Insuring Resources Commentary:
I've numbered the items within the MJ editorial so I can address them for you a bit easier:
1.This is very likely and a key reason why prices for health care will continue to increase as there are simply not enough primary care doctors as they seek to specialize and increase their earning potential.
3. Supposedly HHS (the agency that is writing the implementation rules) is working closely with insurers to get it right concerning what should be administrative costs and which should be left on the health care side of the ledger.
4. The smaller the plan, the higher the increase. Although in Wisconsin this mandate only impacts about 26% of all employer coverage. still for small groups, premiums will definitely rise because of this.
5. This will definitely lead the employers impacted to reduce benefits. This is not a great idea as part of the financing mechanism.
6. There are many reasons why wages may be kept lower. This is one of them but a larger one includes the tax credits available to businesses with salary's that average less than $50,000.
7. Employers will definitely cut hours of many workers to part-time so that they avoide the penalties within the bill related to their employees accessing the exchange if they don't offer health insurance.
Summary:
There are numerous problemns with this reform package. The essential component is that health care should be paid on a "episode of care" basis rather than the current fee-for-service basis. We also need greater incentives for providers to install lean efficiencies... this should have been written in the legislation.
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Businesses prepare to handle health care reform
Companies find they may have unexpected costs as part of legislation
Milw. Journal 5/29/10
Editorial by John Torinus
Seminars and webinars abound on how business can cope with the 2,300-page Obamacare, and attendees quickly learn that there are as many unintended consequences in the new law as intended and that there are as many unknowns as knowns.
It is an exceedingly complex bill, replete with unanswered questions that resulted from the unseemly way in which the House and Senate versions were mashed together.
Businesses, including those in the health care sector, also learn that, while the new law deals with the issue of the uninsured in the country, it deals minimally with their major issue: out-of-control medical inflation.
Human relations executives I talk to are predicting that costs and premiums will continue to rise sharply, even more so with the new law. Hence, the work of real reform of the way U.S. care is delivered and paid for continues, at least in the private sector.
Let's look first at some of the unintended consequences already discovered in the wet ink of the new law and then at the continuing real reforms outside the Washington Beltway.
First, an early list of unintended consequences:
1.• Because 32 million more people will be covered, because insured people use about twice as much health care as the uninsured, and because no increase in the supply of doctors was built into Obamacare, there will be a severe shortage of doctors to serve the newly insured. Doctors and dentists already are turning away Medicaid recipients because of below-market reimbursements. Some are spurning Medicare patients.
2.• Companies have already taken billions of dollars in hits on their financials because of the lost subsidies for retiree drug benefits. Accounting rules require that they recognize the higher future liabilities for their drug programs.
3.• The requirement that insurance companies serving small businesses must spend at least 80% of premiums on direct health care charges has them in a quandary. Depending on how the regulators define payouts, their overheads could be more than 20%. If they can't meet the new test, they will exit the business.
4.• Premiums could rise as companies are required to cover children up to age 26. That added coverage doesn't come without a cost, so companies may reset their premium schedules to say the more children, the higher the premium.
5.• The "Cadillac tax" on high-cost plans ($27,500 for a family plan) may drive companies and their unions toward consumer-driven health plans. Those plans are less expensive because they bring down costs and premiums. A consumer-driven health plan could keep premiums below the Cadillac level. An estimated 60% of all plans will face the 40% surtax when it takes effect in 2018.
6.• The 4% surtax will become a bargaining issue as part of total compensation, and therefore could have a downward effect on wages and other benefits.
7.• Employers will probably cut part-time employee hours to fewer than 30 hours per week to stay under the threshold for required coverage or penalties for non-coverage.
8• Some companies are calculating whether to keep or drop coverage and pay the low fines in the law. Some will get out of the health care game.
Meanwhile, of necessity, real reforms of the major issues facing health care continue, and even accelerate.
Wisconsin innovators are often in the lead. Among the reforms:
• Growth continues in people covered under health savings accounts, now estimated at 10 million, up from 8 million a year ago. Another 10 million are estimated to be covered in plans with health reimbursement arrangements. This is a new army of engaged consumers who will insist on better value. These plans work. They cut costs and premiums; employees love them; and they're becoming part of retirement planning, a companion to 401(k) plans.
• This month, 150 Wisconsin health care leaders held a summit to embark on payment reform. They seek an escape from payment by procedures - a poorly devised system - to payment by episode of care.
• Serigraph found a broker who has cut deals for bundled prices on elective procedures in hospitals across the country, proving such reform is possible. A medical bill doesn't have to be a Babel of line items.
A. • John Toussaint of ThedaCare in Appleton now has 27 health care systems across the country signed up to instill lean disciplines. Costs and errors plummet when that happens.
The president's people have a lot of work to do as they write the regulations that will shape Obamacare. They need to be careful not to do mortal damage to the insurance industry they bashed on their way to victory. Short of a complete national takeover, which didn't fly with the people and therefore Congress, they need the industry.
And his disciples need to let private sector reformers proceed without hindrance because there is not enough money in the country to pay for all the health care they have promised if costs aren't reined in. He needs the real reformers to succeed.
John Torinus is chairman of Serigraph Inc. of West Bend and a founder of BizStarts Milwaukee, a nonprofit organization dedicated to fostering entrepreneurship in southeastern Wisconsin.
Sunday, May 30, 2010
Wednesday, May 26, 2010
Small Business Tax Credit- Let's look at the fine print
Insuring Resources Commentary:
I may rename this blog- "The Devil is in the details"
For months administration officials have said most small businesses will receive the tax credit and most will be helped in providing their employees health care.
Ok, let's take a closer look as the article below does.
The tax credit applies to businesses with 50 or less employees whose wages are less than $50,000 on average.
BUT, that credit drops off sharply once a company gets above 10 workers and $25,000 average annual wages. Hmmm.
Let's take a small financial services company I know of that's located near Milwaukee as an example. XYZ Financial Services (name has been changed) has 27 employees who havge average earnings of $46,000. Based on the article below XYZ gets virtually no help.
Currently the employees contribute $400 a month for family coverage and have a $5000 family annual deductible with coverage thereafter of 100%. Obviously, the PPO health plan they already have is fraught with poor benefits and incentives to quality, cost effective health care. Basically, if a family reaches their deductible they can run wild for the remainder of the year with 100% coverage, but before meeting their deductible they probably avoid seeing a dr as much as possible.
***(That "running wild" scenario also likely causes increased premiums when they renew their coverage the following year.) That in turn may cause the employer to increase the employee's premium contribution and/or annual deductible. Vicious, meet cycle. ***
So, basically there are no tax credits to aid XYZ in making better health insurance purchasing decisions and the owner may decide to pay the fine for not offering any health insurance and let his employees get it through the state's health insurance exchange.
----------------------
FACT CHECK: Health care small biz tax cut elusive
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/05/20/national/w000842D50.DTL&feed=rss.news_nation#ixzz0p3Fvvp2r
By RICARDO ALONSO-ZALDIVAR, Associated Press Writer
Thursday, May 20, 2010
Zach Hoffman was confident his small business would qualify for a new tax cut in President Barack Obama's health care overhaul law.
But when he ran the numbers, Hoffman discovered that his office furniture company wouldn't get any assistance with the $79,200 it pays annually in premiums for its 24 employees. "It leaves you with this feeling of a bait-and-switch," he said.
When the administration unveiled the small business tax credit earlier this week, officials touted its "broad eligibility" for companies with fewer than 25 workers and average annual wages under $50,000 that provide health coverage. Hoffman's workers earn an average of $35,000 a year, which makes it all the more difficult to understand why his company didn't qualify.
Lost in the fine print: The credit drops off sharply once a company gets above 10 workers and $25,000 average annual wages.
It's an example of how the early provisions of the health care law can create winners and losers among groups lawmakers intended to help — people with health problems, families with young adult children and small businesses. Because of the law's complexity, not everyone in a broadly similar situation will benefit.
Consider small businesses: "The idea here is to target the credits to a relatively low number of firms, those who are low-wage and really quite small," said economist Linda Blumberg of the Urban Institute public policy center. The smallest businesses are at greatest risk of losing coverage — assuming they can afford it in the first place, research shows.
On paper, the credit seems to be available to companies with fewer than 25 workers and average wages of $50,000. But in practice, a complicated formula that combines the two numbers works against companies that have more than 10 workers and $25,000 in average wages.
"You can get zero even if you are not hitting the max on both pieces," said Blumberg. Being close to the upper limit on either of the two measures significantly reduces the credit, she explained.
Hoffman used an online calculator to figure his company's eligibility. At least four are available, including one from the House Energy and Commerce Committee, which helped write the legislation. All produced the same result.
"I think (the administration's) intentions are good, but the numbers and applications don't come out to what they intend," said Hoffman, part owner of Wiley Office Furniture, a third-generation family business in Springfield, Ill.
The Treasury Department, which administers the new credit, did not dispute the calculations.
"The small-business tax credit was designed to provide the greatest benefit to employers that currently have the hardest time providing health insurance for their workers — small, low-wage firms," said Michael Mundaca, assistant secretary for tax policy. "Small employers face higher premiums and higher administrative costs than large firms and in many cases cannot afford to provide coverage."
Small business owners are a pivotal constituency in the fall congressional elections, and Democrats are battling to win them over. Major benefits of the health care law — competitive insurance markets, more stable premiums and a ban on denying coverage to those in poor health — don't take effect until 2014. But the health care credit is available this year.
It can be a boon for smaller companies paying lower wages. Betsy Burton, owner of The King's English Bookshop in Salt Lake City, estimates that she will get a credit of roughly $21,000 against premiums of about $67,800. She has 11 full-time equivalent employees averaging $26,100.
"What it means is that I can afford to carry this insurance and insure people's families," said Burton. "I was afraid that we were fast approaching a time when I would have to choose between insuring my employees and closing my doors."
Burton believes offering health insurance is the right thing for an employer to do — and makes good business sense because it helps her retain valued employees. Except at the beginning, she has provided coverage for most of the 33 years the bookstore has been in business.
Hoffman, the furniture store owner whose business missed out, says he understands that lawmakers had a limited amount of money for the health care legislation. But his company's premiums rose 15 percent this year, and it's a struggle to keep paying.
To get the most out of the new federal credit, Hoffman said he'd have to cut his work force to 10 employees and slash their wages.
"That seems like a strange outcome, given we've got 10 percent unemployment," he said
I may rename this blog- "The Devil is in the details"
For months administration officials have said most small businesses will receive the tax credit and most will be helped in providing their employees health care.
