Wednesday, November 30, 2011

Employers accelerate efforts to bring health benefit costs under control

Although the average total health benefit cost growth per employee slowed in 2011 (to 6.1% ($10,146 per year), down from 6.9% in 2010), according to Mercer, a benefits consulting firm, health reform is having an impact on employers’ accelerating efforts to bring health benefit costs under control. Respondents to the Mercer survey expect health benefit costs to increase, on average, by 5.7% in 2012. The cost growth from 2010 to 2011 was much smaller for large employers (3.6%) than for small employers (9.9%), Mercer finds.
Impact of health reform. The Patient Protection and Affordable Care Act (PPACA) requirement that employers extend dependent coverage eligibility to employees' children up to age 26 boosted health plan enrollment by an average of 2 percent, Mercer points out. Employers expect that PPACA provisions effective in 2014 that require employers to extend coverage eligibility to all employees working at least 30 hours per week on average, auto-enroll newly eligible employees, and the new mandate that all individuals obtain health insurance coverage, will result in another increase in enrollment. Retailers and other employers with large part-time populations are likely to be the most affected, Mercer observes.
The PPACA provision of greatest concern to the most employers is the excise tax on high-cost plans with nearly half of the Mercer survey respondents rating it as a "significant" or "very significant" concern. Some have high-cost plans simply because they have an older or less healthy workforce or are located in a high-cost area, not necessarily because they offer very generous plans. Only 39% of employers with 50 or more employees believe their current plans won't reach the excise tax cost threshold, which will be tied to the consumer price index (CPI) and increase each year. Nearly all the rest are determined to avoid the tax if they can: 21% say they "will do whatever is necessary to bring cost below the threshold amounts," and 36% say they will attempt to bring the cost below the threshold amounts, acknowledging that "it may not be possible." Only 4 percent will take no action to avoid the tax, Mercer finds.
"Employers that are concerned about a jump in enrollment in 2014 or the excise tax in 2018 see a need to slow cost growth now," says Beth Umland, Mercer's director of research for health and benefits. "While cost-shifting to employees is still going on, this year we saw more employers adopting strategies they believe will provide better results over the long haul."
Fewer than half of all employers (47%, down from 50% in 2011) say they will shift costs to employees in 2012 by raising deductibles or the percentage of the premium employees pay.
"Best practices" save money. As mentioned, large employers reported a significantly lower average health benefit cost increase than small employers in 2011: 3.6% compared to 9.9%. "The health care reform law may have had a greater impact on small employers than large employers in 2011," says Mercer’s Umland. "But the survey also shows that large employers are doing more to control health benefit cost."
Small employers tend to offer less-generous coverage than large employers, and so were more likely to be affected by new PPACA rules restricting annual benefit limitations and mandating free preventive care. However, they are also less likely to invest in the types of programs that large employers are using to manage cost, Mercer suggests.

Commitment to providing health benefits. Employers remain committed to providing health benefit plans to their employees, even after the PPACA-mandated state health insurance exchanges become available in 2014, Mercer finds. Few large employers say they would terminate their health plans and have employees seek coverage in the individual market instead with 9 percent of all employers with 500 or more employees, but 4 percent of those with 5,000 or more employees, say they would do so.
"Employers have had a year to think about the impact of health reform," says Mercer’s Umland. "When they consider the penalty, the loss of tax savings and potentially grossing up employee income so they can purchase comparable coverage through an exchange, many don't see a financial advantage in dropping coverage."
Small employers were more likely to indicate they would terminate their plans in 2014 --19% of those with 10 to 499 employees, about the same proportion as in 2010. Employers of this size are less likely to offer coverage to begin with; they generally offer fully insured health plans and, with small risk pools and little purchasing power, are vulnerable to large rate increases, Mercer suggests. In 2011, the percentage of small employers offering an employee health plan fell from 57% to 53%.

Other health reform-related findings. Self-funding interest has risen amid concerns that new PPACA regulations will drive up the cost of fully insured plans. Of the 28% of employers with 500 or more employees that have a fully insured PPO, one-third say they are likely to switch to self-funding within the next three years. Just 8% of smaller employers say it's likely they will switch.
Grandfathered status: Only about half of all employers (and 37% of large employers) believe they will maintain the grandfathered status of all their health plans until 2014. One-third had no grandfathered plans in 2011 and 18% expect to lose grandfathered status over the next two years.

