Tag Archives: Affordable Care Act

The real reason contraception is “free” under the Affordable Care Act

6 Apr

Most people, including me, think mandated coverage of contraception was a result of the Affordable Care Act and the Institute of Medicine that is charged with making recommendations related to preventive services that should be covered at 100% by health insurance.

Recently, I found a copy of the website my.Barackobama.com dated November 3, 2008.

Here is what it says:

Barack Obama is an original co-sponsor of legislation to expand access to contraception, health information and preventive services to help reduce unintended pregnancies. Introduced in January 2007, the Prevention First Act will increase funding for family planning and comprehensive sex education that teaches both abstinence and safe sex methods. The Act will also end insurance discrimination against contraception, improved awareness about emergency contraception, and provide compassionate assistance to rape victims.

Think Contraception Logo

So you see, the full and “free” coverage of contraception was a long-planned goal and likely had little to do with the IOM recommendation, but more with an ideology that it is the federal government’s responsibility to solve just about any problem American’s face. Here we also see the claim of “insurance discrimination,” key rhetoric in promoting the idea that virtually every health care related expense should be covered and with minimal or no cost.

Once the Affordable Care Act was passed including discretion for the Secretary of HHS to designate preventive services, there was no need for separate legislation.

The President’s perspective may also have something to do with the fact that 72% of black American children are born to unwed mothers and many of those to teenagers. That indeed is a problem for the individuals involved and for society. It is a social crisis, a moral crisis and one that will not be solved by making the pill “free” especially given that many of the people involved already have access to contraception at minimal or no cost.

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The Obama-Biden promises for health care reform – what happened? Do you still think you can have it all and not pay for it?

5 Apr

President Barack Obama walking with Vice Presi...

 For some reason back in 2008 I printed out the entire Obama-Biden website containing their positions and proposals.  Scanning the health care section recently I found some interesting statements:

“The Obama plan will lower health care costs by $2,500 for a typical family by investing in health information technology, prevention and care coordination.”

“Reduce Costs and Save a Typical American Family up to $2,500.”

“Under the plan, if you like your current health insurance, nothing changes, except your costs will go down by as much as $2,500 per year.”

Which is it, “by”, “up to” or “as much as?”  No matter, there is nothing in the Affordable Care Act that saves the typical family $2,500.  You can stretch this definition and say that the subsidies within the exchanges will save some families money and that’s true, but it does not lower health care costs and certainly not through information technology, prevention and care coordination.

“On health care reform, the American people are too often offered two extremes – government-run health care with higher taxes or letting the insurance companies operate without rules. Barack Obama and Joe Biden believe both of these extremes are wrong, and that’s why they’ve proposed a plan that strengthens employer coverage, makes insurance companies accountable and ensures patient choice of doctor and care without government interference.”

Interesting choice of words, the “extreme” of government-run health care, is “wrong.”

“Require insurance companies to cover pre-existing conditions so all Americans regardless of their health status or history can get comprehensive benefits at fair and stable premiums.”

The “fair and stable premiums” will reflect the additional cost of removing all underwriting for insurance coverage.

“Barack Obama will pay for his $50 – $65 billion health care reform effort by rolling back the Bush tax cuts for Americans earning more than $250,000 per year and retaining the estate tax at its 2009 level.”

LOL . . .

the President’s most recent budget alone contains an additional $111 billion to cover the cost of subsidies for Americans enrolled in the health insurance exchanges.

Of course, rhetoric and  promises that don’t match reality are not unique to Obama-Biden or to Democrats for that matter.  All politicians pander to the wants and fears of the voters, but on occasion it would be nice if the voters held them accountable.

Insurance coverage mandates are nothing new

2 Apr

The United States Supreme Court. The individual mandate to carry health insurance is under the microscope with a very basic question as to whether Congress has the authority to make such a requirement. Frankly, I don’t know the legal answer and given a unanimous verdict by the Supreme Court is unlikely, I guess no one else is 100% certain either. However, it seems to me that there is more than one way to create a mandate.

Take Medicare for example. Do you really have a choice of enrolling in Medicare? The obvious answer is yes you do, but hold on, is it a real choice? If you don’t want Medicare, can you buy other coverage instead? No you can’t, nobody can sell such coverage. Even coverage that supplements Medicare is regulated by the federal government and there is talk of trimming the coverage you can buy to pay your Medicare co-pays and deductibles.

Some people in Congress think too much insurance coverage leads to higher costs … they may have a point.

If you continue to work and have employer health coverage, you must keep your employer coverage even when you turn 65, you can’t use Medicare as your primary coverage even if you wanted to. Before this requirement was part of the Medicare law employers generally required you to use Medicare with the employer plan as supplemental.

If you delay enrolling in Medicare beyond your initial enrollment period, there is a penalty to pay. For Part B that penalty is ten percent for each year of delayed coverage; for Medicare Part D the penalty is 1% for each month you delay enrollment. In addition, you may enroll only during a three-month enrollment period held once each year. The reason for all this is simple; to prevent adverse selection when people enroll in coverage only when they anticipate using the benefits.