Ok, let's take a closer look as the article below does.
The tax credit applies to businesses with 50 or less employees whose wages are less than $50,000 on average.
BUT, that credit drops off sharply once a company gets above 10 workers and $25,000 average annual wages. Hmmm.
Let's take a small financial services company I know of that's located near Milwaukee as an example. XYZ Financial Services (name has been changed) has 27 employees who havge average earnings of $46,000. Based on the article below XYZ gets virtually no help.
Currently the employees contribute $400 a month for family coverage and have a $5000 family annual deductible with coverage thereafter of 100%. Obviously, the PPO health plan they already have is fraught with poor benefits and incentives to quality, cost effective health care. Basically, if a family reaches their deductible they can run wild for the remainder of the year with 100% coverage, but before meeting their deductible they probably avoid seeing a dr as much as possible.
***(That "running wild" scenario also likely causes increased premiums when they renew their coverage the following year.) That in turn may cause the employer to increase the employee's premium contribution and/or annual deductible. Vicious, meet cycle. ***
So, basically there are no tax credits to aid XYZ in making better health insurance purchasing decisions and the owner may decide to pay the fine for not offering any health insurance and let his employees get it through the state's health insurance exchange.
----------------------
FACT CHECK: Health care small biz tax cut elusive
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/05/20/national/w000842D50.DTL&feed=rss.news_nation#ixzz0p3Fvvp2r
By RICARDO ALONSO-ZALDIVAR, Associated Press Writer
Thursday, May 20, 2010
Zach Hoffman was confident his small business would qualify for a new tax cut in President Barack Obama's health care overhaul law.
But when he ran the numbers, Hoffman discovered that his office furniture company wouldn't get any assistance with the $79,200 it pays annually in premiums for its 24 employees. "It leaves you with this feeling of a bait-and-switch," he said.
When the administration unveiled the small business tax credit earlier this week, officials touted its "broad eligibility" for companies with fewer than 25 workers and average annual wages under $50,000 that provide health coverage. Hoffman's workers earn an average of $35,000 a year, which makes it all the more difficult to understand why his company didn't qualify.
Lost in the fine print: The credit drops off sharply once a company gets above 10 workers and $25,000 average annual wages.
It's an example of how the early provisions of the health care law can create winners and losers among groups lawmakers intended to help — people with health problems, families with young adult children and small businesses. Because of the law's complexity, not everyone in a broadly similar situation will benefit.
Consider small businesses: "The idea here is to target the credits to a relatively low number of firms, those who are low-wage and really quite small," said economist Linda Blumberg of the Urban Institute public policy center. The smallest businesses are at greatest risk of losing coverage — assuming they can afford it in the first place, research shows.
On paper, the credit seems to be available to companies with fewer than 25 workers and average wages of $50,000. But in practice, a complicated formula that combines the two numbers works against companies that have more than 10 workers and $25,000 in average wages.
"You can get zero even if you are not hitting the max on both pieces," said Blumberg. Being close to the upper limit on either of the two measures significantly reduces the credit, she explained.
Hoffman used an online calculator to figure his company's eligibility. At least four are available, including one from the House Energy and Commerce Committee, which helped write the legislation. All produced the same result.
"I think (the administration's) intentions are good, but the numbers and applications don't come out to what they intend," said Hoffman, part owner of Wiley Office Furniture, a third-generation family business in Springfield, Ill.
The Treasury Department, which administers the new credit, did not dispute the calculations.
"The small-business tax credit was designed to provide the greatest benefit to employers that currently have the hardest time providing health insurance for their workers — small, low-wage firms," said Michael Mundaca, assistant secretary for tax policy. "Small employers face higher premiums and higher administrative costs than large firms and in many cases cannot afford to provide coverage."
Small business owners are a pivotal constituency in the fall congressional elections, and Democrats are battling to win them over. Major benefits of the health care law — competitive insurance markets, more stable premiums and a ban on denying coverage to those in poor health — don't take effect until 2014. But the health care credit is available this year.
It can be a boon for smaller companies paying lower wages. Betsy Burton, owner of The King's English Bookshop in Salt Lake City, estimates that she will get a credit of roughly $21,000 against premiums of about $67,800. She has 11 full-time equivalent employees averaging $26,100.
"What it means is that I can afford to carry this insurance and insure people's families," said Burton. "I was afraid that we were fast approaching a time when I would have to choose between insuring my employees and closing my doors."
Burton believes offering health insurance is the right thing for an employer to do — and makes good business sense because it helps her retain valued employees. Except at the beginning, she has provided coverage for most of the 33 years the bookstore has been in business.
Hoffman, the furniture store owner whose business missed out, says he understands that lawmakers had a limited amount of money for the health care legislation. But his company's premiums rose 15 percent this year, and it's a struggle to keep paying.
To get the most out of the new federal credit, Hoffman said he'd have to cut his work force to 10 employees and slash their wages.
"That seems like a strange outcome, given we've got 10 percent unemployment," he said
Monday, May 24, 2010
Pricing Transparency Gaining Interest
Insuring Resources Commentary:
With some bipartisan support on these pending bills it'd be great to see something happen on transparency. See the article below.
Also, Rep. Steve Kagen (Appleton) is the author of one of the bills. Appleton happens to be the home of ThedaCare - a leader in lean strategies and health care transparency. (www.createhealthcarevalue.org)
As Rep. Barton states below, the PPACA does fall short of the implementing the transparency we need going forward. This is a great companion bill in that regard to get the amount of transparency America needs to truly provide physicians and hospitals the cost incentives we need.
------- ------- -------
Pricing transparency gaining renewed interest
By Matthew DoBias of Modern Physician Magazine
Posted: May 24, 2010
Led by a physician lawmaker, members of Congress on both sides of the aisle have shown renewed interest in mandating a boost in healthcare pricing transparency, including charges for physician services.
But one key player, the chairman of the Energy and Commerce Committee's Health Subcommittee, Rep. Frank Pallone (D-N.J.), is skeptical that three bills that came before that committee this month will make it into law this year given Congress' calendar is backlogged as a result of the lengthy healthcare reform fight.
One bill, introduced by physician Rep. Steve Kagen, M.D., (D-Wis.), would require doctors, hospitals, nurses, pharmacies and a number of manufacturers and vendors to openly disclose prices. Failure to do so would result in a financial penalty. Kagen says the current system is “upside down,” adding that it allows for those with no insurance to be charged the full amount while it gives the insured steep discounts.
“Some will argue that showing everyone all of the prices is too complex, for there are tens of thousands of prices at any given hospitals,” Kagen says. “But today's technology allows all of us to go online on the Internet and search for items to purchase and find exactly what we want to buy within milliseconds.”
Another bill, sponsored by Rep. Joe Barton (R-Texas) but backed by several Democrats, requires public and private health plans to make known what services they cover, any restrictions in that coverage and the cost-sharing requirements that are also involved. Two years out, it would require hospitals and ambulatory surgical centers to publicly disclose the charges for services they typically perform. A third bill requires a higher level of Medicaid transparency.
Taken together, the bills attempt to give individuals the important information they need to choose where to go for care and how much they can expect to pay once they get there.
Barton acknowledges that the new reform law contains provisions that would inch toward a more transparent system, but he says they fall short.
Under the law, hospitals during the next six months are required to disclose annually a list of their standard charges for items and services, including Medicare DRGs.
Critics contend, however, that “standard” charges are too vague. Steven Summer, president and CEO of the Colorado Hospital Association, says the healthcare system in its current form makes it difficult to post accurate and meaningful pricing information.
“We firmly believe that everyone needs to have access to consumer-friendly pricing language,” Summer told the congressional subcommittee.
Colorado hospitals annually publish some financial data, which compares charges vs. the average length of stay for common medical treatments and surgical procedures.
While many lawmakers agree that price transparency is needed, political realities could squelch any momentum the bills may have. Democratic leaders in the House have deliberately planned a lighter workload heading into the November elections.
“Members have been asking to have hearings and move on legislation for a long time, so I'm more concerned at this point about having hearings and moving legislation that has been held up,” Pallone says. “And that's what I'm getting from members.”
With some bipartisan support on these pending bills it'd be great to see something happen on transparency. See the article below.
Also, Rep. Steve Kagen (Appleton) is the author of one of the bills. Appleton happens to be the home of ThedaCare - a leader in lean strategies and health care transparency. (www.createhealthcarevalue.org)
As Rep. Barton states below, the PPACA does fall short of the implementing the transparency we need going forward. This is a great companion bill in that regard to get the amount of transparency America needs to truly provide physicians and hospitals the cost incentives we need.
------- ------- -------
Pricing transparency gaining renewed interest
By Matthew DoBias of Modern Physician Magazine
Posted: May 24, 2010
Led by a physician lawmaker, members of Congress on both sides of the aisle have shown renewed interest in mandating a boost in healthcare pricing transparency, including charges for physician services.
But one key player, the chairman of the Energy and Commerce Committee's Health Subcommittee, Rep. Frank Pallone (D-N.J.), is skeptical that three bills that came before that committee this month will make it into law this year given Congress' calendar is backlogged as a result of the lengthy healthcare reform fight.
One bill, introduced by physician Rep. Steve Kagen, M.D., (D-Wis.), would require doctors, hospitals, nurses, pharmacies and a number of manufacturers and vendors to openly disclose prices. Failure to do so would result in a financial penalty. Kagen says the current system is “upside down,” adding that it allows for those with no insurance to be charged the full amount while it gives the insured steep discounts.
“Some will argue that showing everyone all of the prices is too complex, for there are tens of thousands of prices at any given hospitals,” Kagen says. “But today's technology allows all of us to go online on the Internet and search for items to purchase and find exactly what we want to buy within milliseconds.”
Another bill, sponsored by Rep. Joe Barton (R-Texas) but backed by several Democrats, requires public and private health plans to make known what services they cover, any restrictions in that coverage and the cost-sharing requirements that are also involved. Two years out, it would require hospitals and ambulatory surgical centers to publicly disclose the charges for services they typically perform. A third bill requires a higher level of Medicaid transparency.
Taken together, the bills attempt to give individuals the important information they need to choose where to go for care and how much they can expect to pay once they get there.
Barton acknowledges that the new reform law contains provisions that would inch toward a more transparent system, but he says they fall short.
Under the law, hospitals during the next six months are required to disclose annually a list of their standard charges for items and services, including Medicare DRGs.