Monday, November 28, 2011

Small businesses can now find, compare health insurance plans on HHS website

For the first time ever, an updated Department of Health and Human Services (HHS) website will provide local health plan benefits and pricing information for small business owners, the HHS has announced. On a greatly expanded HHS website, small business owners will have access to an unprecedented detailed review of their health insurance plan choices including, for the first time ever, the ability to research locally available products in an unbiased manner, which will foster a more transparent and competitive marketplace.

Just in time for 2012, this powerful new tool allows small business owners to compare the benefits and costs of health plans and choose those that are best for their employees. "This new information will help business owners navigate what has traditionally been a complicated and confusing decision," says HHS Secretary Kathleen Sebelius. "Both owners and their employees can feel more confident that the plans offered will be the best to suit everyone's needs."

Beyond facing difficulties in analyzing the market, small businesses do not fare as well large employers when negotiating health care prices, with statistics showing that, on average, small businesses spend 18 percent more for the same health insurance coverage. This new HHS tool brings needed transparency to the marketplace, which will help ensure insurance companies will compete for business on the basis of price and quality.

The tool is located on http://www.healthcare.gov/, which was created under requirements contained in the Patient Protection and Affordable Care Act (PPACA), the 2010 health reform law. To access the small business Insurance Finder, go to the home page of http://www.healthcare.gov/ and click on the blue tab (called "find insurance options") at the top of the page.

Available information. The new information added gives small business owners access to the following:
  • Insurance product choices for a given ZIP code, sorted by out-of-pocket limits, average cost per enrollee, or other factors;
  • A summary of cost and coverage for small group products that shows the available deductibles, range of co-pay options, included and excluded benefits, and benefits available for purchase at additional cost; and
  • The ability to filter product selection based on whether the plans are Health Savings Account eligible, have prescription drug, mental health, or maternity coverage, or allow for domestic partner or same sex coverage.
More than 530 insurers have provided information for more than 2,700 coverage plans across all 50 states and the District of Columbia, the HHS says. The Centers for Medicare & Medicaid Services worked to define and collect detailed benefits and premium rating information from insurers across the country to develop the site.

"Tens of thousands of small businesses from across America have already logged-on to www.HealthCare.gov to see what health coverage options are available to them," said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight. "The new, unprecedented ability to search at this level of detail will bring the marketplace into better balance by giving insurance purchasers the power of information."

In addition, the website provides extensive information about consumer rights, tips for how to navigate the market's complexities, and details on how the PPACA provides new protections for beneficiaries.

Wednesday, November 23, 2011

The ACA And Rate Increases For Businesses

The Department of Health and Human Services (HHS) has announced that Everence Insurance of Pennsylvania is charging small businesses unreasonably high premium increases. This is the first federal rate review under the Patient Protection and Affordable Care Act (ACA). Anyone surprised?

Under the ACA, HHS, in conjunction with the states, is charged with establishing an annual review process, which will require insurers to submit a justification for any "unreasonable" premium increases (Public Health Service Act Sec. 2794(a)).

The HHS review found that Everence's 12% rate increase for small businesses in Pennsylvania was excessive. After reviewing the rate, independent experts determined the choice of assumptions the company based its rate increase on reflected national data rather than reliable and available state data. These assumptions resulted in an unreasonably high premium in relation to the benefits provided, according to HHS.

"We have called on this insurer to immediately rescind the rate, issue refunds to consumers or publicly explain their refusal to do so," said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the Centers for Medicare and Medicaid Services.

Companies can either reduce their rate hikes or post a justification on their website within ten days of the rate review determination.

For more information about rate review and to find rate increase information in each state, visit http://companyprofiles.healthcare.gov/.

Rate Increases The Norm? 

This latest revelation that a health insurer might be charging an unreasonable rate increase brings back the last few decades of rate activity in the health care industry.

Use to be that there were only two situations in which health insurers raised rates:

  1. Health insurers raised rates when their costs were increasing because…well, because their costs were increasing.
  2. Health insurers raised rates when their costs were not increasing because…well, because they knew that sometime in the future their costs would increase.

Doesn’t seem to leave much room for anything but cost increases, but just in case, insurers now have another reason for cost increases: the ACA itself.

A variety of analysts have looked at the potential costs to employers, and the higher projections suggest that the ACA could add 3% to health care premiums each year (for example, click here.

