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.

Tags: Medicare Part D, Medicaid, , , branded drugs, fees on drug companies, fees imposed by PPACA, Prescription drug

Making health care affordable; now it’s your turn

17 Jan

The “experts” have their say every day, they all have the solution to controlling health care costs, it’s too bad they haven’t worked.

Soooooo, now it’s your turn. Visit Health Insurance Illuminated, read my latest post and add your ideas for controlling health care costs. Who better than patients and consumers to help solve this problem?

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I never file a health insurance claim, so what happens to my premiums?

16 Jan
Deutsch: Ein Straßenverkehrsunfall in Kopenhag...

The purpose of insurance

If you have homeowners insurance or auto insurance, I suspect you would be very happy never to have a claim and that goes double for health insurance.  However, that does not stop some people from thinking they may be entitled to a refund if they do not file a health insurance claim.

What does happen to your premiums?  Believe it or not, a relatively few people consume most of the health care and hence incur most of the health care expenses.  Read more about this issue in my blog post on Health Insurance Illuminated

Tags: health insurance claims, health insurance premiums, who uses health insurance

Quinnscommentary growing in a global way. Thanks for your support!

14 Jan
English: Courtyard of the Museum of Louvre, an...

2011 was a record year for Quinnscommentary.  This blog was viewed about 160,000 times (not many by some standards, but pretty good for little old me). If it were an exhibit at the Louvre Museum, it would take about 7 days for that many people to see it.  The busiest day of the year was October 19th with 5,840 views.

While most readers are from the U.S., Quinnscommentary was viewed by people in twenty-five different countries on all continents, including such diverse places as Greece, Romania, Tunisia, Australia, Fiji, Brazil and Nigeria (that guy was probably telling my he had $125 million in a bank account and wanted to share it with me if I would sen him my bank information).

I am keeping at it for 2012 and looking for a new high in people viewing my posts – so far so good. 

In addition, I am writing a new Blog that I also hope you will view regularly.  Health Insurance Illuminated is intended to educate and inform patients, employers and employees about the many issues related to health care.  Please stop by and see what you think.

Thank you for your interest and support.

 

P.S. Your comments on both blogs are welcome and very important.

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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Does the public really care about health care costs? Survey: “Government shouldn’t interfere.” What would you do to control health care costs?

10 Jan
September 3, 2009 health care reform rally at ...

During the health care reform debate the President repeatedly said that no one (meaning insurance companies) should come between you and your doctor.  The US public seems to have taken the no interference philosophy to heart.  Most Americans do not believe in a cost benefit analysis as justification for denying payment for health care treatment.  Are we saying that cost does not matter?

This leads to a fundamental question; exactly how does the public expect health care costs to be controlled?  Or better still, does the public want health care costs managed at all as long as their share of premiums is limited?  If the public remains focused on premiums alone, we are headed for serious trouble far beyond our current state.  Remember, these are the same people who we expect to act like consumers when it comes to buying health care.

Survey: Government shouldn’t impose on health treatment decisions

Most Americans are frustrated by decisions that limit the use of high-cost prescriptions and treatments, according to a survey by the Harvard School of Public Health and the Alliance for Aging Research.

A majority say they oppose decisions by the government or health insurance plans where prescription drugs or medical or surgical treatments are not paid for because the payors determine the benefits and do not justify the cost. The exception is if there’s evidence that something else works equally well but costs less. Sixty-four percent believe the government or health insurance plans should not pay for a more expensive prescription drug or medical or surgical treatment if it has not been shown to work better than less expensive ones. Majorities in Italy and Germany share both of these beliefs with the U.S. public. In the United Kingdom, at least a plurality shares these beliefs.

 It is pretty clear what people do not like when it comes to controlling costs, so let’s hear from you.  What exactly would you do to control health care costs?

Related articles
  • Consumer driven health care is a myth and aiming at the wrong target(quinnscommentary.com)

Tags: Alliance for Aging Research, controlling health care costs, Harvard School of Public Health, insurance company denials, Medical necessity

Medicare premiums 2014, the bogus rumor persists. $247 per month is ridicules

8 Jan

 

An Internet e-mail still circulates that come 2014 the Medicare Part B standard premium will be $247 per person. That’s nonsense for several reasons.