Critics contend, however, that “standard” charges are too vague. Steven Summer, president and CEO of the Colorado Hospital Association, says the healthcare system in its current form makes it difficult to post accurate and meaningful pricing information.
“We firmly believe that everyone needs to have access to consumer-friendly pricing language,” Summer told the congressional subcommittee.
Colorado hospitals annually publish some financial data, which compares charges vs. the average length of stay for common medical treatments and surgical procedures.
While many lawmakers agree that price transparency is needed, political realities could squelch any momentum the bills may have. Democratic leaders in the House have deliberately planned a lighter workload heading into the November elections.
“Members have been asking to have hearings and move on legislation for a long time, so I'm more concerned at this point about having hearings and moving legislation that has been held up,” Pallone says. “And that's what I'm getting from members.”
Sunday, May 23, 2010
5 Points for Families to Consider Before Taking Advantage of New Age Extension
Insuring Resources Commentary:
I've highlighted a few key portions below as this provision does NOT apply toi evry young adult- only those who are unmarried and do not currently have access to employer provided health insurance.
Also, Wisconsin passed a law allowing dependent adult coverage up to age 27, one year longer than under the PPACA. However, the Wisconsin law only applies to about 27% of the Wisconsin health insurance market, according to Wisconsin's OCI. It does not apply to self-funded employer plans or individual plans.
------------ -------------- --------------
Health Care Reform and Young Adults: 5 Points for Families to Consider Before Taking Advantage of New Age Extension
SAN JOSE, CA; May 18, 2010
It would seem that the enactment of the Patient Protection and Affordable Care Act, which extends the time young adults can stay on their parents' health insurance to age 26, would cause many young adults to automatically jump on to their parents' plans. The Foundation for Health Coverage Education (FHCE) www.CoverageForAll.org, a non-profit that specializes in national health coverage information for the uninsured, urges caution.
"All participants should first review the qualifications and overall impact on their insurance policy before they make the move," advises Ankeny Minoux, FHCE president.
Beginning September 23, 2010, the new law will assist a large number of young adults who are currently uninsured. However, the new regulations are unclear about eligibility requirements and the extension's impact on the potential participant and his/her family's policy. "If you or your young adult children are currently uninsured, the place to start is by educating yourself about your potential options, based on your personal circumstances," said Minoux. To this end, the FHCE has put together the following five points to consider:
1. Not all states are alike. The first step is to learn about the rules that apply to your state. The new federal law establishes a minimum level of dependent coverage up to a young adult's 26th birthday. If your state law requires more coverage than the federal law, it's likely that the state law will still apply. Alabama, Alaska, Arizona, Arkansas, California, Washington D.C., Hawaii, Michigan, Mississippi, North Carolina, and Vermont currently have no state laws that require insurance companies to extend dependent coverage to young adults. As a result, most insurance for dependents ends at age 19 or upon graduation from college. Residents in these states will likely see the most direct gain from this dependent coverage expansion. The other 39 states have some form of dependent coverage expansion, but many are restricted to specific populations, such as disabled young adults or full-time students. Among states that already have coverage expansions, only 7 states (Connecticut, Florida, Illinois, New Hampshire, New Jersey, New York, and Utah) already extend dependent coverage to non-students up to age 26 or older in both individual and group market plans.
2. Working young adults may not be able to participate. Tapping into the family's insurance policy could save everyone money, but the House's Reconciliation Bill states that until 2014, for already existing health plans, insurance companies are only required to provide insurance to dependents if the dependents do not have access to insurance on their own employer-sponsored plans. Insurance companies are thus not required to allow participants to make that switch, although some may choose to allow it. The first step should be consulting all involved insurance parties to learn about their specific regulations.
3. Consider the impact on your family's tax return. For young adults who are not listed as dependents on their parents' tax return, the law raises additional questions regarding eligibility of uninsured independent young adults. This question has not yet been answered by the law, and it will likely be determined by how the regulations define the term "dependent."
4. Out-of-state coverage may mean out-of-state care. While the conditions of enrolling a young adult on the family policy may result in a cost savings for everyone, it might not be practical if the young adult is an extensive distance from the family and does not have access to providers that accept the insurance in his/her state of residence. For example, a local HMO may have a closed network of providers within a limited geographic area. This review of local providers should be an important step in making the decision.
5. Consider enrollment periods. While the new provision goes into effect September 23, 2010, the law doesn't state that insurers must change their enrollment periods in order to accommodate these adult children who have previously aged out of their parents' plan. The good news is that a number of insurers, including WellPoint, Cigna, Aetna, United HealthCare, Humana, Kaiser Permanente, and BlueCross and BlueShield plans, have announced they will allow young adults up to age 26 to join their parents' plan now, well ahead of government fall deadline.
I've highlighted a few key portions below as this provision does NOT apply toi evry young adult- only those who are unmarried and do not currently have access to employer provided health insurance.
Also, Wisconsin passed a law allowing dependent adult coverage up to age 27, one year longer than under the PPACA. However, the Wisconsin law only applies to about 27% of the Wisconsin health insurance market, according to Wisconsin's OCI. It does not apply to self-funded employer plans or individual plans.
------------ -------------- --------------
Health Care Reform and Young Adults: 5 Points for Families to Consider Before Taking Advantage of New Age Extension
SAN JOSE, CA; May 18, 2010
It would seem that the enactment of the Patient Protection and Affordable Care Act, which extends the time young adults can stay on their parents' health insurance to age 26, would cause many young adults to automatically jump on to their parents' plans. The Foundation for Health Coverage Education (FHCE) www.CoverageForAll.org, a non-profit that specializes in national health coverage information for the uninsured, urges caution.
"All participants should first review the qualifications and overall impact on their insurance policy before they make the move," advises Ankeny Minoux, FHCE president.
Beginning September 23, 2010, the new law will assist a large number of young adults who are currently uninsured. However, the new regulations are unclear about eligibility requirements and the extension's impact on the potential participant and his/her family's policy. "If you or your young adult children are currently uninsured, the place to start is by educating yourself about your potential options, based on your personal circumstances," said Minoux. To this end, the FHCE has put together the following five points to consider:
1. Not all states are alike. The first step is to learn about the rules that apply to your state. The new federal law establishes a minimum level of dependent coverage up to a young adult's 26th birthday. If your state law requires more coverage than the federal law, it's likely that the state law will still apply. Alabama, Alaska, Arizona, Arkansas, California, Washington D.C., Hawaii, Michigan, Mississippi, North Carolina, and Vermont currently have no state laws that require insurance companies to extend dependent coverage to young adults. As a result, most insurance for dependents ends at age 19 or upon graduation from college. Residents in these states will likely see the most direct gain from this dependent coverage expansion. The other 39 states have some form of dependent coverage expansion, but many are restricted to specific populations, such as disabled young adults or full-time students. Among states that already have coverage expansions, only 7 states (Connecticut, Florida, Illinois, New Hampshire, New Jersey, New York, and Utah) already extend dependent coverage to non-students up to age 26 or older in both individual and group market plans.
2. Working young adults may not be able to participate. Tapping into the family's insurance policy could save everyone money, but the House's Reconciliation Bill states that until 2014, for already existing health plans, insurance companies are only required to provide insurance to dependents if the dependents do not have access to insurance on their own employer-sponsored plans. Insurance companies are thus not required to allow participants to make that switch, although some may choose to allow it. The first step should be consulting all involved insurance parties to learn about their specific regulations.
3. Consider the impact on your family's tax return. For young adults who are not listed as dependents on their parents' tax return, the law raises additional questions regarding eligibility of uninsured independent young adults. This question has not yet been answered by the law, and it will likely be determined by how the regulations define the term "dependent."
4. Out-of-state coverage may mean out-of-state care. While the conditions of enrolling a young adult on the family policy may result in a cost savings for everyone, it might not be practical if the young adult is an extensive distance from the family and does not have access to providers that accept the insurance in his/her state of residence. For example, a local HMO may have a closed network of providers within a limited geographic area. This review of local providers should be an important step in making the decision.
5. Consider enrollment periods. While the new provision goes into effect September 23, 2010, the law doesn't state that insurers must change their enrollment periods in order to accommodate these adult children who have previously aged out of their parents' plan. The good news is that a number of insurers, including WellPoint, Cigna, Aetna, United HealthCare, Humana, Kaiser Permanente, and BlueCross and BlueShield plans, have announced they will allow young adults up to age 26 to join their parents' plan now, well ahead of government fall deadline.
Saturday, May 22, 2010
Mercer Survey: Employers See Small Premium Hikes in 2011
Insuring Resources Comnmentary:
Premium increases over the last decade or so have averaged 8% so this appears to be very good news for many employers. We'll see what the projections look like later this year.
------------------------
Survey: Employers see small health care hikes in 2011
(AP) – May 20, 2010
NEW YORK — More than 40 percent of employers surveyed by the consulting firm Mercer expect health care reform to raise health care costs by a modest 2 percent or less next year.
A quarter of those surveyed believe reform will add at least 3 percent to their projected costs for 2011, while 3 percent of the employers expect no increase.
Benefit plans may see additional costs next year due to provisions in the reform law that ban lifetime maximums for benefits and extend coverage of young adult dependents on parental plans to age 26.
Mercer said Thursday the actual impact will vary widely by company, depending in part on the employees it covers. For instance, it may be fairly small for a company with a young employee population that has few dependents who would qualify for that coverage extension.
About 71 percent of large employers have a lifetime maximum for benefits while 29 percent don't, said Beth Umland, Mercer's research director for health and benefits. Those that don't won't need to make an adjustment for next year.
Average health benefit costs per employee have risen about 6 percent each year for the past five years, Mercer said. Any increases from reform will be in addition to that.
"They have to work hard to keep it at 6 but throw on another two points, it will be interesting to see how they chip away at that," Umland said.
Companies often raise co-insurance, deductibles or other employee contributions to tame their cost increases.
A total of 791 employers responded to Mercer's online survey. They represented several industries including retail, manufacturing, health care and financial services.
Premium increases over the last decade or so have averaged 8% so this appears to be very good news for many employers. We'll see what the projections look like later this year.
------------------------
Survey: Employers see small health care hikes in 2011
(AP) – May 20, 2010
NEW YORK — More than 40 percent of employers surveyed by the consulting firm Mercer expect health care reform to raise health care costs by a modest 2 percent or less next year.
A quarter of those surveyed believe reform will add at least 3 percent to their projected costs for 2011, while 3 percent of the employers expect no increase.