So you would expect that a friend of mine was quite upset when her retiree health care premiums from a major U.S. oil company increased from $312 to $450 a month, and the increase was blamed directly on the ACA. If HHS thinks 12% is high, what would the reaction be to an increase of 44% (if, that is, the plan were subject to a rate increase review—it’s self funded and not subject to review). 

My friend promptly changed plans--she is healthy so there wasn't much problem. But initially she believed the reason for the rate increase--at least until I explained that it was unlikely the ACA was responsible for such a boost.

And what happens when her new plan uses the ACA to jack up their prices?  For one, she won't be as surprised.

Not yet a subscriber to Wolters Kluwer Law & Business? 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.

Already a subscriber to Wolters Kluwer Law & Business? Get this additional information on health insurance rate reviews:

PS: Happy Thanksgiving (Click herefor more on why I am thankful this Thanksgiving).

PPS: This is my final blog posting for Health Reform Talk. After more than 30 years involved in writing about and analyzing health care benefits, I am retiring at the end of the year. I have enjoyed the ups and the downs of the health care scene, and I look forward to the excitement of the Supreme Court deliberations on the ACA next summer.—SAH

Monday, November 21, 2011

Without Pants, There Should Be Rants

What do health care reform and a recent heart attack have to do with each other? Turns out not much, but I’ll get to that later.

I had a mild heart attack Tuesday, Nov. 8, in St. Louis. I was in the Barnes Jewish Hospital Tuesday through Friday, Nov. 8-11. Medication and diet and more exercise should prevent this from happening again. In addition to coming through this with few consequences so far (a few medications, lots of medical follow-up, some cardiac rehab), here are a few events that stick with me about the last few weeks:

  1. When I was admitted to the hospital, I was provided with a pair of blue elastic paper pants to wear while I was in the hospital. Anyone who has worn a hospital gown that closes in the back will appreciate what a great advance this is. I recommend that all hospitals adopt this procedure immediately. Demand it the next time you or someone you know is admitted.
  2. I had two diagnostic procedures (a cardiac catheterization and a contrast MRI), left after three days, and was told I should expect to lead a normal life with few if any restrictions. I wish I could recommend this type if outcome to anyone who has had a heart attack.
  3. One week after I left the hospital, I received a claim denial for the three days in the hospital.  Here was the reason: “Coverage for the requested services has been denied because we have not been able to obtain any requested clinical information from the provider to determine whether or not the particular services are considered medically necessary under the terms of the plan.” I knew that the claims would be approved but was angry that my insurer would send this out so quickly, and yes, I knew it was for certification and there are various hard deadlines for claims denial and appeal—but come on—what if my heart attack had been worse and someone else had to jump through the hoops necessary, etc. Anyway, by the time I called, certification had been given (at least so I was told by phone—I could not get an e-mail confirmation and am still waiting for a mailed reply (another annoyance—sending out the denial was easy, but sending a confirmation that the stay was certified seemed more difficult. Here I recommend persistence and a good knowledge of all the contacts available to help resolve situations (provider, insurer, administrator, employer, Vinnie who runs protection down the street (no--just kidding about Vinnie)).

And why does this have nothing to do with health reform and the Patient Protection and Affordable Care Act? Well, I have good coverage through my employer (despite the denial hiccup), I am familiar with health care systems and insurance, and as far as I can tell I will continue the coverage into the foreseeable future. In 2014, I might see some effects of health reform, but for this medical encounter health reform was largely irrelevant.

Which is probably why many of those millions and millions of individuals who have health coverage through their employers either are oblivious to health reform or are scared it will screw their good deals. Which is probably why it has been so easy to peck away at health reform’s problems and ignore its advantages, which for most will not kick in until 2014.

So, I am thankful for the insurance I have (and wish more workers could have the same), and I am thankful for my medical outcome, and I sure am thankful for the pants.

Not yet a subscriber to Wolters Kluwer Law & Business? 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.

Already a subscriber to Wolters Kluwer Law & Business? Get this additional information on health care plan the uninsured:

Friday, November 18, 2011

Most Witnesses At IRS Hearing Criticize Proposed Premium Tax Credit Rules

Many witnesses at a November 17 Internal Revenue Service public hearing on health insurance premium tax credits and employer regulations said that proposed IRS regulations on the health insurance premium tax credit will deny the credit to eligible families and deprive them of access to family health insurance coverage. But one employer group disagreed, testifying that the government had correctly interpreted the law.