1. The calculation of the premium is set by law and that law has not changed.

2. There is nothing in the Affordable Care Act (Obamacare) that affects the Medicare premium calculation.

3. The President does not, as has been alleged, have the ability to unilaterally change any of this.

4. The standard 2012 premium for Medicare Part B is $99.90 (higher for the 5% higher income beneficiaries). If you used the highest rate of inflation to hit Medicare in the last forty years for both 2012 and 2013 you would get a premium of less than $130.00. The likelihood of that kind of inflation in the next two years is non-existent.

5. There is nothing in the 2011 Medicare Trustees report to indicate other than normal rates of cost increases over the next several years. In fact, the Trustee’s project that by 2020 the Part B premium will be $158.60. Even that is based on a premium for 2012 of $106.60 (not $99.90).

6. Most Medicare beneficiaries (95%) are protected from high increases in Medicare premiums under the Social Security hold harmless provision. This means that an increase in Medicare premiums cannot cause a net reduction in the Social Security payments. So, for example, if you are receiving $1,000 a month in Social Security benefits and you receive a 3% COLA increase, your Part B premium cannot increase my more than $30. Do the math and you will see there would have to be whopping COLA increases in Social Security in the next two years to get most people anywhere near $247 and that ain’t gonna happen.

English: President signing the Medicare Bill a...

1965

Are any of these projections 100% accurate? Certainly not, there are too many unknowns. However, before you pass along some outrageous story about Medicare premiums (or a tax on the sale of your home, or that the value of health benefits is now taxable income or that Obama was stopping the 2011 Social Security COLA – all of which were circulated in the last year), get the facts.

Unfortunately too many people out there are so obsessed with opposition to this or that, their judgement is clouded …or they are simply ignorant and that’s scary because they can still vote.

By the way, the story about a brain surgeon being at a meeting in Washington where denying care to Americans 70 and over was discussed is also a lie. There was no such meeting, there is nothing in the Affordable Care Act remotely related to that and the caller to a talk show giving the story was not a brain surgeon.

Read other articles related to Medicare under the “Medicare” and “Healthcare” categories on this Blog. 

Tags: Cost of Living Allowance, Medicare, Medicare in 2014, Medicare Part B, Medicare Part B premium $247, Medicare premium rumor, Medicare premiums, Medicare rumor, Obamacare and Medicare, , Social Security

Defense cuts are risky business

8 Jan

I have no doubt there is significant opportunity to wring savings from the  as there is from virtually all government departments. For example, health costs for retired career military are out of control and their premiums have not been raised in over fifteen years … those folks are no different from any other retiree. It is also true there must be a balance in cost management between the three largest expenditures, Medicare, Defense and Social Security.

Having said all that, in the world we live in today do cuts that make it impossible to fight two ground wars simultaneously make sense, does cutting back on development for new weapon systems make sense?  Don’t get me wrong I am not for war or starting a new war, but in the face of a military build up by China, ‘s ongoing threat, ongoing instability in the Middle East, and spreading terrorism especially in Africa, announcing to the world that we are reducing our capability is risky business at best.

In an ideal world, perhaps the world of progressives, a defense force would only be needed to help with natural disasters but that is not our world and never has been. America is in decline as the worlds economic power and even our once dominate influence is diminished, there is no need to send signals that we will become ripe for picking. By all means, seek out waste and duplication, close domestic bases and facilities that are not needed, strengthen the procurement process to get more for our money.

However, cutting our military to avoid changes to Social Security and Medicare is a bad deal and potentially a long-term debacle. If we don’t have the best security possible, that monthly check won’t mean much.

 

A decline in the Medicare Part B deductible is a poor long-term strategy

6 Jan

Spend now, worry later!

Through 2005 the Medicare Part B deductible was set by statute. Thereafter it reflects the per capita cost for Medicare beneficiaries. In 1967 the Part B deductible was $50.00. Today after decreasing for 2012 it is only $ 140.00.  

However, if the deductible had been allowed to increase at the rate of general inflation (not even medical inflation) it would be $338.00.         