It seems that rules and regulations and penalties abound regarding your choices of health care, at least when you are as old as I am.

Granted the above are implicit mandates, but in the final analysis are they much different from the requirement to carry health insurance contained in the Affordable Care Act? This is the same logic used for the individual mandate under the Affordable Care Act; if you don’t take coverage, you pay a penalty to partially offset the additional cost created by those who enroll only when they expect to use the coverage. I am still free to not enroll for health insurance, but rather than pay a surcharge or suffer a delay in coverage when I decide I need it, I am required to pay an upfront penalty.

Such limitations and penalties are designed not to protect the individual, but the pool of insured that must eventually carry the cost burden for less responsible citizens. Boy, I’m glad I am not on the Supreme Court.

This debate all comes down to these rather simple words crafted by our Founders in the Constitution outlining the rights of Congress:

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

The essence of the argument seems to be whether Congress is creating commerce by requiring coverage and then regulating what it created.  Frankly, I think I could argue this either way and that’s scary. What is even scarier is that a one sided Congress hell bent on getting its way could not craft a better way to reach the same goal of expanded coverage without creating a Constitutional crisis. Arrogance has its unintended consequences too.

Are we serious about health care REFORM or just the promotion of “more?”

27 Mar
Nancy-Ann DeParle, director of the White House...

Nancy-Ann DeParle, director of the White House Office for Health Reform, at a senior staff meeting in the Oval Office. (Photo credit: Wikipedia)

I have long maintained that health care is too emotional for any of us to look at costs and efficiency objectively. We see or hear that a person was fully covered by their insurance and it’s a good thing.  An insurer was made to pay for this or that and it’s a good thing.  The idea that we care about cost is questionable and when it comes to ourselves or a loved one, there is no question that we do not care about the cost of health care at all.  It’s human nature after all and the very reason external control of some type is necessary if we are to seriously manage costs.  That control may come in the form of managed care, following certain guidelines for care, etc.

 
That human nature factor in health care does not go unnoticed by our politicians who cannot resist playing up the individual benefits of health care reform without regard to the cost.  At the same time that the Secretary of HHS trumpets the Department declining “unreasonable” premium rate increases, the White House promotes all the aspects of the affordable Care Act that increase costs.  This is not to say helping individuals is a bad thing, but it is also a costly thing and that simply cannot be pushed under the rug as if it does not matter.
 
We all know certain individuals are benefiting from the Affordable Care Act. Any time you give people more stuff and “free” stuff somebody is going to benefit and somebody else is going to pay for it.
 
If we can’t look at the cost of our own health care objectively, we should expect our most senior policymakers to do so for us collectively.  Good luck with that as it appears their main objective is promotion of all the goodies.   That is a great disservice to us all.
 
Text of e-mail from the White House:

Good afternoon – 

Too often in Washington, politicians tell compelling stories about individuals when they are trying to make a point. But once the news cycle moves on, those people keep living their lives and confronting the same problems. 

Health reform is different. 

We met Nathan and his son, Thomas, in 2009. Thomas was born with hemophilia, and he hit lifetime limits on his health coverage with two different insurance companies before he turned seven years old. Two years ago, Nathan was hopeful about what the Affordable Care Act would mean. 

Last week we spoke with Thomas’s family again and they made it clear: Health reform has improved their quality of life. It means they can focus on making sure Thomas has the best possible care. It’s changing their lives for the better. 

It’s a powerful thing to watch. Go check it out. 

Thomas is not alone. He’s just one of the 105 million Americans who no longer have lifetime dollar limits on their coverage. 

The Affordable Care Act gives hardworking, middle class families the security they deserve. Because of health reform, 54 million Americans with private insurance have been able to access more preventive services. In the 2011 tax year, two million workers will benefit from the small business health insurance tax credit. And 2.5 million young people under age 26 have gained coverage on their parents’ plan. 

Behind each of those numbers is a person like Thomas. Two years after President Obama signed the Affordable Care Act, life is a little better for millions of Americans from all over the country. 

So take a moment to hear some of their stories and hear why this matters for Americans across the country: 

http://www.whitehouse.gov/health-care-story 

Thanks,

Nancy-Ann 

Nancy-Ann DeParle
Deputy Chief of Staff 

P.S. — Learn about more individuals who are benefiting from the Affordable Care Act with our map that shows the impact of reform, state by state.

 
 
 
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The five real problems with the health care reform law

23 Mar

May_30_Health_Care_Rally_NP (397)

Left, right or center, you can find people who have major problems with the Affordable Care Act.  Then at one end of the extreme are people who see it as the greatest thing since sliced bread and at the other a near end to our republic.  But all those folks are missing the point.  While there are attempts to tweak the health care system (with regard to Medicare) contained within the Act, the primary goal is expanding coverage above all other considerations. 

And that leaves us with the real problems.