Rule’s Impact

Beginning in 2014, the Patient Protection and Affordable Care Act (ACA) provides a refundable health insurance premium tax credit to individuals and families who cannot obtain affordable health insurance through their employers or certain government-sponsored plans. The credit is designed to help taxpayers pay for the cost of health insurance obtained through state-established Health Insurance Exchanges. The taxpayer must have household income between 100% and 400% of the federal poverty level (FPL), cannot be claimed as a dependent, and must file a joint return if married.

An individual cannot claim the credit if the individual is eligible for minimum essential coverage. An employee is eligible for minimum essential coverage (and therefore not entitled to the credit) only if the employee’s share of the insurance premiums is affordable and the insurance coverage provides minimum value.

Coverage is not affordable if the employee’s required contribution to the plan exceeds 9.5% of the applicable taxpayer’s household income for the year. The preamble to the regulations states that the required contribution is the amount that would be paid by the individual for self-only coverage, even if the individual would in fact be purchasing family coverage or other coverage for multiple individuals. This affordability test was the primary issue at the hearing.

Joe Touschner, with the Georgetown University Health Policy Institute Center for Children and Families, testified that the proposed regulation creates a family penalty in the affordability test. This approach will leave children without an affordable option for health insurance, he indicated. Other programs such as the Children’s Health Insurance Program (CHIP) are not a reliable source of alternative coverage, Mr. Touschner said.

He also noted the problem of premium stacking, where a family has to pay more than one premium to provide coverage. These additional premiums would push family insurance costs well in excess of the affordability limits. Mr. Touschner said that the IRS has the regulatory authority to adopt a family-based affordability test.

These comments were echoed by most of the 14 speakers at the hearing. Dana Cope, executive director of the State Employees Association of North Carolina, said “this rule would effectively deny state employees the premium tax credits available” through the exchanges and “would nullify the major goal of the ACA to expand equal access to health care.” She noted that North Carolina’s health plan does not subsidize family coverage and that employees could owe 20% of their family income just to provide coverage for the entire family. Ms. Cope said that the correct interpretation of affordability should be based on the cost of both self-only coverage and family or dependent coverage.

Lynn Quincy of Consumers Union said that the rule would leave dependents uninsured and families underinsured. She also expressed concern that the rule would undermine the system of employer-provided health insurance coverage. She said the rule would be particularly tough on families with income at 200% to 300% of FPL.

Dania Palanker of the Service Employees International Union and Kim Bailey of Families USA strongly opposed the government’s interpretation of the affordability test. Ms. Bailey testified that the rules allowing premium variations for wellness coverage also could drive up the cost of health insurance and impose substantial burdens on families. The wellness surcharge could run as high as 30%of premiums, she stated, and far exceeds the cost of affordable coverage. The wellness costs should be included in applying the 9.5% ceiling on affordable coverage.

Contrary View

The group Employers for Flexibility in Health Care (EFHC), a coalition of businesses and trade associations in retail and service-related industries, took a contrary view. It is necessary to look at the provision as a whole, Anne Phelps of Washington Council Ernst & Young testified. “Treasury correctly interpreted the affordability standard.” She also said that EFHC wants employer-provided health insurance coverage to remain the backbone of the insurance market, but that the law creates many disincentives for employers.

Ms. Phelps commented that the minimum value standard for adequate coverage is not clearly defined. The standard is viewed as requiring 60% of full benefits on an actuarial basis, but should not be interpreted to require a particular kind of plan, Ms. Phelps said. Employers should have the flexibility to offer different kinds of plans. She also asked for penalty relief in 2014 as the new rules are implemented, to avoid discouraging employers from participating and from offering affordable coverage.

Michelle Neblett of the National Restaurant Association supported the EFHC’s testimony. She also asked for flexibility in applying the minimum value standard. She said that insurance reforms will impact costs and are linked to the affordability of a plan. She asked that employers not be tied to a rigid benefits package in offering coverage.

In contrast, Ms. Palanker said that the rules should provide a strong definition of the minimum value standard and should ensure that the plan provides essential benefits across the board. She said it was okay for employers to have flexibility and even offer “below-minimum” value, as long as employees have options to enroll in an exchange.

Wednesday, November 16, 2011

Supreme Court Will Rule On Health Reform Issues Next Year

On Monday, the U.S. Supreme Court granted certiorari and agreed to consider three of the five health care reform-related petitions it reviewed on November 10. The Court has agreed to hear certain issues in the following cases:

  • Federation of Independent Business, et al., v. Sebelius (No. 11-393);
  • Florida, et al. v. HHS (No. 11-400); and
  • HHS v. Florida, et al. (No. 11-398).