Benefit plans may see additional costs next year due to provisions in the reform law that ban lifetime maximums for benefits and extend coverage of young adult dependents on parental plans to age 26.
Mercer said Thursday the actual impact will vary widely by company, depending in part on the employees it covers. For instance, it may be fairly small for a company with a young employee population that has few dependents who would qualify for that coverage extension.
About 71 percent of large employers have a lifetime maximum for benefits while 29 percent don't, said Beth Umland, Mercer's research director for health and benefits. Those that don't won't need to make an adjustment for next year.
Average health benefit costs per employee have risen about 6 percent each year for the past five years, Mercer said. Any increases from reform will be in addition to that.
"They have to work hard to keep it at 6 but throw on another two points, it will be interesting to see how they chip away at that," Umland said.
Companies often raise co-insurance, deductibles or other employee contributions to tame their cost increases.
A total of 791 employers responded to Mercer's online survey. They represented several industries including retail, manufacturing, health care and financial services.
Wednesday, May 19, 2010
More on Small Business Health Care Issues
Insuring Resources Commentary:
As I stated in yesterday's blog entry small businesses with higher salary's appear to be on the outside looking in. This is all a work in progress so everything is up in the air on this proposal. I'll highlight the high points below.
------- --------- ---------
New tax break for health care gets mixed review
By RICARDO ALONSO-ZALDIVAR (AP) – 1 day ago
WASHINGTON — The Obama administration Monday unveiled a tax cut for small companies that provide health insurance, but business groups gave it a mixed review.
Even if it amounts to free money, many small businesses won't qualify for the tax credit.
The full benefit goes to companies that have 10 or fewer workers with average salaries of $25,000 or less. They can get Uncle Sam to pick up 35 percent of their premiums. But sole proprietors aren't eligible. And neither are firms with 25 or more employees, or average wages of $50,000 and above.
"We're thinking mom-and-pop shops with one or two employees," said James Gelfand, the U.S. Chamber of Commerce's health policy director. "For some businesses this will be helpful, but for many it will not be helpful. You have to be so small that it will be difficult."
Administration officials said they're trying to target assistance to those who need it most. "The Number 1 concern of small businesses is access to affordable health care," said Small Business Administration head Karen Mills, noting that only about half of businesses with three to ten employees offer coverage.
"People know this means money in their pockets," Mills added.
The major expansion of coverage under President Barack Obama's health care overhaul law isn't slated to happen until 2014. Congress included the small business tax credit as an immediate benefit partly in recognition of the political clout of small business.
Nonetheless, small business owners remain skeptical of the law. Last week the National Federation of Independent Business joined a court challenge seeking to overturn its requirement that most Americans obtain health insurance coverage.
IRS rules issued Monday resolved a range of questions about the tax credit that Congress didn't address. The agency generally worked to expand the number of companies that can qualify for the benefit.
For example, dental and vision benefits will be eligible, not just medical coverage. And companies that get state tax breaks to help pay premiums can also claim the federal assistance. Moreover, business owners' salaries won't be counted in figuring out the company's average wages — allowing more firms to stay under the cutoff for the federal credit.
Nonprofits — including churches and other religious congregations — will also be allowed to claim a partial credit.
The administration estimates that 4 million businesses are potentially eligible for the credit, but the NFIB says its own experts calculate the number is less than half that, about 1.8 million.
"It's difficult to know how many business owners will take this up, at this point," acknowledged Michael Mundaca, head of Treasury's tax policy office. "It can provide a good deal of incentive for those businesses not yet providing health care to take steps to do so."
Others expect the credit will mainly benefit companies that already provide coverage. Part of the reason is that it's temporary, expiring after six years.
"It's hard to imagine businesses creating health care benefits in response to this credit," said Gelfand, the Chamber of Commerce expert. "It's much more likely that this credit will offset the cost to businesses already providing coverage."
John Arensmeyer, head of the advocacy group Small Business Majority, said business owners have expressed strong interest in learning more about the credit. The IRS sent out 4 million postcards to companies that might be eligible.
"Would we have preferred a tax cut that was a lot bigger? Off course," said Arensmeyer, whose group supported the health care overhaul. "But we think it's a lot better than nothing — and a big piece of an overall solution. I never met a small business owner who turned their nose up at a tax credit."
As I stated in yesterday's blog entry small businesses with higher salary's appear to be on the outside looking in. This is all a work in progress so everything is up in the air on this proposal. I'll highlight the high points below.
------- --------- ---------
New tax break for health care gets mixed review
By RICARDO ALONSO-ZALDIVAR (AP) – 1 day ago
WASHINGTON — The Obama administration Monday unveiled a tax cut for small companies that provide health insurance, but business groups gave it a mixed review.
Even if it amounts to free money, many small businesses won't qualify for the tax credit.
The full benefit goes to companies that have 10 or fewer workers with average salaries of $25,000 or less. They can get Uncle Sam to pick up 35 percent of their premiums. But sole proprietors aren't eligible. And neither are firms with 25 or more employees, or average wages of $50,000 and above.
"We're thinking mom-and-pop shops with one or two employees," said James Gelfand, the U.S. Chamber of Commerce's health policy director. "For some businesses this will be helpful, but for many it will not be helpful. You have to be so small that it will be difficult."
Administration officials said they're trying to target assistance to those who need it most. "The Number 1 concern of small businesses is access to affordable health care," said Small Business Administration head Karen Mills, noting that only about half of businesses with three to ten employees offer coverage.
"People know this means money in their pockets," Mills added.
The major expansion of coverage under President Barack Obama's health care overhaul law isn't slated to happen until 2014. Congress included the small business tax credit as an immediate benefit partly in recognition of the political clout of small business.
Nonetheless, small business owners remain skeptical of the law. Last week the National Federation of Independent Business joined a court challenge seeking to overturn its requirement that most Americans obtain health insurance coverage.
IRS rules issued Monday resolved a range of questions about the tax credit that Congress didn't address. The agency generally worked to expand the number of companies that can qualify for the benefit.
For example, dental and vision benefits will be eligible, not just medical coverage. And companies that get state tax breaks to help pay premiums can also claim the federal assistance. Moreover, business owners' salaries won't be counted in figuring out the company's average wages — allowing more firms to stay under the cutoff for the federal credit.
Nonprofits — including churches and other religious congregations — will also be allowed to claim a partial credit.
The administration estimates that 4 million businesses are potentially eligible for the credit, but the NFIB says its own experts calculate the number is less than half that, about 1.8 million.
"It's difficult to know how many business owners will take this up, at this point," acknowledged Michael Mundaca, head of Treasury's tax policy office. "It can provide a good deal of incentive for those businesses not yet providing health care to take steps to do so."
Others expect the credit will mainly benefit companies that already provide coverage. Part of the reason is that it's temporary, expiring after six years.
"It's hard to imagine businesses creating health care benefits in response to this credit," said Gelfand, the Chamber of Commerce expert. "It's much more likely that this credit will offset the cost to businesses already providing coverage."
John Arensmeyer, head of the advocacy group Small Business Majority, said business owners have expressed strong interest in learning more about the credit. The IRS sent out 4 million postcards to companies that might be eligible.
"Would we have preferred a tax cut that was a lot bigger? Off course," said Arensmeyer, whose group supported the health care overhaul. "But we think it's a lot better than nothing — and a big piece of an overall solution. I never met a small business owner who turned their nose up at a tax credit."
Tuesday, May 18, 2010
Fascinating Proposal: Creation of a new field- Health Care Delivery Science
Insuring Resources Commentary:
For long-term readers of this blog you'll recognize this article as hitting on my number one issue, health care quality and cost incentives to reduce waste in our fractured health care delivery system.
It is my firm belief that insurance reform cannot succeed without quality and cost reduction health care provider incentives to eliminate waste and focus on improved, quality health outcomes for all Americans.
This proposal, I believe, holds tremendous promise in reshaping the delivery and financing of American health care to finally focus on quality, rather than quantity.
I'll keep you updated as the Center for Health Care Delivery Science is launched.
- -- --- ---- ----- ------
By Jim Yong Kim and James N. Weinstein
Guest Editorial in the Washington Post
Monday, May 17, 2010
Health insurance reform is now law, giving millions of Americans access to the full resources of our health-care system for the first time. The question becomes: How can we ensure that they -- and all of us -- receive value-based and high-quality care?
It is well known that U.S. health-care costs, as a share of our economy, are the highest in the world but that compared to other industrialized countries, our results are the worst. The Dartmouth Atlas has documented the enormous waste in our system and shown that spending more money and performing more medical procedures do not equal better outcomes for patients.
Americans deserve health care that is coordinated across physicians and health systems, and that is effective, appropriate and safe. As a nation, we have a moral and a fiscal responsibility to ensure that all patients receive value for health services. While the achievement of health insurance reform was historic, it is time to focus on the next step: improving quality while bending the unsustainable cost curve significantly.
We are physicians and researchers; one of us is now a college president, and the other head of a leading academic medical center. We share a history of work in medicine, science, policy reform and education. We also share the view that throughout history, our most difficult problems have found scientific solutions.
We propose the rapid expansion of a new field to tackle the twin problems of how to provide high-quality health care while lowering costs: health-care delivery science.
This new field will work with the recognition that truly reforming health care requires more than the efforts of one entity. We cannot blame government or insurers or physicians for the complex and multilayered problem. No single group or entity created the puzzle that is our health-care system; it is not reasonable to expect one group to solve it.
What will lead to improvements is a multidisciplinary approach that brings the best minds to focus on the problem. Experts in management, systems thinking and engineering, sociology, anthropology, environmental science, economics, medicine, health policy and other fields must join together to apply a laser focus to fixing the delivery system.
Why? Consider the moving pieces of a patient-health system encounter. A patient comes into the emergency room. Immediately, judgments are made about how sick she is and what treatments she needs. There is no universal medical record for that patient, so the provider has no idea about her medical history, medication use or preexisting conditions. Incomplete information is relayed through layers of nurses, physicians, specialists and the shifts of personnel who replace them. In the absence of real-time information, tests are ordered and treatment decisions made. Perhaps after an overnight stay, barring complications from drug interactions or perhaps an unrecognized underlying condition, she is discharged, with no further transfer of information to a provider and, more important, no follow-up to see whether the treatment was effective. The symptoms were treated; the patient was not.
The best insurance in the world will not fix this problem. We need a whole new cadre of people committed to applying their expertise to the challenge of health-care delivery.