  1. The Affordable Care Act reinforces the idea that much of our health care should be “free” or at virtually no cost. 
  2. The Act promotes the idea that health care costs are the premiums we pay rather than the cost of the health care we receive. 
  3. The Act falsely transfers blame from individuals (patients) and the system to insurance companies
  4. The Act creates the impression that costs can be managed while maintaining the status quo in terms of access to unlimited health care or merely by cutting payments to some health care providers
  5. The Act deceives Americans with employer-based coverage by claiming their coverage will not change as a result of the Law.

 It is for these reasons that it is unlikely the Act will make health care truly “affordable” to individuals or to the government, or raise the quality of our health care.   

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Medicare premium $247 in 2014 – false information won’t go away

13 Mar

I am beginning to become disillusioned about the ability of people to think and reason and not be blinded by prejudices  [i]. . . he said with tongue in cheek.  It seems that people will believe what they want to believe and not be deterred by the facts.

I have written frequently that the rumor about the Medicare Part B premium increasing to $247 in 2014 is not true and yet I still get comments to the contrary.  The latest is that Snopes.com says it is true. No, Snopes does not say that at all.  Here is what it says:

From Snopes:

As for future Medicare Part B premium rates, the information cited above is wrong on two counts: No provision of the health care legislation passed during the Obama administration sets Medicare premium rates, nor is a whopping jump of over 100% to a $247.00 monthly premium in 2014 a realistic figure.

Many people, it seems, just want to believe that so-called Obamacare is responsible for a tremendous jump in Medicare premiums (and no doubt the tornadoes in the mid-west as well).  That is not true; there is nothing in the Affordable Care Act that talks about the Medicare premium.

So far I have been accused of lying, of being a liberal, of being a supporter of President Obama and I forgot what else because of posting the truth about the Part B premium rumor.  Frankly, I am none of those, but I am one thing.  I am scared to death that some of these people are going to vote.

If you want to believe rumors and Internet nonsense that is your right, but for Pete’s sake, don’t spread false information or any information without checking out the facts.  You can go to Snopes, Fact Checker and other sources if you like.  In this case you can read the Medicare Trustees Report and you can easily get the full text of the Affordable Care Act.  You can do all kinds of productive things before you spread rumors, try it sometime.

Here is a tip. Just because it is on the Internet or you receive an e-mail along with another four million people, does not make it true.

[i] a preformed opinion, usually an unfavorable one, based on insufficient knowledge, irrational feelings, or inaccurate stereotypes

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No child must be “dependent” to be eligble for the parents health insurance, regardless of age. Regulations under the Affordable Care Act do not define “adult”

1 Mar
Happy Children Playing Kids

They are all eligible

Prior to the enactment of the Affordable Care Act health benefits plans used language similar to this to explain who is eligible for coverage.

 Be sure you have enrolled only eligible dependents for your medical and dental coverage, which includes your spouse, natural children, and stepchildren, foster children dependent on you for support and maintenance, and legal wards. You must have a marriage certificate, birth certificates, or court papers to support each dependent’s status.

 Similar language is still used in some plans and it is quite misleading.  The words dependent or dependents are no long appropriate in any case when it refers to any child regardless of the child’s age.  The problem with using “dependent” in this context is that it may prevent employees from enrolling an eligible child or cause disenrollment of a child who is still eligible.  This is most likely to happen as a child graduates from high school around age 17 or 18 when it is questionable whether they are an adult or not.

In fact, no child has to be a dependent and there is no definition of “adult” in the regulations. Here is what the regulation says (note the last sentence I put in bold).

 Preamble to May 13, 2010 interim final rule:

Many group health plans that provide dependent coverage limit the coverage to health coverage excludible from employees’ gross income for income tax purposes. Thus, dependent coverage is limited to employees’ spouses and employees’ children that qualify as dependents for income tax purposes. Consequently, these plans often condition dependent coverage, in addition to the age of the child, on student status, residency, and financial support or other factors indicating dependent status. However, with the expansion of dependent coverage required by the Affordable Care Act to children until age 26, conditioning coverage on whether a child is a tax dependent or a student, or resides with or receives financial support from the parent, is no longer appropriate in light of the correlation between age and these factors. Therefore, these interim final regulations do not allow plans or coverage to use these requirements to deny dependent coverage to children.

Because the statute does not distinguish between coverage for minor children and coverage for adult children under age 26, these factors also may not be used to determine eligibility for dependent coverage for minor children.

 

You can find more on the rules for children here
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2012 Retirement Security Survey Ha! Ha! Ha! LOL

24 Feb
 
English: A member of the audience holds a &quo...

Thank you indeed, we will take all we can get, even from the millionaires and billionaires

I recently received the “2012 Retirement Security Survey” in the mail.  Great I thought; somebody is really looking at this important subject.  I will fill this one out for sure.  Oops, upon closer examination the document turns out to be propaganda from Democratic National Headquarters and a request for a donation.  There is no serious attempt to gain any valuable information.

Of course, Democrats are not alone with such nonsense, but some of the text of the “survey” really caught my eye because it is so outrageous in its claims and more than anything else it panders to people (mostly elderly) while ignoring the consequences for us all of staying a course of unlimited entitlements, irresponsible spending and long-term growing liabilities.