In a press conference on Monday, HHS Secretary Kathleen Sebelius said she welcomes the Supreme Court’s decision to hear the lawsuits challenging the Patient Protection and Affordable Care Act (ACA), saying a quick and favorable ruling could encourage reluctant states to move ahead on implementation. “We will have a decision midway though 2012, which means that states that are sitting, perhaps, on the sidelines saying, ‘We really want to know what happens next’ [with the litigation] will fully engage,” Sebelius said. “We are confident that the law is constitutional, will be upheld as constitutional.”

The National Federation of Independent Business (NFIB) and 26 states had filed a petition asking the Supreme Court to review the ACA. In response to the Supreme Court agreeing to hear the case, Dan Danner, president and chief executive officer of the NFIB, said, “The health care law has not lived up to its promises of reducing costs, allowing citizens to keep their coverage or improving a cumbersome system that has long been a burden to small-business owners and employees, alike. The small-business community can now have hope; their voices are going to be heard in the nation’s highest court.”

Issues To Be Considered
Among the issues the Court will consider are the following:

Individual mandate. The court granted the petition in HHS v. Florida, et al. (No. 11-398) on the constitutionality of the individual mandate.

Severability. The Court also agreed to review whether the individual insurance mandate can be considered separately from the other provisions of the Patient Protection and Affordable Care Act (ACA). This was the only question presented in the National Federation case (No. 11-393) and it was Question 3 of the petition in Florida, et al. v. HHS (No. 11-400).

Anti-Injunction Act. In addition, in HHS v. Florida, et al. (No. 11-398), the Court directed the parties to brief and argue the question of whether the Anti-Injunction Act bars the lawsuit challenging the individual mandate provision. Under the Anti-Injunction Act, “No suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person,” and it was intended to maintain the government’s revenues while a taxpayer objected to paying a tax. Under the Act, the taxpayer must pay the tax first, then pursue a challenge. If the Court were to find that the Anti-Injunction Act applies in the health reform case, challenges would have to wait until after the mandate actually had gone into effect in 2014 and was actually enforced against a taxpayer.

Medicaid expansion. The Court also agreed to review the constitutionality of the Medicaid amendments to expand eligibility and subsidies, which was Question 1 in the Florida, et al. v. HHS (No. 11-400) petition. The appeals court had deemed this Medicaid expansion as constitutional. Under this provision, the federal government would pay 100% of the fees associated with the increase Medicaid eligibility and subsidies beginning in 2014 and 2015, after which the percentage will drop gradually each year until reaching 90% in 2020.

The Court has scheduled five and a half hours of oral debate on these issues during March 2012, and a final decision on the issues can be expected in June.

The Court took no action on the three other pending petitions, which are Thomas More Law Center v. Obama (No. 11-117), Liberty University v. Geithner (No. 11-438), and Virginia v. Sebelius (No. 11-420).

Monday, November 14, 2011

Small Business Health Care Credit Claims Lower Than Expected

Claims for the Small Business Health Care Tax Credit provided by the Patient Protection and Affordable Care Act (ACA) have been lower than anticipated despite extensive IRS outreach, an audit by the Treasury Inspector General for Tax Administration (TIGTA) has found.

The ACA provides a tax credit for small business employers who pay at least one-half the cost of health insurance coverage for their employees. The credit was designed to encourage small business employers to offer health insurance benefits. TIGTA reviewed whether the IRS adequately implemented and accurately processed the credit.

The volume of claims for the credit has been low despite IRS efforts to inform 4.4 million taxpayers who could potentially qualify for it. According to the IRS, as of mid-May 2011, just more than 228,000 taxpayers had claimed the credit for a total amount of more than $278 million. The IRS plans to conduct focus groups to determine why the claim rate was so low. The Congressional Budget Office had estimated the credit would cost $37 billion over ten years and that taxpayers would claim up to $2 billion of credit for tax year 2010.

TIGTA found that some taxpayers and tax practitioners made mistakes when completing Form 8941, Credit for Small Employer Health Insurance Premiums, to apply for the credit. That form does not contain all of the data and calculations needed to verify each step of credit eligibility.