As a result of the Medicare Modernization Act, the Part B deductible was increased to $110 in 2005 and is indexed thereafter by the annual percentage increase in the Part B actuarial rate for aged beneficiaries.  In 2012, the Part B deductible will be $140, a decrease of $22 from 2011.  (The actuarial rate is set by law at one-half of the total estimated per-enrollee cost of Part B benefits and administrative expenses, adjusted as necessary to maintain an adequate contingency reserve.)

This seems to mean that the per-enrollee cost of Part B is expected to decrease by 13.5%, is that really a likely occurrence?   Did the contingency reserve used in calculating the Part B deductible consider the likely reversal of cuts to physician payments as was apparently the case with the Part B premium?  Regardless, a deductible that should by simple math be $338, should not be decreased under any circumstances, that is simply poor long-term planning.   

Medicare Part B covers a portion of the cost of physicians’ services, outpatient hospital services, certain home health services, durable medical equipment, and other items. By law, the standard premium is set to cover one-fourth of the average cost of Part B services incurred by beneficiaries aged 65 and over, plus a contingency margin. The contingency margin is an amount to ensure that Part B has sufficient assets and income to (i) cover Part B expenditures during the year, (ii) cover incurred-but-unpaid claims costs at the end of the year, (iii) provide for possible variation between actual and projected costs, and (iv) amortize any surplus assets.  Most of the remaining Part B costs are financed by Federal general revenues.  (In 2012, about $2.9 billion in Part B expenditures will be financed by the fees on manufacturers and importers of brand-name prescription drugs under the Affordable Care Act.) 

The largest factor affecting the contingency margin for 2012 is the current law formula for physician fees, which will result in a payment reduction of about 29 percent in 2012.  For each year from 2003 through 2011, Congress has acted to prevent smaller physician fee reductions from occurring. The 2012 reduction is almost certain to be overridden by legislation enacted after Part B financing has been set for 2012. In recognition of the strong possibility of increases in Part B expenditures that would result from similar legislation to override the decrease in physician fees in 2012, it is appropriate to maintain a significantly larger Part B contingency reserve than would otherwise be necessary.  The asset level projected for the end of 2012 is adequate to accommodate this contingency.  

In summary, benefits have increased, the deductible is lower, the premium increase is extremely modest, nothing related to the Affordable Care Act has been implemented that would measurably lower Medicare costs or future trends, the planned cut in physician payments will not happen and all is right with the world.  In many ways CMS has little discretion in administering Medicare because most provisions are set by law, but that is the point.   Setting something as massive as Medicare on automatic pilot is not the best way to administer such a program.  It replaces prudent budget decisions with political decisions.

Tags: Medicare, Medicare deductible, Medicare Part B, Part B,

  • Comments 1 Comment
  • Categories Medicare

Consumer driven health care is a myth and aiming at the wrong target

5 Jan

The CEO of Humana recently gave a talk on the health care system in which he correctly noted some of the fundamental problems in the system (unnecessary care being provided, little concern for cost (of care) by the consumer, lack of electronic medical records, variations among practice patterns and others). However, he incorrectly concludes as do many other “experts” in and out of government that consumerism by the patient is the key to solving our health care cost problem. In other words, if you shop for health care as you do for a new television, you will be more prudent and cost conscious when it comes to receiving an MRI or CT scan.

Let’s see what you actually know about that new television. You certainly know the price and you also know that if you go to a big box, no frills store you may save money. You may know something about the perceived quality, probably from word of mouth or perhaps a consumer report of some kind. And you also know something else; if you guess wrong in your purchase you may return it for a refund or replacement, or if all else fails you throw it out, learn your lesson, chalk up the loss of a few hundred dollars to a bad experience and start over.

Sure, buying a TV is exactly like that severe pain your child feels on her left side accompanied by a very high fever; start shopping!

 
Health care systems

Pick a system, any system

I have worked with thousands of people over the last fifty years as they navigate the health care system, deal with major illness, doctors, hospitals and their health insurance. Not one of those people knew the true cost of health care, not one could accurately assess the quality of care they received, not one knew if all the care received was necessary or appropriate. What they did know was that they or someone they loved were ill and wanted to get better, sometimes desperately so. On occasion (after the fact) there would be consternation over a high balance bill from a non participating physician, but more often than not the concern was that the insurer paid too little not that the doctor charged too much … “he saved my life.”