We have begun building that cadre at Dartmouth with the establishment of a Center for Health Care Delivery Science. But it is our hope that many more institutions will work together to generate the needed evidence on health-care delivery solutions, to disseminate that knowledge and to train the current and future professionals who will put solutions into practice. We envision a network of centers across the country that will marry research and implementation from the start -- finding and testing delivery solutions with practitioners and patients on the front lines.
The recent health legislation establishes an implicit covenant with the American people. The spirit of this covenant goes far beyond insurance. In exchange for new public and private investment in the health system, Americans expect access to effective, high-quality care within a financially sustainable system. With a robust science of health-care delivery, this goal can be achieved.
Jim Yong Kim is president of Dartmouth College. James N. Weinstein is president of the Dartmouth-Hitchcock Clinic.
For long-term readers of this blog you'll recognize this article as hitting on my number one issue, health care quality and cost incentives to reduce waste in our fractured health care delivery system.
It is my firm belief that insurance reform cannot succeed without quality and cost reduction health care provider incentives to eliminate waste and focus on improved, quality health outcomes for all Americans.
This proposal, I believe, holds tremendous promise in reshaping the delivery and financing of American health care to finally focus on quality, rather than quantity.
I'll keep you updated as the Center for Health Care Delivery Science is launched.
- -- --- ---- ----- ------
By Jim Yong Kim and James N. Weinstein
Guest Editorial in the Washington Post
Monday, May 17, 2010
Health insurance reform is now law, giving millions of Americans access to the full resources of our health-care system for the first time. The question becomes: How can we ensure that they -- and all of us -- receive value-based and high-quality care?
It is well known that U.S. health-care costs, as a share of our economy, are the highest in the world but that compared to other industrialized countries, our results are the worst. The Dartmouth Atlas has documented the enormous waste in our system and shown that spending more money and performing more medical procedures do not equal better outcomes for patients.
Americans deserve health care that is coordinated across physicians and health systems, and that is effective, appropriate and safe. As a nation, we have a moral and a fiscal responsibility to ensure that all patients receive value for health services. While the achievement of health insurance reform was historic, it is time to focus on the next step: improving quality while bending the unsustainable cost curve significantly.
We are physicians and researchers; one of us is now a college president, and the other head of a leading academic medical center. We share a history of work in medicine, science, policy reform and education. We also share the view that throughout history, our most difficult problems have found scientific solutions.
We propose the rapid expansion of a new field to tackle the twin problems of how to provide high-quality health care while lowering costs: health-care delivery science.
This new field will work with the recognition that truly reforming health care requires more than the efforts of one entity. We cannot blame government or insurers or physicians for the complex and multilayered problem. No single group or entity created the puzzle that is our health-care system; it is not reasonable to expect one group to solve it.
What will lead to improvements is a multidisciplinary approach that brings the best minds to focus on the problem. Experts in management, systems thinking and engineering, sociology, anthropology, environmental science, economics, medicine, health policy and other fields must join together to apply a laser focus to fixing the delivery system.
Why? Consider the moving pieces of a patient-health system encounter. A patient comes into the emergency room. Immediately, judgments are made about how sick she is and what treatments she needs. There is no universal medical record for that patient, so the provider has no idea about her medical history, medication use or preexisting conditions. Incomplete information is relayed through layers of nurses, physicians, specialists and the shifts of personnel who replace them. In the absence of real-time information, tests are ordered and treatment decisions made. Perhaps after an overnight stay, barring complications from drug interactions or perhaps an unrecognized underlying condition, she is discharged, with no further transfer of information to a provider and, more important, no follow-up to see whether the treatment was effective. The symptoms were treated; the patient was not.
The best insurance in the world will not fix this problem. We need a whole new cadre of people committed to applying their expertise to the challenge of health-care delivery.
We have begun building that cadre at Dartmouth with the establishment of a Center for Health Care Delivery Science. But it is our hope that many more institutions will work together to generate the needed evidence on health-care delivery solutions, to disseminate that knowledge and to train the current and future professionals who will put solutions into practice. We envision a network of centers across the country that will marry research and implementation from the start -- finding and testing delivery solutions with practitioners and patients on the front lines.
The recent health legislation establishes an implicit covenant with the American people. The spirit of this covenant goes far beyond insurance. In exchange for new public and private investment in the health system, Americans expect access to effective, high-quality care within a financially sustainable system. With a robust science of health-care delivery, this goal can be achieved.
Jim Yong Kim is president of Dartmouth College. James N. Weinstein is president of the Dartmouth-Hitchcock Clinic.
Monday, May 17, 2010
IRS Lays Groundwork for Tax Credit For Health Insurance
Insuring Resources Commentary:
The rule development regarding the small business tax credit may ultimately be decided at the Supreme Court, rather than in a good dialogue between business interests and HHS, Labor, the IRS and others that implement and then ultimately enforce them. Check back often for more details on the impact of these rules as they are developed and implemented and their effect on small business interests and consumers. This is only the beginning and I will stay on top of this.....because,
the details are obviously lacking at this poin. Particularly, I wonder about small, professional oriented businesses who have less than 50 employees but have an average wage of more than $50,000. This appears to be a problem for small Arcitecture firms, law firms, dental and physician practices and fledgling health insurance consultants.
----------------------------------------
May 17, 2010 |
By ALLISON BELL - National Underwriter
The Internal Revenue Service has come out with guidelines for small commercial and nonprofit employers that want to take advantage of a new health insurance tax break.
The small employer health insurance tax credit guidelines, given in IRS Notice 2010-44, include examples that can help employers and their benefits advisors determine whether the employers are eligible for the tax break, and exactly how much of the new federal health insurance tax credit the employers can claim.
Calculating exactly how small an employer is for tax credit purposes will depend partly on the definition of “full-time equivalent” employee, officials write in the notice.
“In general, employees who perform services for the employer during the taxable year are taken into account in determining the employer’s FTEs, average wages, and premiums paid,” officials write.
But “partners in a business and certain owners are not taken into account as employees,” officials write. “Specifically, sole proprietors, partners in a partnership, shareholders owning more than 2% of an S corporation.
Owners and partners need not count family members or other dependents who are members of their households as employees when they are trying to qualify for the tax credit.
Season workers count toward the FTE total only if they work for an employer on more than 120 days during the taxable year.
IRS officials devote another section to computing workers’ hours.
The IRS issued the notice to implement a new tax law, Section 45R of the Internal Revenue Code, which was added by Section 1421 of the new Patient Protection and Affordable Care Act.
PPACA and a companion act, the Health Care and Education Reconciliation Act, are part of what federal agencies have dubbed the Affordable Care Act.
This year, the new ACA small business tax break will offer small employers a tax credit equal to at least half the cost of single coverage, if the employees earn average wages of less than $50,000 per year.
The tax credit is not available to ordinary government employers, but it is available to small businesses, small tax-exempt employers, and government-affiliated tax-exempt employers that can be described as section 501(c) organizations.
“For tax years 2010 to 2013, the maximum credit is 35% of premiums paid by eligible small business employers and 25% of premiums paid by eligible employers that are tax-exempt organizations,” officials write in a summary of the notice.
Employers with 10 or fewer FTE employees that pay annual average wages of $25,000 or less can qualify for the maximum credit.
Employers with 10 to 25 FTE employees that pay annual wages of $50,000 or less can qualify for a smaller tax credit.
WASHINGTON -- Pitching President Barack Obama's health care law to skeptical business owners, the IRS on Monday will announce ground rules for small firms wishing to claim a new federal tax credit for health insurance.
Created under the health overhaul law, the tax credit covers up to 35 percent of the premiums that certain small businesses pay on behalf of their workers. The IRS notice addresses unanswered questions about the benefit, which is available starting this year.
The agency's action comes days after the nation's largest small business lobbying group announced it was joining a lawsuit challenging the health care law. The National Federation of Independent Business argues that Congress overstepped its constitutional authority by imposing a requirement that most Americans obtain health insurance either through an employer, a government program or buying it directly.
The IRS notice clarifies that employers can apply the credit toward dental and vision benefits, not just medical coverage. A fact sheet released by the Treasury Department also says that employers can claim the federal benefit even if they receive state tax credits for their insurance premiums.
The White House estimates up to 4 million small businesses may qualify for the tax credit, but it's not clear how many will be eligible. To begin with, they have to provide health insurance _ and many small employers don't. To qualify, companies must pay at least 50 percent of their workers' premiums.
Eligibility is also limited by company size and wages. A firm has to have fewer than 25 full-time workers averaging less than $50,000 a year in pay.
The rule development regarding the small business tax credit may ultimately be decided at the Supreme Court, rather than in a good dialogue between business interests and HHS, Labor, the IRS and others that implement and then ultimately enforce them. Check back often for more details on the impact of these rules as they are developed and implemented and their effect on small business interests and consumers. This is only the beginning and I will stay on top of this.....because,
the details are obviously lacking at this poin. Particularly, I wonder about small, professional oriented businesses who have less than 50 employees but have an average wage of more than $50,000. This appears to be a problem for small Arcitecture firms, law firms, dental and physician practices and fledgling health insurance consultants.
----------------------------------------
May 17, 2010 |
By ALLISON BELL - National Underwriter
The Internal Revenue Service has come out with guidelines for small commercial and nonprofit employers that want to take advantage of a new health insurance tax break.
The small employer health insurance tax credit guidelines, given in IRS Notice 2010-44, include examples that can help employers and their benefits advisors determine whether the employers are eligible for the tax break, and exactly how much of the new federal health insurance tax credit the employers can claim.
Calculating exactly how small an employer is for tax credit purposes will depend partly on the definition of “full-time equivalent” employee, officials write in the notice.
“In general, employees who perform services for the employer during the taxable year are taken into account in determining the employer’s FTEs, average wages, and premiums paid,” officials write.
But “partners in a business and certain owners are not taken into account as employees,” officials write. “Specifically, sole proprietors, partners in a partnership, shareholders owning more than 2% of an S corporation.
Owners and partners need not count family members or other dependents who are members of their households as employees when they are trying to qualify for the tax credit.
Season workers count toward the FTE total only if they work for an employer on more than 120 days during the taxable year.
IRS officials devote another section to computing workers’ hours.
The IRS issued the notice to implement a new tax law, Section 45R of the Internal Revenue Code, which was added by Section 1421 of the new Patient Protection and Affordable Care Act.
PPACA and a companion act, the Health Care and Education Reconciliation Act, are part of what federal agencies have dubbed the Affordable Care Act.