TIGTA made several recommendations to make it easier for the IRS to verify eligibility and to correctly process claims for the credit. IRS officials agreed with the recommendations and stated that they plan to take appropriate corrective actions.

For more information, visit http://www.treasury.gov/tigta/auditreports/2011reports/201140103fr.html.

Friday, November 11, 2011

No word yet on Supreme Court’s decision to hear health reform case, but D.C. court speaks

November 10 came and went, and we still don’t know whether the Supreme Court will review one of the health reform cases that I mentioned on Monday. The decision could be revealed this coming Monday, November 14, in the Court’s order list. For now, we continue to wait . . .

In the meantime, other courts continue to rule on health reform cases. The District of Columbia Circuit Court of Appeals has ruled in Seven-Sky v. Holder (No. 11-5047) that the individual mandate in the Patient Protection and Affordable Care Act (ACA) is constitutional. After determining that the Anti-Injunction Act did not bar the lawsuit, the court found that Congress had the authority under the Commerce Clause to enact the individual mandate, which requires individuals to purchase health insurance by 2014 and imposes a penalty on most who do not comply.

Anti-Injunction Act. The shared responsibility payment provision does not implicate the Anti- Injunction Act, according to the court. The Anti-Injunction Act bars pre-enforcement challenges to the assessment and collection of “taxes,” but the shared responsibility payment is labeled a “penalty” in the ACA. Congress labeled other provisions in the ACA “taxes.” This indicates that Congress’ decision to use the word penalty was deliberate, the court wrote. Further, the court said, congressional findings do not show that the purpose of the shared responsibility payment was to raise revenue. Rather, the aim of the payment is to encourage individuals to purchase health insurance. Also, Congress did not provide the IRS with the traditional criminal enforcement or levying powers to collect the payment. Thus, the penalty is not a tax within the meaning of the Anti-Injunction Act, and the lawsuit is not barred.

Commerce Clause. The D.C. court also found that Congress had the authority under the Commerce Clause to enact the individual mandate. The court indicated that the Supreme Court’s Commerce Clause cases do not require “activity” as a prerequisite to regulation. The court likened the current case to the situation in Wickard v. Filburn, 317 U.S. 111 (1942), where the court found that growing wheat for personal consumption could affect the national price of wheat and was, therefore, within Congress’ power to regulate under the Commerce Clause. “Wickard, therefore, comes very close to authorizing a mandate similar to ours, at least indirectly, and the farmer’s “activity” could be as incidental to the regulation as simply owning a farm,” the court wrote.

In addition, the court acknowledged the impact of the mandate on individual liberty. “Appellants’ view that an individual cannot be subject to Commerce Clause regulation absent voluntary, affirmative acts that enter him or her into, or affect, the interstate market expresses a concern for individual liberty that seems more redolent of Due Process Clause arguments. But it has no foundation in the Commerce Clause,” the court wrote.

Dissent. Judge Kavanaugh dissented as to jurisdiction, but did not decide the case on the merits. In a lengthy dissent, he wrote that the Anti-Injunction Act applies because a successful pre-enforcement suit would prevent the IRS from assessing and collecting the penalty from those who do not have health insurance. The ACA contains a provision indicating that the penalty be collected in the “same manner as an
assessable penalty under subchapter B of chapter 68” of the Tax Code. Judge Kavanaugh points out that “penalties under subchapter B of chapter 68 in turn must ‘be assessed and collected in the same manner as taxes.’” (emphasis in original). Because the ACA penalty is to be assessed and collected in the same manner as taxes, and taxes are shielded from pre-enforcement suits by the Anti-Injunction Act, ACA’s penalty likewise is shielded from such suits. Thus, the court lacks jurisdiction to decide this case at this time, he concluded.

White House reaction. Stephanie Cutter, Assistant to the President and Deputy Senior Advisor, reacted quickly to the court’s ruling, posting on the White House blog that “the Affordable Care Act scored another win in court when the District of Columbia Circuit Court of Appeals ruled that the law is constitutional. In upholding the constitutionality of the law, Judge Laurence H. Silberman reaffirmed that Congress has the constitutional authority ‘to forge national solutions to national problems’ like the need to provide affordable, quality health care to all Americans.”

“The ruling is yet another victory for the millions of Americans who are already benefitting from the law including the parents of children with preexisting conditions, women getting mammograms with no out-of-pocket cost, seniors saving hundreds of dollars on their prescription drugs, and one million young adults now newly insured through their parent’s plan,” Cutter wrote.

