in the bill by operating state exchanges, or to let the federal government take on that task, if the bill remains in effect in 2014.”

The governors note “We believe the system proposed by the [ACA] is seriously flawed, favors dependency over personal responsibility, and will ultimately destroy the private insurance market.

“Because of this, we do not wish to be the federal government’s agents in this policy in its present form.”

The letter requested the following changes:

• Provide states with complete flexibility in operating the exchange, most importantly the freedom to decide which licensed insurers are permitted to offer their products.


• Waive the [ACA’s] costly mandates and grant states the authority to choose benefit rules that meet the specific needs of their citizens.


• Waive the provisions that discriminate against consumer-driven health plans, such as health savings accounts (HSAs).


• Provide blanket discretion to individual states if they chose to move non-disabled Medicaid beneficiaries into the exchanges for their insurance coverage without the need of further HHS approval.


• Deliver a comprehensive plan for verifying incomes and subsidy amounts for exchange participants that is not an unfunded mandate but rather fully funded by the federal government and is certified as workable by an independent auditor.


• Commission a new and objective assessment of how many people will end up in the exchanges and on Medicaid in every state as a result of the legislation (including those “offloaded” by employers), and at what potential cost to state governments.

Government Response

In response, Ms. Sebelius wrote, “The Affordable Care Act puts states in the driver’s seat because they often understand their health needs better than anyone else‑and that is why it is so frustrating to hear opponents of reform falsely attack the law as nationalized health care.”

“The truth is that states aren’t just participating in implementation of the law; they’re leading it.”

In addition, a February 10 HHS memo outlines the how the Administration feels the law provides flexibility for the states:

• States will determine which insurers are permitted to offer products in the Exchanges. Under the law, States will have wide latitude to run their own insurance marketplaces and determine which insurance companies may operate in the new State-based Exchanges. Utah and Massachusetts, for instance, already operate their own Exchanges. And while they’ve taken different approaches, with Utah allowing all insurers to participate and Massachusetts having stricter standards, both models could meet the goals of the law.


• States can choose benefit rules that meet the needs of their citizens. The Affordable Care Act ensures health insurance plans offered in the Exchanges provide at least what a typical employer currently provides today. Accordingly, the benefits offered through the State-based Exchanges will reflect what is offered today in the private sector. States have flexibility to go beyond that minimum standard and determine what, if any, additional benefits insurance companies that sell policies in the Exchange must provide. States that choose to require more generous coverage must bear the cost of those benefits.


• Consumer-driven health plans and Health Savings Accounts (HSAs) will be available. The new State-based Exchanges will offer individuals, families and small businesses a wide range of plans from lower-cost consumer-driven health plans and those coupled with Health Savings Accounts (HSAs) that tend to have a higher deductibles and higher cost sharing to more comprehensive plans with lower out-of-pocket costs. Exchanges will offer health plans at the “bronze” or basic level, which will expand availability of consumer-driven plans and HSA-eligible plans to new consumers. And, young adults and people for whom coverage would otherwise be unaffordable will have access to catastrophic coverage.


• States have discretion over Medicaid coverage. Under the Affordable Care Act, States may structure their Medicaid programs to more closely resemble the private insurance coverage options available in the Exchanges. States can tailor the benefit packages based on private coverage options available in their States – such as the standard Blue Cross/Blue Shield plan, the State employee health plan, and the largest commercial HMO available in the State. States can go beyond these standards to provide additional benefits but are not required to do so.


• New funding to establish Exchanges and modernize eligibility systems is available. The law provides full funding for States to conduct planning activities needed to develop an Exchange and funding through 2015 to establish an Exchange. States can also receive funding to update antiquated systems used to verify who is eligible to purchase insurance in the Exchanges and who is eligible for Medicaid benefits. Many States have not updated their Medicaid eligibility systems since the mid-1980s.

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

Health reform rollercoaster on fast track to Supreme Court?

Do you ever feel you’re on a rollercoaster ride when following health care reform developments? The ups, the downs, the twists and turns. Well, hold onto your hats folks, because your trip might be speeding toward the Supreme Court.