Here is an example:

“Republicans are working to turn back the clock on civil rights, destroy trade unions and the right to collective bargaining, deny women health care and vital family planning services, dismantle the Environmental Protection Agency, slash investments in education and medical research and to repeal President Obama’s historic health care reform.”

Another few examples:

“They (Republicans) abandoned seniors who fall into the prescription drug “donut hole” to give tax breaks to millionaires and billionaires. And they’ve developed plans to cut Social Security by slashing benefits and raising the retirement age.”

I’m still trying to figure out how much of this has to anything do with a retirement survey, but of course I know the real purpose of this mailing which is to scare the hell out of people, especially seniors.  This message and misleading information is not unlike that frequently issued by the AARP.

Then we have the objective questions contained in the actual survey:

  • Do you oppose the decision by House Republicans to end Medicare while protecting tens of millions of dollars in subsidies for Big Oil?
  • Do you oppose the Republican Party’s position of cutting Medicare for future retirees so they can extend the Bush tax cuts for millionaires and billionaires?
  • The health care reform law passed last year closes the Medicare prescription drug benefit donut hole.  Do you support this plan to help seniors pay for expensive prescription drugs?

How is all that for an objective set of survey questions?  Hey, doesn’t everyone love Big Oil, billionaires and donut holes? 

Within this blog I have addressed many of these issues over the last few years, especially why it is so important to future generations for this generation to fairly and prudently address the growing costs of Medicare and Social Security.  Any political party that panders to people creating the we can have it all expectation and the only thing that needs to change is to place higher taxes on millionaires and billionaires (defined as families earning $250,000 or more) is doing a great disservice to this Country and its citizens.

Extreme right Republicans who believe that the average American can do without many government programs is equally irresponsible.  The left underestimates Americans and sees them as totally dependent on government and the right over estimates the American ability or willingness for self-sufficiency.  Dare I say that puts us some place in the center?

I see no purpose in addressing the other side of some of these claims, but I can’t resist pointing out a few items.

A few Republican governors have taken on public employee unions and rightly so and in the best interests of all of a state’s citizens. 

Republicans are the ones who started Medicare drug coverage in the first place, albeit with no funding to pay for it.

Nobody is denying women health care or vital family planning services, not even a big bad insurance company denies anyone health care . . . think about it.

Nobody is proposing to slash Social Security benefits, but rather to slow the growth in future benefits, quite modestly as a matter of fact once you look at the numbers.

Nobody is going to destroy Medicare or Social Security, but to keep denying the need for meaningful reform will cause just as much harm.

You may want to review the Social Security, Health Care and Medicare categories on this blog for additional discussions on these topics.

Forget the “Pill” we need a new common sense pill for politicians. Now insurance companies will pay the full cost of oral contraceptives.

10 Feb
Birth control pill

Read this:

Politico: Birth-Control Compromise To Be Announced By White House
President Barack Obama is scheduled to deliver a statement at 12:15 p.m. He is expected to announce that he wants insurance companies to pick up the cost of providing free contraceptives for religious employers, according to one source familiar with the announcement. White House officials briefed reproductive rights groups and Democratic lawmakers Friday morning on the expected announcement (Budoff Brown, 2/10).

From Bloomberg Businessweek:  Under the new policy, religious employers will not be required to offer contraception and will not have to refer their employees to places that provide it. Instead, the employer’s insurance company must provide birth control for free in a separate arrangement with workers who want it

“He wants insurance companies to pick up the cost of providing free contraceptives for religious employers!”  Holy crap! (no pun intended).  

Insurance companies you say, has anyone told those in the White House that nearly all employers of any size are self-insured and there is no insurance involved, who will be paying for this coverage? 

Only in the case of religious organizations will insurance companies have to carry the full cost?  You are kidding right, all other employers must pay this added expense which will be shared by all employees.  What utter nonsense.

This is the most absurd issue to date with regard to the Affordable Care Act.  Birth control pills are not health care, pregnancy is not an illness and the cost of the pill is already affordable to anyone, poor, rich or otherwise.  Read the political rhetoric on this and you would think working women cannot afford contraception.  This isn’t about the poor, it is about people who earn a good living, in some cases the so-called wealthy, who now need a federal law to require a pill that does not treat an illness and is taken voluntarily (I know it can be used for certain medical conditions, but that is not the issue) to be free.

The argument that it is cheaper to pay for the pill than for a pregnancy is equally misleading.  It is still cheaper for everyone if individuals who voluntarily choose to take a contraceptive to pay their own way.  This is not a tradeoff, it is misuse of insurance. 

This isn’t about women’s health, it is about government furthering certain  agendas.  I think men who buy condoms should be covered 100%, men who need a hairpiece should be covered 100% on the basis of the psychological injury caused by baldness, reversal of a vasectomy should be covered at 100% as should the full cost of in-vitro fertilization.  You see anyone can make the case for “free” stuff without regard to logic or the consequences.

