Insuring Resources

Announcement

2010-11-20T20:49:00.000-08:00

You may be wondering what I've been up to: Well, wait no longer!!!

See for yourself at my new permanent home. I am excited to tell you to please visit me at my new nationwide site with About.com where I now provide insurance resources as the INSURANCE GUIDE for the entire industry.... That's right, health, life and annuities, auto and home, long-term care and workers comp.

Please join me at: http://insurance.about.com

2010-06-29T05:50:00.000-07:00

Insuring Resources Commentary:

So what has happened in the three months since health care reform passed Congress and Pres. Obama signed it March 23rd?

Premiums have continued to rise and health care reform rules are slowly taking shape. In the end will the new rules help?

I believe in some ways they will, more people will become insured, young adults will have greater access through their parent's plans, pre-x will be eliminted for children this October and in 2014 for adults.

BUT, will premiums go down? Probably not because the bill does virtually nothing to stem the tide of rising health CARE costs, that's where the price drivers are.

We need incentives for quality and efficiency.

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See this article concerning new premium increases PRIOR to health care reforms implementation.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/06/26/ED011D46ND.DTL&type=health

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PPACA puts niche health insurance market in jeopardy

2010-06-10T07:22:00.000-07:00

Insuring Resources Commentary:

Because the PPACA mandates an "essential (or minimum) benefits package starting this fall many individuals on limited cover plans may see their benefits at risk.

As noted below, a cadre of employers and trade associations, have asked the administration to allow the plans — at least through 2014, when the insurance exchanges are set up and tax credits become available for low-wage workers.

This is another indication that not every item in this reform package was well thought out and also illustrates how politics intervened. Because the administration wanted the consumer friendly pieces right away there is some disconnect on how provisions, like this, add up.

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Part of the health care overhaul due to kick in this September could strip more than 1 million people of their insurance coverage, violating a key goal of President Barack Obama’s reforms.

Under the provision, insurance companies will no longer be able to apply broad annual caps on the amount of money they pay out on health policies. Employer groups say the ban could essentially wipe out a niche insurance market that many part-time workers and retail and restaurant employees have come to rely on.

This market’s limited-benefit plans, also called mini-med plans, are priced low because they can, among other things, restrict the number of covered doctor visits or impose a maximum on insurance payouts in a year. The plans are commonly offered by retail or restaurant companies to low-wage workers who cannot afford more expensive, comprehensive coverage.

Depending on how strictly the administration implements the provision, the ban could in effect outlaw the plans or make them so restrictive that insurance companies would raise rates to the point they become unaffordable.

A cadre of employers and trade associations, including 7-Eleven, Lowe’s, the National Restaurant Association, the National Retail Federation and the U.S. Chamber of Commerce, have asked the administration to allow the plans — at least through 2014, when the insurance exchanges are set up and tax credits become available for low-wage workers.

The struggle over the provision highlights the importance of the new law’s implementation timetable and the way its parts interlock with one another. The legislation was front-loaded with consumer-friendly reforms, such as the ban on most annual limits, in hopes the law would become more popular. Polls show the legislation is supported by about half the public.

But many of the more comprehensive features of the overhaul, such as the insurance exchanges and tax credits that would help cover those who use limited-benefit plans, don’t come into play until 2014.

That means, for nearly three years, the effect of the ban on annual limits could be costly for the low-wage, seasonal or temporary workers who most often use limited-benefit plans. The full effect won’t be known until the administration releases regulations that detail how the provision will be implemented.

The ban on annual caps is designed to improve the quality of all health coverage. It will prevent patients from “maxing out” of their health coverage if they are diagnosed with catastrophic illnesses or sustain costly injuries.

Understanding the Grandfather Rules

2010-06-06T21:44:00.000-07:00

Insuring Resources Commentary:
A key talking point or sound bite from the effort to reform health care and insurance access for the last year has been, “ if you like your health plan, you can keep it.” Well, here are the details in the article below.
Essentially very few changes are required of “grandfathered plans” but I’ll detail here the key issues and or requirements that ARE required of these “grandfathered plans”.

Plans that are “granted” grandfather status will be able to maintain the benefits they have and their contracted providers. However these requirements do apply:
1) the mandatory requirement to include the value of coverage on each employee's Form W-2 (effective January 1, 2011),
2) the large-employer mandate to offer affordable coverage to full-time employees (effective January 1, 2014),
3) the high-cost health plan excise tax (effective January 1, 2018) and
4) the mandatory automatic enrollment requirement (effective once regulations are issued).

For more details see the italicized highlights below within the article

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Health Care Reform: Understanding the Grandfather Rules
June 04, 2010 | Mondaq Business Briefing
Copyright 2010 Gale Group, Inc.