This year, the new ACA small business tax break will offer small employers a tax credit equal to at least half the cost of single coverage, if the employees earn average wages of less than $50,000 per year.
The tax credit is not available to ordinary government employers, but it is available to small businesses, small tax-exempt employers, and government-affiliated tax-exempt employers that can be described as section 501(c) organizations.
“For tax years 2010 to 2013, the maximum credit is 35% of premiums paid by eligible small business employers and 25% of premiums paid by eligible employers that are tax-exempt organizations,” officials write in a summary of the notice.
Employers with 10 or fewer FTE employees that pay annual average wages of $25,000 or less can qualify for the maximum credit.
Employers with 10 to 25 FTE employees that pay annual wages of $50,000 or less can qualify for a smaller tax credit.
WASHINGTON -- Pitching President Barack Obama's health care law to skeptical business owners, the IRS on Monday will announce ground rules for small firms wishing to claim a new federal tax credit for health insurance.
Created under the health overhaul law, the tax credit covers up to 35 percent of the premiums that certain small businesses pay on behalf of their workers. The IRS notice addresses unanswered questions about the benefit, which is available starting this year.
The agency's action comes days after the nation's largest small business lobbying group announced it was joining a lawsuit challenging the health care law. The National Federation of Independent Business argues that Congress overstepped its constitutional authority by imposing a requirement that most Americans obtain health insurance either through an employer, a government program or buying it directly.
The IRS notice clarifies that employers can apply the credit toward dental and vision benefits, not just medical coverage. A fact sheet released by the Treasury Department also says that employers can claim the federal benefit even if they receive state tax credits for their insurance premiums.
The White House estimates up to 4 million small businesses may qualify for the tax credit, but it's not clear how many will be eligible. To begin with, they have to provide health insurance _ and many small employers don't. To qualify, companies must pay at least 50 percent of their workers' premiums.
Eligibility is also limited by company size and wages. A firm has to have fewer than 25 full-time workers averaging less than $50,000 a year in pay.
Dartmouth gets grant to demo increasing health quality, reduce costs
Insuring Resources Commentary:
Dartmouth will demonstrate to others how its done. The only problem is Dartmouth already has the track record and the evidence to begin wider implementation. Now they have to essentially do what they've already been doing for years instead of just simply mentoring others how to do it. Here's the evidence:
http://www.rwjf.org/qualityequality/challenge.jsp
------------ -------------- -----------
$35M For Dartmouth Health Care Delivery Center AP by HOLLY RAMER
Dartmouth College is getting $35 million to open a center it hopes will help the nation take the next big steps in health care reform: improving quality while lowering costs. The historic health care overhaul legislation President Barack Obama signed in March will give millions of Americans access to health care, but "the real rocket science in health care right now is in the delivery," said Dartmouth President Jim Yong Kim, who has been promoting the idea of a national institute on health care delivery since arriving at Dartmouth last July. Now, he has a $35 million commitment from an anonymous donor to establish the Dartmouth Center for Health Care Delivery Science, which will bring together experts in everything from medicine and management to sociology and systems engineering to figure out what is working in successful health care systems such as Minnesota's Mayo Clinic. They'll then teach practitioners, who can return home and make changes immediately, Kim said.
Dartmouth will demonstrate to others how its done. The only problem is Dartmouth already has the track record and the evidence to begin wider implementation. Now they have to essentially do what they've already been doing for years instead of just simply mentoring others how to do it. Here's the evidence:
http://www.rwjf.org/qualityequality/challenge.jsp
------------ -------------- -----------
$35M For Dartmouth Health Care Delivery Center
Dartmouth College is getting $35 million to open a center it hopes will help the nation take the next big steps in health care reform: improving quality while lowering costs. The historic health care overhaul legislation President Barack Obama signed in March will give millions of Americans access to health care, but "the real rocket science in health care right now is in the delivery," said Dartmouth President Jim Yong Kim, who has been promoting the idea of a national institute on health care delivery since arriving at Dartmouth last July. Now, he has a $35 million commitment from an anonymous donor to establish the Dartmouth Center for Health Care Delivery Science, which will bring together experts in everything from medicine and management to sociology and systems engineering to figure out what is working in successful health care systems such as Minnesota's Mayo Clinic. They'll then teach practitioners, who can return home and make changes immediately, Kim said.
Tuesday, May 11, 2010
Health Care Reform Implementation Timeline
Insuring Resources Link:
The link below is a very useful one-page resource showing how health care reform (PPACA legislation) will roll-out and what will happen, when, and how.
http://www.insurance-mail.net/i/pdfs/HealthCareReformTimeline.pdf
The source is the National Association of Health Underwriters.
The link below is a very useful one-page resource showing how health care reform (PPACA legislation) will roll-out and what will happen, when, and how.
http://www.insurance-mail.net/i/pdfs/HealthCareReformTimeline.pdf
The source is the National Association of Health Underwriters.
Monday, May 10, 2010
Mental Health Parity Rules Fight Underway
Insuring Resources Commentary:
I'm posting this article because it illustrates how difficult the rules implementation will be in regard to the much broader and much more controversial PPACA.
It does appear that the rules the Obama administration is attempting to implement might be overreaching the boundaries set by the legislation. I'll quote a specific passage from the article below:
The purpose of the law was to ensure parity in benefits for patients, not “parity in provider reimbursement,” said Justine Handelman, executive director of the Blue Cross and Blue Shield Association.
I've put other key passages in italics below including the opinion of House Democrats who support the Obama admin.'s administrative rules efforts.
What do you think? And what impact do you see this type of struggle having on the implementation of PPACA rules?
------------ ----------- ------------
Fight Erupts Over Rules Issued for ‘Mental Health Parity’ Insurance Law
by Robert Pear- NY Times 5/9/10
A huge fight has erupted over rules issued by the Obama administration to enforce a 2008 law that requires equal insurance coverage for the treatment of mental and physical illnesses.
The fight offers a taste of the coming battle over rules to remake the health care system under legislation pushed through Congress by President Obama.
Insurance companies and employer groups are lobbying the White House to delay and rework the rules on “mental health parity.” Insurers and many employers supported the 2008 law, but they say the rules go far beyond the intent of Congress and would cripple their cost-control techniques while raising out-of-pocket costs for some patients.
Advocates for patients generally support the rules, saying they will eliminate many forms of insurance discrimination against people with mental illness. The rules are also supported by the American Medical Association, the American Psychiatric Association and House Democrats, most notably Representative Patrick J. Kennedy of Rhode Island.
The goal of the law is to abolish discriminatory insurance practices frequently applied to coverage for the treatment of mental health disorders and substance abuse. Under the law, insurers cannot set higher co-payments and deductibles or stricter limits on mental health benefits than they set for the treatment of physical illnesses like cancer and diabetes. For decades, such disparities have been common.
Insurers and employers agree that the law prohibits them from setting numerical limits on hospital inpatient days and outpatient visits for mental health services if they do not impose such limits on other types of medical care.
But insurers say the Obama administration went overboard when it tried to regulate “nonquantitative treatment limits.” These include the techniques used by insurers to manage care, the criteria for selection of health care providers and the rates at which they are paid.
The Blue Cross and Blue Shield Association, Aetna and other insurers have urged the federal government to drop this aspect of the rules. The purpose of the law was to ensure parity in benefits for patients, not “parity in provider reimbursement,” said Justine Handelman, executive director of the Blue Cross and Blue Shield Association.
But Carol A. McDaid, a lobbyist for a coalition of mental health advocates, said, “Patients are not getting access to mental health care because many insurers are not paying enough to cover the cost of services.”
This may have three consequences for patients and their families, advocates say. Patients may be unable to find mental health experts in their health plan’s network of providers. If they go outside the network, they typically pay more. And if they cannot afford it, they may not receive treatment at all.
The American Psychiatric Association said that nonquantitative treatment limits, though less visible than limits on the number of doctor visits or hospital days, could be more insidious.
Dr. James H. Scully Jr., chief executive of the association, said some insurers had tried to “circumvent the law” by “imposing new requirements for prior authorization and the submission of treatment plans for mental health services where there were no comparable requirements on the medical-surgical side.”
Insurers strenuously object to one provision of the rules that requires them to maintain a single deductible for all medical and mental health services combined. This is a significant departure from the industry’s current practice of separate deductibles.
As a result of the change, insurers say, many mental health patients will face higher out-of-pocket costs because the combined deductible will almost surely be higher than the current one for mental health services alone.
But in a letter to the administration last week, leading House Democrats said Mr. Obama was right to prohibit separate deductibles. The law, they said, was adopted to end such inappropriate distinctions between medical and mental health care services.
A number of companies like Aetna, Magellan Health Services and ValueOptions specialize in managing mental health benefits.
In issuing the new rules, the Obama administration praised the work of such companies, saying they increased the use of mental health care while holding down costs.
But Pamela B. Greenberg, president of the Association for Behavioral Health and Wellness, which represents these companies, said the new rules would “hamstring” their ability to use the tools that have proved effective in managing mental health benefits.
In a suit over the rules, Magellan and other companies said the concept of nonquantitative limits was “boundless and ill defined” and would reach virtually every policy and procedure used to manage mental health benefits.
One premise of the law is that mental illnesses often have a biological basis and can be treated as effectively as many physical ailments. But insurers say it is impossible to use the same techniques in managing the treatment of colon cancer and schizophrenia, or heart failure and major depression.
I'm posting this article because it illustrates how difficult the rules implementation will be in regard to the much broader and much more controversial PPACA.
It does appear that the rules the Obama administration is attempting to implement might be overreaching the boundaries set by the legislation. I'll quote a specific passage from the article below:
The purpose of the law was to ensure parity in benefits for patients, not “parity in provider reimbursement,” said Justine Handelman, executive director of the Blue Cross and Blue Shield Association.
I've put other key passages in italics below including the opinion of House Democrats who support the Obama admin.'s administrative rules efforts.
What do you think? And what impact do you see this type of struggle having on the implementation of PPACA rules?
------------ ----------- ------------
Fight Erupts Over Rules Issued for ‘Mental Health Parity’ Insurance Law
by Robert Pear- NY Times 5/9/10
A huge fight has erupted over rules issued by the Obama administration to enforce a 2008 law that requires equal insurance coverage for the treatment of mental and physical illnesses.
The fight offers a taste of the coming battle over rules to remake the health care system under legislation pushed through Congress by President Obama.