If this is going to be the way the Affordable Care Act is interpreted and administered, we are all in serious trouble. 

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“Unreasonable” premium increases denied-stand up and cheer?

23 Jan

If any insurance company, say your auto insurer or home owners insurer raised your premiums an unreasonable amount what would you do? I suspect you would switch insurance companies, perhaps give that little lizard a boot in the butt.  When it comes to health insurance it takes the federal government to tell you what is unreasonable. We all better hope that the denials being made by regulators are themselves reasonable. A small change in assumptions can make a big difference in outcomes and if premiums are too low, there will be a great deal of catching up to do. Remember, a premium set in 2011 is designed to cover claims incurred through 2012 which may not be reflective of experience in the past twelve months. Actuaries know this of course, but let us hope political pressure is not influencing the many variables that go into setting premiums.

If you look at the release below you will see a rate cut for Anthem Blue Cross in Connecticut. However, when you go to the HHS link in the press release you find this:

Connecticut Rate Review

The Rate Review program began September 1, 2011. No insurers in Connecticut have proposed rate increases of 10% or more since that time. Check back regularly for updates.

Then we have the following hype.  HHS is incapable of preparing a press release containing just facts, but rather must include more and more spin and unsubstantiated claims.

“The Affordable Care Act includes several policies, including rate review, to continue this slow growth.  By fighting fraud, better coordinating care, preventing disease and illness before they happen and creating a new state-based insurance marketplace, it helps keep health care cost growth low.”

In fact only rate review has been implemented, the efforts at coordinated care are focused on Medicare, preventive disease programs have been used by employers for many years with no measurable results and the state-based marketplace is two years away.

News Release

Affordable Care Act holding insurers accountable for premium hikes.  Health insurance premium increases in five states have been deemed “unreasonable” by the U.S. Department of Health and Human Services, HHS Secretary Kathleen Sebelius announced today.

After independent expert review, HHS determined that Trustmark Life Insurance Company has proposed unreasonable health insurance premium increases in five states—Alabama, Arizona, Pennsylvania, Virginia, and Wyoming.  The excessive rate hikes would affect nearly 10,000 residents across these five states.

To make these determinations, HHS used its “rate review” authority from the Affordable Care Act (the health care law of 2010) to determine whether premium increases of over 10 percent are reasonable.

“Before the Affordable Care Act, consumers were in the dark about their health insurance premiums because there was no nationwide transparency or accountability,” said Secretary Kathleen Sebelius.  ”Now, insurance companies are required to disclose rate increases over 10 percent and justify these increases.  It’s time for Trustmark to immediately rescind the rates, issue refunds to consumers or publicly explain their refusal to do so.”

In these five states, Trustmark has raised rates by 13 percent.  For small businesses in Alabama and Arizona, when combined with other rate hikes made over the last 12 months, rates have increased by 27.2 percent and 18.1 percent, respectively.  These increases were reviewed by independent experts to determine whether they are reasonable.  In this case, HHS determined that the rate increases were unreasonable because the insurer would be spending a low percent of premium dollars on actual medical care and quality improvements, and because the justifications were based on unreasonable assumptions.

In addition to the review of rate increases, many states have the authority to reject unreasonable premium increases.  Since the passage of the health care reform law, the number of states with this authority increased from 30 to 37, with several states extending existing “prior authority” to new markets.

Examples of how states have used this authority include:

In New Mexico, the state insurance division denied a request from Presbyterian Healthcare for a 9.7 percent rate hike, lowering it to 4.7 percent;In Connecticut, the state stopped Anthem Blue Cross Blue Shield, the state’s largest insurer, from hiking rates by a proposed 12.9 percent, instead limiting it to a 3.9 percent increase;In Oregon, the state denied a proposed 22.1 percent rate hike by Regence, limiting it to 12.8 percent.In New York, the state denied rate increases from Emblem, Oxford, and Aetna that averaged 12.7 percent, instead holding them to an 8.2 percent increase.In Rhode Island, the state denied rate hikes from United Healthcare of New England ranging from 18 to 20.1 percent, instead seeing them cut to 9.6 to 10.6 percent.In Pennsylvania, the state held Highmark to rate hikes ranging from 4.9 to 8.3 percent, down from 9.9 percent.

Today’s announcement comes the same week that a report showed that health care spending has grown at remarkably low rates.  According to an analysis done each year by the Centers for Medicare & Medicaid Services, U.S. health care spending experienced historically low rates of growth in 2009 and 2010.  A recent study released by Mercer Consulting also showed a slow-down in the average employee health benefit cost to businesses.

The Affordable Care Act includes several policies, including rate review, to continue this slow growth.  By fighting fraud, better coordinating care, preventing disease and illness before they happen and creating a new state-based insurance marketplace, it helps keep health care cost growth low.