Wednesday, November 9, 2011

Supreme Court not likely to review state’s right to sue in Fourth Circuit ACA case

The U.S. government has issued its response to the petition for certiorari in Virginia v. Sebelius (No. 11-420). That’s the case where the Fourth Circuit Court of Appeals ruled that the state of Virginia lacked standing to challenge the minimum coverage provision of the Patient Protection and Affordable Care (ACA).

The state of Virginia argued it had standing to bring the action because ACA’s minimum coverage provision allegedly conflicts with a state statute, the Virginia Health Care Freedom Act (VHCFA). But the Fourth Circuit disagreed, finding that the VHCFA did not confer on the state a sovereign interest in challenging the provision. The court also found the provision applies only to individuals, not states.

Lower court didn’t reach merits. It’s important to note that the Fourth Circuit did not rule on the merits of the case. That means it did not address whether the minimum coverage provision is or is not constitutional.

Ruling doesn’t conflict with other cases. The government predictably opposes the Supreme Court’s review of the Virginia case. It contends that not only did the Fourth Circuit rule correctly on the standing issue, but moreover, the court’s “holding does not conflict with any decision of this Court or of any other court of appeals and does not warrant plenary review by this Court.”

Review Florida case instead. The government suggests that the petition in the Virginia case be held pending the disposition of the other related petitions, specifically HHS v. Florida, where the Eleventh Circuit found the minimum coverage provision unconstitutional. In that case, the court of appeals found that an individual, Mary Brown, had standing to challenge the coverage provision. Because the Virginia case contains a threshold jurisdictional question, but the Florida case does not, the government urges the Court to grant the petition in Florida to address the provision’s constitutionality.

Odds of review. As I mentioned in Monday’s post, the odds are favorable for the Court to review one of the cases containing the constitutionality issue. But Virginia v. Sebelius is not that case and, so, it’s unlikely the Court will review it. Now we all know that stranger things have happened (did I mention the 999-to-one odds on the Cardinals to win the World Series this year? Oh, that’s right, I did mention it in Monday’s post!). But we also know the Court prefers to limit (avoid?) review of established precedents, such as a state’s standing to sue the government. Stare decisis is the Court’s best friend, and I think it will stay that way with the Court declining to review the standing issue in the Virginia case.

Monday, November 7, 2011

What’s so special about November 10?

If November 10 is your birthday, then it’s a special day for you each year. But for those of us keeping an eye on the status of health care reform, November 10 this year is special for another reason.
During a private conference this Thursday, November 10, the U.S. Supreme Court will consider five petitions related to the Patient Protection and Affordable Care Act (ACA) and the Health Care and Education Reconciliation Act of 2010.

The petitions to be considered are:
  1. Thomas More Law Center v. Obama, et al. (No. 11-117),
  2. National Federation of Independent Business, et al., v. Sebelius (No. 11-393),
  3. HHS v. Florida, et al. (No.11-398),
  4. Florida, et al., v. HHS (No. 11-400), and
  5. Liberty University v. Geithner (No. 11-438).
A sixth petition not yet distributed to the Justices is Commonwealth of Virginia v. Kathleen Sebelius (No. 11-420). (In my next post on Wednesday, I'll discuss the government's response to that petition and the likelihood the Court will review it. If you enjoy reading about whether or not a state can sue our government (and I know you do!), be sure to come back and visit this blog on Wednesday.)

Lower courts in disagreement. You may recall that the Eleventh Circuit Court of Appeals found that the minimum coverage provision of the ACA is unconstitutional while the Sixth Circuit found the provision to be constitutional. Due to this split of authority in the lower courts, the Supreme Court is expected to decide to review at least one of the cases regarding the provision’s constitutionality. One legal expert, Professor Brad Joondeph, who writes the aca litigation blog, puts the likelihood of the Supreme Court granting review on this issue at 99%. “If there is a constellation of factors that guarantees certiorari, this is it,” according to Joondeph.

(I’m no expert on matters involving the Supreme Court. But I’ll go out on a limb and say the chances of the Supreme Court deciding to review one of the cases are much better than the chances were of the St. Louis Cardinals winning the World Series this year. One Vegas bookie had the odds at 999 to one. Way to go Cards!)

When will we know? The Court could issue an order granting review on the same day of the conference, November 10, or on Monday, November 14, when it issues its regularly scheduled list of orders. (November 11 is another special day, Veterans Day, but because it’s a federal holiday, we won’t hear from the Court on Friday.)