Virginia Attorney General Ken Cuccinelli has filed a petition asking the United States Supreme Court to take Virginia’s health care lawsuit now, as opposed to waiting for the case to first be decided by the court of appeals. The Petition for Certiorari Before Judgment in the United States Supreme Court in the case of Commonwealth v. Sebelius was filed pursuant to Rule 11 of the Rules of the United States Supreme Court, according to a press release from the Virginia AG’s office.

The AG explains that normally, appeals of decisions of United States district courts are first heard in the federal courts of appeals. But Rule 11 provides that an immediate review in the U.S. Supreme Court is permissible “upon a showing that the case is of such imperative public importance as to justify deviation from normal appellate practice and to require immediate determination in” the Supreme Court.

Cuccinelli noted, “Rule 11 is the exception to the general rule, but this case and the other cases challenging the constitutionality of PPACA are truly exceptional in their own right. There are a number of suits pending throughout the country challenging the constitutionality of PPACA. Presently, 28 states have filed suits challenging the authority of Congress to enact this law. That, in and of itself, is exceptional and makes the cases excellent candidates for immediate review in the Supreme Court.”

Media reports indicate the Department of Justice opposes a direct review by the Supreme Court. The Fourth Circuit Court of Appeals has set oral arguments for the case for May.

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

Mississippi throws out health reform challenge on jurisdictional grounds

A federal court in Mississippi has joined more than a dozen other districts in ruling that those seeking to overturn the Patient Protection and Affordable Care Act (ACA) do not have standing to file suit (a listing of many of these cases is available at http://m.whitehouse.gov/blog/2010/12/08/health-reform-wins-another-round-court). In four other cases, judges have ruled on the merits of the challenges to the ACA.

In Lt. Gov. Phil Bryant vs. Eric Holder Jr. (Civ. Act No. 2:10-CV-76-KS-MTP), the U.S. District Court for the Southern District of Mississippi stated that the lawsuit "contains insufficient allegations to establish that [the plaintiffs] will certainly be 'applicable individuals' who must comply with the minimum coverage provision [of the ACA]."

In addition, according to the court, "it is not certain from Plaintiffs' allegations that, in the event they were considered 'applicable individuals' they would incur the tax penalty [under the ACA] for non-compliance."

The four rulings that have been decided on the constitutionality of the ACA are as follows:

• State Of Florida, et al. v. United States Department Of Health And Human Services, et al. (Case No. 3:10-Cv-91);
• Commonwealth of Virginia v. Kathleen Sebelius (Civ. Act. No. 3:10CV188-HEH);
• Liberty University v. U.S. (Case No. 6:10-cv-00015-nkm);
• Thomas More Law Center, Jann Demars; John Ceci; Steven Hyder; And Salina Hyder, v. Barack Hussein Obama (No. 10-CV-11156).

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

Let's ditch the paperwork, Senate says

The Senate has approved by a 81-to-17 margin an amendment to the FAA reauthorization bill (S. 223) currently under debate in the Senate that would repeal new IRS Form 1099 reporting requirements for businesses. The measure, offered by Sen. Debbie Stabenow, D-Mich., is offset by rescinding $44 billion in previously approved but unobligated discretionary spending; however, unobligated funds of the Defense and Veterans Affairs Departments and the Social Security Administration would not be affected.

The requirement was signed into law as part of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) and has been widely decried by small businesses as an unnecessary paperwork burden. The provision mandated that all businesses file a return for payments to vendors in excess of $600 beginning in 2012 and was estimated to raise some $19 billion over 10 years to help offset the cost of health care reform.

The repeal has widespread bipartisan support and White House backing, but previous attempts to repeal the bill have failed as lawmakers could not reach agreement on how to offset the legislation. Ironically, Democrats in November 2010 defeated, by a 61-to-35 margin, a repeal measure offered by Sen. Mike Johanns, R-Neb., that also called for offsetting the cost with unused federal funds. A repeal bill with no offsets was offered at the same time by Senate Finance Committee Chairman Max Baucus, D-Mont. and fell by a 44-to-53 margin.