For more information on the specific determinations made today, please visit http://companyprofiles.healthcare.gov/

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2012 is the start of new fees and taxes on health care organizations…what are the possible consequences? First up, a new excise tax on pharmaceutical companies

18 Jan
English: Novamoxin Prescription Drug - Amoxici...

First target

One of the criticisms of the Affordable Care Act has been that few people actually know what is contained in the Act.  Having spent untold hours reading the Act along with various independent assessments of the Act, I can testify to its immense complexity.   

For example, in order to pay for the expansion of subsidized health insurance to millions of Americans, the Affordable Care Act adds numerous new fees and taxes on individuals’, employers and the health insurance industry.  In 2010, there was a new tax on indoor tanning facilities (ok, so that is not a big deal, anyone who uses one of those deserves to be taxed). In 2014 there are new fees on employers and insurance companies, all of which have the potential of being passed along to consumers.  In 2012 pharmaceutical companies that sell to the federal government are assessed what is called an annual fee (excise tax). 

The various fees and taxes contained in the Act are among the few elements that are reasonably quantifiable.  Other elements of the Act that are to reduce costs rely on assumptions of long-term success for well-meaning, but untried programs generally related to Medicare.  To be successful, hospitals, physicians, other health care providers and Medicare beneficiaries must all work in a coordinated effort under new paradigms for providing health care.

Taking billions of dollars each year in new taxes impacts these organizations which then must find ways to mitigate this loss.  It is tempting to simply dismiss such taxes as justified on highly profitable organizations.  However, we should never forget that everything we do is connected to something else and every action has its consequences (think housing crisis).  Generating revenue for some means a loss for others, a savings here means less revenue there and in some cases that may mean a loss of jobs, less invested in research or simply passing costs along to another party. When additional costs are imposed on employers, especially related to health benefits, it generally means greater cost sharing for employees and a shift in compensation from cash to employee benefit programs.  Good benefits are valuable, but they don’t buy groceries or pay college tuition.

The following is excerpted from the IRS regulations with regard to the new fees on drug manufacturers (a very small sample of the hundreds of thousands, ultimately millions, of pages of regulations implementing the Affordable Care Act). 

The aggregate fee amount each year for all covered entities (referred to as the applicable amount) is $2.5 billion for fee year 2011; $2.8 billion for fee years 2012 and 2013; $3 billion for fee years 2014 through 2016; $4 billion for fee year 2017; $4.1 billion for fee year 2018; and $2.8 billion for fee year 2019 and thereafter. The applicable amount for each year is allocated, using a specified formula, among covered entities with aggregate branded prescription drug sales of over $5 million to specified government programs or pursuant to coverage under such programs.

The specified government programs are the Medicare Part B program, the Medicare Part D program, the Medicaid program, any program under which branded prescription drugs are procured by the Department of Veterans Affairs, any program under which branded prescription drugs are procured by the Department of Defense, and the TRICARE retail pharmacy program (collectively, the Programs).

The annual fee for each covered entity is calculated by determining the ratio of (i) the covered entity’s branded prescription drug sales taken into account during the preceding calendar year to (ii) the aggregate branded prescription drug sales taken into account for all covered entities during the same year, and applying this ratio to the applicable amount. Sales taken into account means branded prescription drug sales after the application of the percentage adjustment table.

Increased number of adult children covered by health insurance as a result of the Affordable Care Act

12 Jan
This image shows the income distribution of Am...

If there is one thing that the Affordable Care Act does well it is expanding health insurance coverage, much like what happened in Massachusetts. In the case of PPACA one goal was to expand coverage available to adult children. Some measure of additional coverage has been accomplished as reported below.  Keep in mind that these children do not have to be dependent on the parent (employee) in order to be covered, may be married and cannot be charged an extra premium for the coverage. In addition, beginning in 2014 these children can be employed and have other coverage available and will still be eligible for their parent’s plan.  Prior to that an employer may deny coverage to an employed adult child.

All this is a good thing if you are one of the families affected, but remember this additional cost is carried by employers and all other insured members of a group.

New Health Law Increased Insurance
Coverage of Adult Children

WASHINGTON—The new federal insurance law has increased the health insurance coverage of adult children between 2009 and 2011, according to a new report by the nonpartisan Employee Benefit Research Institute (EBRI).

The Patient Protection and Affordable Care Act (PPACA) enacted March 23, 2010, requires that group health plans and insurers make dependent coverage available for children until they attain the age of 26, regardless of tax or student status, or dependent status as it relates to financial support. The mandate to offer coverage to adult children ages 19‒25 took effect for policy years that began on or after Sept. 23, 2010, but since January is the beginning of the plan year for many employment-based health plans, many insurers adopted the requirements of the law before the effective date.

To determine whether the coverage mandate had an effect, EBRI examined data from two U.S. Census Bureau surveys (the Current Population Survey, CPS, and the Survey of Income and Program Participation, or SIPP), as well as from the National Health Interview Survey (NHIS) by the Centers for Disease Control. The data indicated:

  • The percentage of persons ages 19‒25 with employment-based coverage as a dependent increased from 24.7 percent in 2009 to 27.7 percent in 2010, according to the CPS. 
  • The percentage of individuals ages 19‒25 with employment-based health coverage as a dependent averaged 26.9 percent during January‒September 2010, and increased to an average 27.1 percent during October and November, per SIPP. 
  • The percentage with private insurance increased from 51 percent to 55.8 percent, and the percentage uninsured fell from 33.9 percent during 2010 to 28.8 percent during the first half of 2011 among those ages 19‒25, according to data from the NHIS. 