When it comes to health care we humans are not and can never be objective consumers motivated by cost (and sometimes even quality; witness the reaction to new guidelines for certain screenings that question popular wisdom).

All the well-known problems in the system must change, but it is the system that must change, not the consumer/patient. Why would we attempt to solve our problems by seeking to have 300 million people learn to question the next recommended MRI as opposed to changing the system so that we have confidence the next MRI is appropriate, necessary and cost efficient?  Let’s face it; if we believe that only external pressure from consumers can change the system, we are also saying the quality of health care in America is generally poor, overpriced, defensive and motivated largely by profit maximization.

Tags: consumer driven, Health care reform

48% of likely voters believe Congress is corrupt

4 Jan

See the following from Rasmussen.

New High: 48% Say Most Members of Congress Are Corrupt In Politics

A new Rasmussen Reports national telephone survey shows that 48% of Likely U.S. Voters believe that most members of Congress are corrupt. Just 28% disagree, and another 24% are not sure. Rasmussen Reports updates are also available on Twitter or Facebook. The survey of 1,000 Likely Voters was conducted on December 27-28, 2011 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC.

Many people don’t think Congress is doing a good job, that government is the problem and even that Congress is corrupt. Based on my personal experience with feedback it also appears people are willing to believe the most outrageous things about members of Congress, like they receive their pay for life and that Congress stopped the Social Security COLA for two years . . . And yet we keep electing the same people over and over so they become so ingrained in the system they are frozen with the fear of losing power.

Isn’t it really time for term limits?  We only need a few more signatures on our petition to get it released to Congress. Please click in the term limit link and sign the petition (U.S. citizens only please).

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Tags: Congress, Rasmussen Report, Term limits

4474

3 Jan
English: Source http://www.ankawa.com/forum/in...

Four thousand four hundred seventy-four is the number of American military personnel killed in Iraq. Compared with past wars that’s a small number, but certainly not to the family and friends of those who were lost. We are told the Iraq war is now over. Americans pulling the trigger may be over, but that is a long way from peace and stability in Iraq. Iraqis hold the key as to whether this was all worth the cost. So far things do not look promising in a country still besieged by religious violence, political infighting and tribal conflict. Every explosion, every murder and every violation of human rights is an insult to the memory of the 4474 and the untold number of wounded still suffering. Paying a high price for a noble cause is one thing, paying a high price for a lost cause quite another.

 

Let’s hope Iraqis don’t waste, even if they cannot appreciate, the very expensive gift America has given them and for which they too paid a very heavy price.

 

Americans should watch closely developments in Iraq and learn the lesson their success or failure teach.

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If you thought Congress was dysfunctional in December 2011, just wait for 2012

2 Jan
46th United States Congress

Simpler times

Let’s see, Americans couldn’t handle expiration of the 2% payroll tax in 2011, but come 2012 they will be  faced with expiration of not only the payroll tax break, but all of the Bush tax rates.  And given the failure at deficit reduction, automatic cuts will kick in. Not to worry you say, there is a full year for Congress to fix things. True, but 2012 is an election year so rather than solving a problem with a real solution Congress and the Administration will look to popular “solutions” that appeal to this or that voter block and nothing more.

It is a sad commentary on our dysfunctional system that is perpetuating uncertainty, indecision and an economy that will see little change in 2012.

Have you considered signing the term limit petition?  See the link at the top of this page. 

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  • Categories Politics

A New Year wish

1 Jan

Happy New Year

And may 2012 be a better year for anyone who has struggled in 2011. 

The $2.00 really dumb bet

31 Dec
The Virgin Credit Card, issued by Virgin Money...

Corporations are not people, but people are corporations and it appears a large number of people are just plain stupid. Witness Verizon’s attempt to charge $2.00 for paying your bill on line or via automatic credit card charge. Both methods improve a company’s cash flow,  payment collection and save administrative costs compared with processing checks or cash. In addition, Verizon and other corporations have been encouraging paperless transactions for years. Who told them to accept credit card payments in the first place, electric and gas utilities don’t.

While the $2.00 fee idea has been withdrawn, how dumb was it to create the flack in the first place in an anti business environment and when Americans are being continuously told how bad off they are in this economy.
Dumb, dumb, dumb.

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