Stabenow estimated that, if Congress failed to repeal the requirement, Form 1099 filings for businesses would increase an estimated 2,000 percent. "If left unchecked, this 1099 provision would tie up 40-million small businesses in red tape and burdensome IRS reporting requirements, so we need to fix it now," said Stabenow. "This amendment is a common-sense solution for business owners who need to be focused on creating jobs, not filling out paperwork for the IRS." 

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

Report: some employers will pass health reform costs to employees

More than 40% of employers said that they are likely, and another 23% said that they are "highly" likely, to pass along any direct or indirect health reform-related cost increases to employees, according to research from the Employee Benefit Research Institute (EBRI) and the Society for Human Resource Management (SHRM). The 2010 EBRI/MGA Consumer Engagement in Health Care and the 2010 SHRM Organizations' Response to Health Care Reform surveys found that few are unlikely (10%) or "highly" unlikely (2%) to pass along cost increases related to the Patient Protection and Affordable Care Act (ACA), while 23% were unsure whether cost increases would be passed along to workers.

The studies noted that while the majority of employers are likely to pass along cost increases onto workers, only 30% of employers said that they were likely to pass along any cost decreases that were directly or indirectly related to the ACA. And, while 23% were "highly" likely to pass along these cost increases, only 10% were "highly" likely to pass along similar cost decreases.

Low knowledge of health reform. The Obama Administration may be frustrated with the level of current understanding of the reform law. Only 2% of adults with private insurance reported that they were "extremely" knowledgeable about the ACA, and only 7% reported that they were "very" knowledgeable. Most reported that they were "somewhat" knowledgeable (35%) or "not very" knowledgeable (37%). In addition, 18% said that they were "not at all" knowledgeable about the health reform law. Less than half of employers (45%) said that they were comfortable with the ACA, while 41% said they were not comfortable with the ACA, and 11% were strongly uncomfortable with the provisions of the ACA.

Future of employer-provided coverage. Despite their self-confessed lack of knowledge about reform, however, most Americans who currently have employer-provided coverage believe they will get to keep it.

Thirty-two percent of employees believe that their employer is likely to continue offering health benefits after 2014, and another 23% think that their employer is very likely to continue offering health benefits.

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

Florida judge: stop ACA rollout

In issuing a declaratory judgment on January 31 that the entire Patient Protection and Affordable Care Act (ACA) is unconstitutional, Judge Roger Vinson of the U. S. District Court for the Northern District of Florida may have, in effect, voided the implementation of the law in the 26 states that joined in the Florida case.

In the ruling, Mr. Vinson stated both that the individual mandate in the ACA is unconstitutional and that the individual mandate cannot be separated from the rest of the law (State Of Florida, et al. v. United States Department Of Health And Human Services, et al. (Case No.: 3:10-Cv-91):

"There are simply too many moving parts in the Act and too many provisions dependent (directly and indirectly) on the individual mandate and other health insurance provisions-which, as noted, were the chief engines that drove the entire legislative effort-for me to try and dissect out the proper from the improper, and the able-to-stand-alone from the unable-to-stand-alone."

Mr. Vinson then concluded, "Because the individual mandate is unconstitutional and not severable, the entire Act must be declared void. This has been a difficult decision to reach, and I am aware that it will have indeterminable implications. At a time when there is virtually unanimous agreement that health care reform is needed in this country, it is hard to invalidate and strike down a statute titled 'The Patient Protection and Affordable Care Act.'"

So, what does this mean?


ACA provisions in jeopardy. Thus, without a stay on the decision (either by Mr. Vinson or by the 11^th Circuit Court of Appeals), small business tax credits, the ability of young adults to be covered by their parents' insurance, early retiree subsidies to employers, preventive care mandates, and all the other ACA provisions now in effect could be in jeopardy in the states covered by the ruling.

High Court ruling inevitable. So far, in addition to the latest Florida case, there have been at least five rulings on the ACA--district court judges are split as to whether the individual mandate passes constitutional muster. A final resolution is not expected until the Supreme Court agrees to hear one or more of the cases.

 

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