“Data from these three surveys show that PPACA has had a positive effect on the percentage of young adults with employment-based coverage as a dependent,” said Paul Fronstin, director of EBRI’s Health Research and Education Program and author of the report.

Full results of the report are published in the January 2012 EBRI Notes, “The Impact of PPACA on Employment-Based Health Coverage of Adult Children to Age 26,” online at www.ebri.org

The Employee Benefit Research Institute is a private, nonprofit research institute based in Washington, DC, that focuses on health, savings, retirement, and economic security issues. EBRI does not lobby and does not take policy positions.

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Accountable Care Organizations (ACO) and the promise of savings without managed care or patient limitations.. I wish you all the best.

20 Dec

 Here is a text of an e-mail I received from HHS:

 Affordable Care Act helps 32 health systems improve care for patients, saving up to $1.1 billion

12/19/2011 12:01 AM EST

Thirty-two leading health care organizations from across the country will participate in a new Pioneer Accountable Care Organizations (ACOs) initiative made possible by the Affordable Care Act, HHS Secretary Kathleen Sebelius announced today.  The Pioneer ACO initiative will encourage primary care doctors, specialists, hospitals and other caregivers to provide better, more coordinated care for people with Medicare and could save up to $1.1 billion over five years

That headline really grabs you doesn’t it.  Seems like it’s a done deal and the savings are in the bank.  That’s far from the truth, of course. There is no new information here other than we know the names of some health care systems that will participate in this trial (“Pioneer”) effort for Accountable Care Organizations.  

Don’t get me wrong, this is a good idea because if there is one thing we need, it is more coordinated care, but we have a long way to go before we start patting ourselves on the back with a success under the Affordable Care Act.  We need it to work in terms of saving money and improving the care people receive.  That’s a tall order even for spin doctors.

I have one major reservation on the ability for this program to succeed and that is the limited involvement by the patient and the limited ability for the ACO to manage all of a patient’s care.  Working efficiently, the process should be virtually invisible to the patient, but that assumes the patient only uses health care providers within a given ACO.  Will the ACO that receives financial incentives to provide efficient care be reluctant to make outside referrals thereby losing some of the control over patient care?  In the long run there is no benefit to the ACO to do so, but this is one of the criticisms made of HMOs.  Here is what HHS says about patient rights.  I am concerned that we are again trying to have it both ways; efficient management of care and total freedom when seeking care.  I don’t think that can work, let’s hope I am wrong.

Beneficiary Participation

Under the Pioneer ACO Model, beneficiaries do not enroll in an ACO.    Primary care providers and other healthcare providers make the decision to participate in ACOs, meaning a beneficiary will not need to take proactive action to receive the benefits offered through an ACO.  ACOs are required to notify beneficiaries of their participation, ensuring the beneficiary is aware of the new arrangement, and his or her rights described in this document.  In addition, beneficiaries may affirmatively attest that their primary provider is in a Pioneer ACO, and can then be aligned with the ACO and benefit from the enhanced care coordination that it offers.

Beneficiary Rights and Protections

A beneficiary aligned to an ACO maintains complete freedom to visit any healthcare provider accepting Medicare, just as all Medicare beneficiaries participating in original, fee-for-service Medicare do.  These beneficiaries do not need a referral to see a specialist outside the ACO.   Unlike a managed care arrangement, like an HMO or a Medicare Advantage plan, a beneficiary aligned to an ACO is free to see any healthcare provider accepting Medicare at any time.  In addition, beneficiaries maintain all the benefits to which they are entitled in original, fee-for-service Medicare. 

Beneficiaries will have direct channels of communication to CMS to ask questions and relay concerns.  Through the initial notice of participation, beneficiaries will be informed that they can call 1-800 MEDICARE at any time to ask questions about the program,   alert CMS of any concerns they may have about the ACO.  Beneficiaries will also be surveyed each year to assess their experience with the new program.

 Here is a link to the list of the 32 organizations

Essential health benefits for exchanges left to states to determine

19 Dec

When ERISA was enacted a provision was included to exempt employer self-insured health plans from state regulation and mandates. This was done so that employers who operate in multiple states would not have to comply with scores of different regulations and mandates. There are about 1600 different state mandates related to coverage of health care services. Each of these adds to the cost of health insurance. Now the Obama administration has decided to take the opposite approach and allow each state to determine the essential health benefits to be used by plans within its exchange effective January 2014.

States will be allowed to base their essential coverage on one of several benchmarks.