Insurance companies and employer groups are lobbying the White House to delay and rework the rules on “mental health parity.” Insurers and many employers supported the 2008 law, but they say the rules go far beyond the intent of Congress and would cripple their cost-control techniques while raising out-of-pocket costs for some patients.
Advocates for patients generally support the rules, saying they will eliminate many forms of insurance discrimination against people with mental illness. The rules are also supported by the American Medical Association, the American Psychiatric Association and House Democrats, most notably Representative Patrick J. Kennedy of Rhode Island.
The goal of the law is to abolish discriminatory insurance practices frequently applied to coverage for the treatment of mental health disorders and substance abuse. Under the law, insurers cannot set higher co-payments and deductibles or stricter limits on mental health benefits than they set for the treatment of physical illnesses like cancer and diabetes. For decades, such disparities have been common.
Insurers and employers agree that the law prohibits them from setting numerical limits on hospital inpatient days and outpatient visits for mental health services if they do not impose such limits on other types of medical care.
But insurers say the Obama administration went overboard when it tried to regulate “nonquantitative treatment limits.” These include the techniques used by insurers to manage care, the criteria for selection of health care providers and the rates at which they are paid.
The Blue Cross and Blue Shield Association, Aetna and other insurers have urged the federal government to drop this aspect of the rules. The purpose of the law was to ensure parity in benefits for patients, not “parity in provider reimbursement,” said Justine Handelman, executive director of the Blue Cross and Blue Shield Association.
But Carol A. McDaid, a lobbyist for a coalition of mental health advocates, said, “Patients are not getting access to mental health care because many insurers are not paying enough to cover the cost of services.”
This may have three consequences for patients and their families, advocates say. Patients may be unable to find mental health experts in their health plan’s network of providers. If they go outside the network, they typically pay more. And if they cannot afford it, they may not receive treatment at all.
The American Psychiatric Association said that nonquantitative treatment limits, though less visible than limits on the number of doctor visits or hospital days, could be more insidious.
Dr. James H. Scully Jr., chief executive of the association, said some insurers had tried to “circumvent the law” by “imposing new requirements for prior authorization and the submission of treatment plans for mental health services where there were no comparable requirements on the medical-surgical side.”
Insurers strenuously object to one provision of the rules that requires them to maintain a single deductible for all medical and mental health services combined. This is a significant departure from the industry’s current practice of separate deductibles.
As a result of the change, insurers say, many mental health patients will face higher out-of-pocket costs because the combined deductible will almost surely be higher than the current one for mental health services alone.
But in a letter to the administration last week, leading House Democrats said Mr. Obama was right to prohibit separate deductibles. The law, they said, was adopted to end such inappropriate distinctions between medical and mental health care services.
A number of companies like Aetna, Magellan Health Services and ValueOptions specialize in managing mental health benefits.
In issuing the new rules, the Obama administration praised the work of such companies, saying they increased the use of mental health care while holding down costs.
But Pamela B. Greenberg, president of the Association for Behavioral Health and Wellness, which represents these companies, said the new rules would “hamstring” their ability to use the tools that have proved effective in managing mental health benefits.
In a suit over the rules, Magellan and other companies said the concept of nonquantitative limits was “boundless and ill defined” and would reach virtually every policy and procedure used to manage mental health benefits.
One premise of the law is that mental illnesses often have a biological basis and can be treated as effectively as many physical ailments. But insurers say it is impossible to use the same techniques in managing the treatment of colon cancer and schizophrenia, or heart failure and major depression.
Thursday, May 6, 2010
PPACA Retiree Health Benefits Program Described
Insuring Resources Commentary:
Early retirement produces a serious gap in health insurance coverage for many, many baby boomers as they await later Medicare eligibility. As health insurance premiums have risen fewer employers are providing retiree access to health insurance.
Within the PPACA an interim measure was put in place before the Health Insurance Exchanges get active to aide those retirees of pre-Medicare age access health insurance. This article below describes the federal rules and the funding provided to employers. As I've noted in previous posts, the devil will be in the details as to how this program is implemented.
--------- ----------- ----------
Source: Keith Martin- http://ifawebnews.com
5/5/2010
The White House has announced the allocation of $5 billion for a temporary program to make it easier for employers to provide health coverage for early retirees.
The U.S. Department of Health and Human Services issued regulations to establish the Early Retiree Reinsurance Program, a part of the recently signed Patient Protection and Affordable Care Act.
In a statement, HHS Secretary Kathleen Sebelius said rising costs “have made it hard for employers to provide quality, affordable health insurance for workers and retirees.
“As a result, many Americans who retire before they are eligible for Medicare are worried about losing health insurance coverage through their former employers, putting them at risk of losing their life savings due to medical costs, “ she said. “This new program will provide much-needed relief so that employers can provide more retirees with quality, affordable insurance, starting this year.”
According to the White House, the percentage of large firms providing workers with retiree coverage has dropped from 66% in 1988 to 31% in 2008. New reform law includes the $5 billion in financial aid to employers to maintain coverage for early retirees age 55 and older who do not yet qualify for Medicare.
The temporary program, similar to a high-risk pool for uninsured Americans, will end in 2014 when health insurance exchanges should get established. Those exchanges will provide additional coverage options.
Sebelius’ agency said eligible employers can apply for the program beginning at the end of June. Applicants can be from both self-funded and insured plans, including plans sponsored by private entities, state and local governments, nonprofits, religious entities, unions and other employers, according to HSS officials.
Health benefits that qualify for relief include medical, surgical, hospital, prescription drug and other benefits that may be specified by HSS, as well as coverage for mental health services.
The White House said the amount of the reimbursement to the employer plan is up to 80% of claims costs for health benefits between $15,000 and $90,000. Claims incurred between the start of the plan year – often Jan. 1 – and June 1 are credited toward the $15,000 threshold for reimbursement.
However, only medical expenses incurred after June 1, 2010, are eligible for reimbursement under this program, according to officials.
As an example, they noted that if an individual incurs costs of $30,000 between the start of the plan year and June 1, and $40,000 after that date, the amount which may be reimbursed is $40,000 – the costs above the $15,000 threshold that occur after June 1.
Early retirement produces a serious gap in health insurance coverage for many, many baby boomers as they await later Medicare eligibility. As health insurance premiums have risen fewer employers are providing retiree access to health insurance.
Within the PPACA an interim measure was put in place before the Health Insurance Exchanges get active to aide those retirees of pre-Medicare age access health insurance. This article below describes the federal rules and the funding provided to employers. As I've noted in previous posts, the devil will be in the details as to how this program is implemented.
--------- ----------- ----------
Source: Keith Martin- http://ifawebnews.com
5/5/2010
The White House has announced the allocation of $5 billion for a temporary program to make it easier for employers to provide health coverage for early retirees.
The U.S. Department of Health and Human Services issued regulations to establish the Early Retiree Reinsurance Program, a part of the recently signed Patient Protection and Affordable Care Act.
In a statement, HHS Secretary Kathleen Sebelius said rising costs “have made it hard for employers to provide quality, affordable health insurance for workers and retirees.
“As a result, many Americans who retire before they are eligible for Medicare are worried about losing health insurance coverage through their former employers, putting them at risk of losing their life savings due to medical costs, “ she said. “This new program will provide much-needed relief so that employers can provide more retirees with quality, affordable insurance, starting this year.”
According to the White House, the percentage of large firms providing workers with retiree coverage has dropped from 66% in 1988 to 31% in 2008. New reform law includes the $5 billion in financial aid to employers to maintain coverage for early retirees age 55 and older who do not yet qualify for Medicare.
The temporary program, similar to a high-risk pool for uninsured Americans, will end in 2014 when health insurance exchanges should get established. Those exchanges will provide additional coverage options.
Sebelius’ agency said eligible employers can apply for the program beginning at the end of June. Applicants can be from both self-funded and insured plans, including plans sponsored by private entities, state and local governments, nonprofits, religious entities, unions and other employers, according to HSS officials.
Health benefits that qualify for relief include medical, surgical, hospital, prescription drug and other benefits that may be specified by HSS, as well as coverage for mental health services.
The White House said the amount of the reimbursement to the employer plan is up to 80% of claims costs for health benefits between $15,000 and $90,000. Claims incurred between the start of the plan year – often Jan. 1 – and June 1 are credited toward the $15,000 threshold for reimbursement.
However, only medical expenses incurred after June 1, 2010, are eligible for reimbursement under this program, according to officials.
As an example, they noted that if an individual incurs costs of $30,000 between the start of the plan year and June 1, and $40,000 after that date, the amount which may be reimbursed is $40,000 – the costs above the $15,000 threshold that occur after June 1.
Haggling Over the Implementation Rules Begins
Insuring Resources Commentary:
An overused cliche is "the devil is in the details". Well many believe this health care legislatiobn is the devil, so you can imagine the fight over many of these details. As the federal HHS moves toward the implementation of the first health care rules the debate may not be as public, but it certainly will be contentious within the states themselves and between several states and HHS. On that last note, several states have infomred HHS that they will not establish their own High Risk Pool but instead let the feds do it. About 35 states already have high risk pools and the PPACA ,mandates their creation in the remaining states.... but, those states can allow the federal gov't to do it in their stead.
The article below concerns the PPACA's requirment regarding medical loss ratio's. This is "insurance-speak" for the percentage of premiums they spend on medical expenses. Defining what a “medical expense” is, it turns out, is crucial.
------ ------- ------- -------
It’s a simple question, but one with a complex answer: In health insurance, what counts as a medical expense?
Claims for visits to physicians clearly fit the bill; likewise for surgeries and hospital stays. But what about a 24-hour nursing hotline? Does a flier in the mail that encourages subscribers to reduce sodium intake count? Or a new computer system to better manage care for multiple chronic conditions?
This question is far from rhetorical. Under health care reform, insurers will be required to maintain certain “medical loss ratios,” insurance-speak for the percentage of premiums they spend on medical expenses. Defining what a “medical expense” is, it turns out, is crucial.
Insurers will have to spend at least 85 percent of subscriber premiums on medical expenses in small- and large-group markets and at least 80 percent in individual policies.
Insurers will have to report their medical loss ratios to the Department of Health and Human Services by the end of each year. Those who do not meet the requirements will face penalties.
The new law is meant as consumer protection to ensure that the vast majority of subscriber premiums go toward medical care rather than administrative costs or company profits.
But it has also forced a complicated, drawn-out debate among insurers, legislators and regulators over how best to define medical loss ratios.