Friday, November 4, 2011

ERIC advises government to keep exchange eligibility process simple

Anyone who has had the pleasure of reading substantial portions of the Patient Protections and Affordable Care Act (ACA) and its implementing provisions can attest to the fact that much of it is likely to be confusing to just about everyone, including employers, employees, and healthcare professionals. Anything that could simplify upcoming new processes, procedures, and requirements should probably be welcome. The ERISA Industry Committee (ERIC) has submitted a comment letter to the Department of Health and Human Services (HHS) on proposed HHS regulations relative to the ACA that were published in the Federal Register on August 17, 2011. The proposed regs describe ways state exchanges will be able to determine eligibility for the purchase of health coverage through a state health insurance exchange, as well as eligibility for the receipt of premium tax credits or cost-sharing reductions. ERIC has included, in its comment letter, ways it contends will simplify this process.

Premium cost-sharing assistance and tax credits will be available to employees who purchase insurance coverage through a state exchange if they are not eligible for health insurance coverage through their employer, or if their employer-sponsored coverage is considered to be unaffordable.

Two methods appear to be under consideration for the purpose of determining employees' eligibility for this assistance. Under one method, employees and employers would complete a template, given to them by their state exchanges, and the information on those templates would enable the exchanges to determine what premium assistance or tax credits an individual might or might not be eligible for. Under the second method, exchanges would be required to establish a central database, to which employers could submit the appropriate information. ERIC is recommending that both methods be made available to employers, and that each employer be given a choice with regard to which it will use.

ERIC points out that some employers, such as those with high turnover rates, would find it cost-effective to submit information to a database, whereas other employers would find it more affordable to complete an exchange-provided template.

According to ERIC President Mark Ugoretz, "large employers are particularly concerned that a mechanism be found to avoid excessive requests from the exchanges for information and data with respect to employees who may be eligible to purchase coverage through an exchange."

ERIC also points out that new Code Sec. 6056, added by the ACA, requires much of the same information that the exchange database and templates would, including whether or not employer-provided health insurance is affordable and provides minimum value. Therefore, ERIC has suggested that employers be allowed to use a mechanism for submitting information to the exchanges that is compatible with the reporting requirements of Code Sec. 6056.

Wednesday, November 2, 2011

ACA support wanes - this month, anyway

It seems as though we've seen support for the Patient Protection and Affordable Care Act (ACA) wax and wane, over and over again, since before it was even passed. The latest survey, from Kaiser Health News (KHN), appears to fall into the waning category. This is the first time, according to KHN, that the number of  respondents that believe the law won’t make the country better off outnumber those who believe it will.

KHN blames a drop in support by Democrats for the change. Seventy-eight percent of Democrats polled supported the law in March 2010, when the ACA became law, and by October 2011, only 52% did. Furthermore, in October of this year, only 27% of Democrats polled said that they thought the ACA would actually improve their lives, a drop from 43% in September. What a difference a month makes. From what I can see on a monthly graph on the KHN press release, it looks to me as though the number of people who hold a favorable view of the ACA has careened up and down in 2010 and 2011, and there's no question that unfavorable responses hit an all-time high in October of this year, at 51%, although unfavorable responses hit 50% in January 2011.

Is it possible that the negative results for October can be traced to the fact that many employees get information in October about upcoming November open enrollment options? Premiums have continued to skyrocket, and many employees may be under the impression that the ACA has something to do with that, although many provisions aren't kicking in until January of 2012. It's been over a year since the law was passed, and many Americans may not feel any real effects of the ACA until it's time for them to opt to participate in the newly-created state exchanges. The average employee may be unaware of the various ACA timetables, and, in fact, the KHN survey shows that many Americans don’t know enough about the Massachusetts healthcare law, and its similarity to the ACA, to even offer an assessment, which could demonstrate a generally lack of familiarity with healthcare reform specifics.

In fact, KHN states that Democrats had hoped that when certain ACA provisions, such as letting dependent children remain on their parents’ insurance policies until age 26, and giving some Medicare recipients more financial assistance in buying prescription drugs, took effect only months after passage of the law, voters would would remain optimistic. The ACA's major provisions, however, such as making sure that all Americans are allowed to purchase affordable insurance despite any pre-existing conditions, won’t kick in until 2014, which, KHN points out, is more than a year after next year’s presidential election.