Given the track record of enacting mandates promoted by special interest groups along with providing benefits to state workers considerably above competitive levels followed by private sector employers, this decision to defer to each state may well be a recipe for higher health care premiums.  That in turn translates to higher federal costs when providing the subsidies that are available to most families that will be used in exchanges.  In addition, the cost of mandates in excess of the essential health benefits must be defrayed by the state.  All of this is counterintuitive to affordable health care.

In effect, we are saying that government decisions on essential health benefits reflect what is essential to individuals, but that is not the always the case.  We are making this process  way too complicated.  Very basic, nearly catastrophic coverage should be the  standard. From there allow insurers to build higher level plans demanded by consumers who can then decide the coverage they need and can afford.  This is not the same as the current approach of starting with generous coverage and varying reimbursement levels.

Exactly what are we attempting to make affordable?  We appear to be starting with the Cadillac of coverage and working our way up.

Four Benchmark Plan Types

Our analysis of offerings that exist today suggests that the following four benchmark plan types for 2014 and 2015 best reflect the statutory standards for EHB in the Affordable Care Act:

(1)  the largest plan by enrollment in any of the three largest small group insurance products in the State’s small group market;26

(2)  any of the largest three State employee health benefit plans by enrollment;

(3)  any of the largest three national FEHBP plan options by enrollment; or

(4)  the largest insured commercial non-Medicaid Health Maintenance Organization(HMO) operating in the State.

HHS intends to assess the benchmark process for the year 2016 and beyond based on evaluation and feedback.

To reflect the State flexibility recommended by the IOM, under our intended approach, States are permitted to select a single benchmark to serve as the standard for qualified health plans inside the Exchange operating in their State and plans offered in the individual and small group markets in their State. To determine enrollment in plans for specifying the benchmark options, we intend to propose to use enrollment data from the first quarter two years prior to the coverage year and that States select a benchmark in the third quarter two years prior to the coverage year. For example, enrollment data from HealthCare.gov for the first quarter of calendar year 2012 could be used to determine which plans would be potential benchmarks for State selection and the benchmark plan specified during the third quarter of 2012 for coverage year 2014. If a State does not exercise the option to select a benchmark health plan, we intend to propose that the default benchmark plan for that State would be the largest plan by enrollment in the largest product in the State’s small group market.

 
 
Related articles
Health Care Law Will Let States Tailor Benefits – New York Times (nytimes.com)

Essential Benefits — Who Decides? – Huffington Post (huffingtonpost.com)

Early Retiree Reinsurance Program (ERRP) money is gone. Five billion dollars from the federal to state governments. What did we get for our money?

12 Dec

The Early Retiree Reinsurance Program was supposed to reimburse employers for some of the health insurance claim costs for retirees through 2013 until the Affordable Care Act exchanges were in place.  CMS has announced that $5 billion allocated for the program has run out and that claims incurred after 2011 will not be accepted. It appears the administrations earlier estimate how long the funds would last was off just about a year.  Here is the CMS release:

The Early Retiree Reinsurance Program (ERRP) was established by section 1102 of the Affordable Care Act enacted on March 23, 2010. Congress appropriated $5 billion for this temporary program and directed the Secretary of Health and Human Services (HHS) to set up the program within 90 days of enactment. By law, the ERRP is scheduled to end when its resources have been used to pay claims. Due to the significant response among the employer community, the Administration’s budget released in February 2011 projected that the funds would last through fiscal year 2012, which started on October 1, 2011. The program ceased accepting applications for participation in the program on May 6, 2011. On November 18, 2011, CMS notified plan sponsors that total payments reached $4.1 billion. On December 9, 2011, CMS notified plan sponsors that $4.5 billion had been paid and issued further guidance informing plan sponsors that claims incurred after December 31, 2011 will not be accepted.

Where did the money go? It went to a wide variety of employers of all sizes, but interestingly, if you scan the list of recipients you will find that most of the money went to state and local governments, including school districts (reflecting their large numbers and generous early retirement programs).  A few very large corporations such a Verizon, Prudential and Johnson & Johnson received sizeable checks as well.

The City of Minot in North Dakota has over 2000 plan participants and has received $112,933 in ERRP reimbursements. As a direct result of these reimbursements the City was able to reduce 2012 premiums by 17 percent.

And what will happen in 2013 when the premium increases will have to cover the shortfall created by artificially reducing premiums in 2012 in addition to the increases being generated over the next year? Wait until these organizations see a compounding of their premium increases in 2013, it will be like the middle class receiving a tax increase because the Social Security payroll tax is reinstated.

In the final analysis, what did the American tax-payer get for his money?  The purpose of the ERRP was to encourage organizations to retain early retiree coverage.  However, state and local government plans and large corporations, especially those heavily unionized, are very unlikely or completely unable to cease providing early retiree health care coverage, certainly not  before 2014.  So what we have is a transfer of federal (borrowed) money to the states, local government and mostly large corporations creating a windfall serving a very questionable purpose.  It is true that some retirees also saw a small benefit in all this, but that too is temporary and any reduction in their cost will quickly disappear.

That $5 billion could have been spent in more productive ways.

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