Discussions and research on the subject began well before health care reform became law and will surely continue past June 1, the deadline for the first draft of medical loss ratio regulations.
The debate highlights how the Affordable Care Act, despite its breadth and length, still leaves much space for policy and political maneuvering.
Until now, insurer spending on medical expenses has gone largely unregulated. Only 13states set minimum medical loss ratios in the individual market, and even fewer police the group market.
The National Association of Insurance Commissioners recommends setting minimum loss ratios between 50 percent and 60 percent in the individual market, depending on characteristics of different policies.
States, though, have taken great liberty with these recommendations. North Dakota, for example, requires policies for individuals to reflect a minimum of 55 percent on medical expenses. In New Jersey, insurers must meet an 80 percent target.
A recent Senate report found that of six major insurance companies surveyed — Aetna, Cigna, Coventry, Humana, UnitedHealth and WellPoint — only Cigna would have met the proposed individual market target in 2009. The number, however, jumps to four in the large-group market.
Legislators are worried that insurers will reclassify administrative costs as medical to inflate their medical loss ratio in order to comply with the new law.
The Senate report singled out the insurance company WellPoint as already engaging in such behavior, shifting costs enough to raise its medical loss ratio 1.7 percent.
“This ‘accounting reclassification’ means that the company has converted more than a half-billion dollars of this year’s administrative expenses into medical expenses,” the report concludes.
WellPoint does not dispute reclassifying some previously administrative costs. But it says the costs reclassified, which included a nurse hotline and expenditures on a clinical health policy, fell well within the bounds of the proposed health care regulations, which allow “activities that improve health quality” to be counted as medical.
“We reclassified costs that are incurred to improve our members’ health and medical outcomes, and this is appropriate accounting treatment,” said WellPoint spokeswoman Kristin Binns. “We did not reclassify costs for network contracting, claims or customer service. In fact, we selected benefits that have been discussed as being part of the Medical Costs Ratio calculation in the various federal health reform proposals in an effort to be consistent with them.”
Insurance companies will help develop and comply with new medical loss ratio regulations. Robert Zirkelbach, communications director of industry group America’s Health Insurance Plans, says they “support transparency” when it comes to explaining how premiums are spent. But he also describes the new numbers as “arbitrary” and not based on any current industry practices.
The process highlights tensions between insurance companies and government officials tasked with regulating them.
A Senate aide familiar with the issue recalls “enormous pushback” from some insurers to requests for medical loss ratio information. “It was striking,” the aide said, “given how much they relied on that data for their analysts.”
The National Association of Insurance Commissioners, a consortium of state-level officials, is supposed to play middleman between legislators and insurers.
In the Affordable Care Act, the Department of Health and Human Services designated NAIC as the agency that would draft definitions and regulations of the medical loss ratio provisions.
NAIC currently has two task forces at work on the issue, both holding weekly conference calls and circulating numerous proposals and calls for input.
One recent phone call, attended by POLITICO, attracted insurance commissioners, consumer advocates and insurers. All discussed the best way to calculate a medical loss ratio.
Public comment on the medical loss ratio provision closes May 14 and, by the end of the month, NAIC will submit a first draft of guidelines to the Department of Health and Human Services.
“Ultimately, our process is pretty objective,” said Kim Holland, NAIC secretary and treasurer, who is Oklahoma’s insurance commissioner. At the end of the day, she says, complicated areas of insurance policy are regulated in the same way as simpler provisions: “We’ll develop a standard, require insurers to meet it, and, if they don’t, they will get sanctioned.”
Read more: http://www.politico.com/news/stories/0510/36703_Page2.html#ixzz0nARF1RBu
An overused cliche is "the devil is in the details". Well many believe this health care legislatiobn is the devil, so you can imagine the fight over many of these details. As the federal HHS moves toward the implementation of the first health care rules the debate may not be as public, but it certainly will be contentious within the states themselves and between several states and HHS. On that last note, several states have infomred HHS that they will not establish their own High Risk Pool but instead let the feds do it. About 35 states already have high risk pools and the PPACA ,mandates their creation in the remaining states.... but, those states can allow the federal gov't to do it in their stead.
The article below concerns the PPACA's requirment regarding medical loss ratio's. This is "insurance-speak" for the percentage of premiums they spend on medical expenses. Defining what a “medical expense” is, it turns out, is crucial.
------ ------- ------- -------
It’s a simple question, but one with a complex answer: In health insurance, what counts as a medical expense?
Claims for visits to physicians clearly fit the bill; likewise for surgeries and hospital stays. But what about a 24-hour nursing hotline? Does a flier in the mail that encourages subscribers to reduce sodium intake count? Or a new computer system to better manage care for multiple chronic conditions?
This question is far from rhetorical. Under health care reform, insurers will be required to maintain certain “medical loss ratios,” insurance-speak for the percentage of premiums they spend on medical expenses. Defining what a “medical expense” is, it turns out, is crucial.
Insurers will have to spend at least 85 percent of subscriber premiums on medical expenses in small- and large-group markets and at least 80 percent in individual policies.
Insurers will have to report their medical loss ratios to the Department of Health and Human Services by the end of each year. Those who do not meet the requirements will face penalties.
The new law is meant as consumer protection to ensure that the vast majority of subscriber premiums go toward medical care rather than administrative costs or company profits.
But it has also forced a complicated, drawn-out debate among insurers, legislators and regulators over how best to define medical loss ratios.
Discussions and research on the subject began well before health care reform became law and will surely continue past June 1, the deadline for the first draft of medical loss ratio regulations.
The debate highlights how the Affordable Care Act, despite its breadth and length, still leaves much space for policy and political maneuvering.
Until now, insurer spending on medical expenses has gone largely unregulated. Only 13states set minimum medical loss ratios in the individual market, and even fewer police the group market.
The National Association of Insurance Commissioners recommends setting minimum loss ratios between 50 percent and 60 percent in the individual market, depending on characteristics of different policies.
States, though, have taken great liberty with these recommendations. North Dakota, for example, requires policies for individuals to reflect a minimum of 55 percent on medical expenses. In New Jersey, insurers must meet an 80 percent target.
A recent Senate report found that of six major insurance companies surveyed — Aetna, Cigna, Coventry, Humana, UnitedHealth and WellPoint — only Cigna would have met the proposed individual market target in 2009. The number, however, jumps to four in the large-group market.
Legislators are worried that insurers will reclassify administrative costs as medical to inflate their medical loss ratio in order to comply with the new law.
The Senate report singled out the insurance company WellPoint as already engaging in such behavior, shifting costs enough to raise its medical loss ratio 1.7 percent.
“This ‘accounting reclassification’ means that the company has converted more than a half-billion dollars of this year’s administrative expenses into medical expenses,” the report concludes.
WellPoint does not dispute reclassifying some previously administrative costs. But it says the costs reclassified, which included a nurse hotline and expenditures on a clinical health policy, fell well within the bounds of the proposed health care regulations, which allow “activities that improve health quality” to be counted as medical.
“We reclassified costs that are incurred to improve our members’ health and medical outcomes, and this is appropriate accounting treatment,” said WellPoint spokeswoman Kristin Binns. “We did not reclassify costs for network contracting, claims or customer service. In fact, we selected benefits that have been discussed as being part of the Medical Costs Ratio calculation in the various federal health reform proposals in an effort to be consistent with them.”
Insurance companies will help develop and comply with new medical loss ratio regulations. Robert Zirkelbach, communications director of industry group America’s Health Insurance Plans, says they “support transparency” when it comes to explaining how premiums are spent. But he also describes the new numbers as “arbitrary” and not based on any current industry practices.
The process highlights tensions between insurance companies and government officials tasked with regulating them.
A Senate aide familiar with the issue recalls “enormous pushback” from some insurers to requests for medical loss ratio information. “It was striking,” the aide said, “given how much they relied on that data for their analysts.”
The National Association of Insurance Commissioners, a consortium of state-level officials, is supposed to play middleman between legislators and insurers.
In the Affordable Care Act, the Department of Health and Human Services designated NAIC as the agency that would draft definitions and regulations of the medical loss ratio provisions.
NAIC currently has two task forces at work on the issue, both holding weekly conference calls and circulating numerous proposals and calls for input.
One recent phone call, attended by POLITICO, attracted insurance commissioners, consumer advocates and insurers. All discussed the best way to calculate a medical loss ratio.
Public comment on the medical loss ratio provision closes May 14 and, by the end of the month, NAIC will submit a first draft of guidelines to the Department of Health and Human Services.
“Ultimately, our process is pretty objective,” said Kim Holland, NAIC secretary and treasurer, who is Oklahoma’s insurance commissioner. At the end of the day, she says, complicated areas of insurance policy are regulated in the same way as simpler provisions: “We’ll develop a standard, require insurers to meet it, and, if they don’t, they will get sanctioned.”
Read more: http://www.politico.com/news/stories/0510/36703_Page2.html#ixzz0nARF1RBu
Wednesday, May 5, 2010
WPS Recognized for its Ethical Practices
Insuring Resources Commentary:
WPS has had a tremendous reputation in its insurance products and contracting with Medicare and TRICARE plans. WPS is a non-profit insurer and is headquartered in Monona, WI with offices in several other states.
How this correlates to health care reform lies in the fact that the federal reform effort mandates that at least one insurer in each state's new health insurance exchange must be a non-profit insurer.
-------- --------- ----------- ----------
WPS Health Insurance Recognized as One of the World's Most Ethical Companies
4/6/10
WPS Health Insurance of Madison has been recognized by the Ethisphere Institute as one of the World’s Most Ethical Companies for 2010. It was the only health company in the world to receive the award, and joins Aflac and Swiss Re in the Insurance category. Ethisphere honors companies that “demonstrate real and sustained ethical leadership within their industries,” according to its web site.
WPS has had a tremendous reputation in its insurance products and contracting with Medicare and TRICARE plans. WPS is a non-profit insurer and is headquartered in Monona, WI with offices in several other states.
How this correlates to health care reform lies in the fact that the federal reform effort mandates that at least one insurer in each state's new health insurance exchange must be a non-profit insurer.
-------- --------- ----------- ----------
WPS Health Insurance Recognized as One of the World's Most Ethical Companies
4/6/10
WPS Health Insurance of Madison has been recognized by the Ethisphere Institute as one of the World’s Most Ethical Companies for 2010. It was the only health company in the world to receive the award, and joins Aflac and Swiss Re in the Insurance category. Ethisphere honors companies that “demonstrate real and sustained ethical leadership within their industries,” according to its web site.
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