The coverage mandates and insurance reforms in Subtitles A and C of the Patient Protection and Affordable Care Act (PPACA) will require significant changes to employer-sponsored health plans. Several of the mandates become effective in 2010 or 2011, requiring immediate attention, while others become effective over the next several years. Also, though PPACA generally applies to all group health plans and health insurance coverage going forward, certain existing plans and coverage are exempted, or "grandfathered," from a number of the new requirements. The grandfather provision delays the time a new rule will apply to a grandfathered plan in some cases and in other cases seems to provide a complete exemption from the rules.
The grandfather provision, found in section 1251 of PPACA1, is intended to provide plan sponsors and insurers with greater certainty regarding their current benefit arrangements. Grandfathered plans will be able to maintain many of their current coverage provisions and will require fewer changes to plan documents and administrative procedures in order to comply with the new law. However, with its caveats, ambiguities and exceptions, the grandfather provision has raised as many questions as it has answered, particularly for large employers with complex benefits arrangements.

This article addresses the ten most frequently asked questions regarding grandfather protection for large employer-sponsored group health plans. The article also includes a quick-reference chart with details on key provisions that are applicable to grandfathered plans, as well as a final section summarizing the rules that grandfathered plans are able to avoid - at least for the time being.

Q-1: What is a grandfathered group health plan? A-1: A grandfathered group health plan is a plan in which an individual was enrolled on March 23, 2010. A grandfathered plan can be a single employer plan, a multi-employer plan, or a multiple employer plan; it can also be an insured or a self-insured arrangement.

Q-2: My plan appears to be grandfathered. What does that mean?
A-2: Depending on the provision, grandfathered plans may benefit from either a delayed effective date for compliance with, or a total exception from, certain insurance market reforms and coverage mandates under Subtitles A and C of PPACA. However, it is important to note that grandfathering does not protect a plan from the reforms found in other parts of the statute, including, for example, the mandatory requirement to include the value of coverage on each employee's Form W-2 (effective January 1, 2011), the large-employer mandate to offer affordable coverage to full-time employees (effective January 1, 2014), the high-cost health plan excise tax (effective January 1, 2018) and the mandatory automatic enrollment requirement (effective once regulations are issued).

Q-3: Is grandfathering indefinite? In other words, for any rule that does not expressly include a delayed effective date, does the grandfather rule mean that we will never need to amend the plan for that provision? A-3: While the grandfather provision does not include a general sunset date for non-collectively bargained grandfathered plans, it is unlikely that these plans will have a permanent exception from compliance with any of the insurance market reforms and coverage mandates in the statute that do not expressly include a delayed effective date. Given the flexibility of the language of the grandfather rule, the federal agencies invested with regulatory authority over the new law (specifically, the Internal Revenue Service, the Department of Labor, and the Department of Health and Human Services) are likely to issue guidance that places certain parameters around grandfather protection. Q-4: If I add new employees (or new enrollees) to my currently grandfathered plan, does the plan lose its grandfathered status?
A-4: No. Section 1251(c) of PPACA specifically provides that a grandfathered plan may enroll new employees and their families in the plan without losing the plan's grandfather status. In addition, the statute also states that grandfathering continues to apply to the coverage of an individual covered by the plan on the date of enactment regardless of whether the individual renews coverage or adds family members after the date of enactment. Although the statute does not specifically state that a plan may add other new enrollees (i.e., current employees who have not previously enrolled in the plan), it is unlikely that enrollment of such employees in the ordinary course will cause the plan to lose its grandfathered status. Guidance is needed as to whether more significant changes in enrollment will cause a plan to lose grandfather status (e.g., the enrollment of a large group of employees following a corporate acquisition).

Q-5: Can I amend my grandfathered plan without losing the grandfathered status?
A-5: Presumably some amendments are permitted, but the complete answer to this question is still unclear. Unlike the grandfather provisions of other legislation, section 1251 of PPACA does not expressly prohibit amendments to a grandfathered plan, nor does it contain a mandate requiring plan sponsors to maintain benefits at current levels in order to preserve grandfather status. Arguably, this means that plan sponsors may freely amend their grandfathered plans without jeopardizing the plan's grandfathered status. However, it is unlikely that such a liberal reading of the provision accurately reflects legislative intent. Until further guidance is issued, plan sponsors must consider amendments to grandfathered plans on a case-by-case basis to determine (1) whether the amendment substantively alters the nature of the plan's coverage in a manner that may jeopardize the plan's grandfathered status, and (2) the true cost impact of losing grandfather status.

Q-6: How does the grandfather rule apply to collectively bargained plans?
A-6: Section 1251(d) of PPACA provides that health insurance coverage maintained pursuant to one or more collective bargaining agreements that were ratified before March 23, 2010, is not subject to the insurance market reforms and coverage mandates in Subtitles A and C of PPACA until the date on which the last collective bargaining agreement relating to coverage terminates. The provision also states that any coverage amendments made pursuant to a collective bargaining agreement that amends the coverage to conform with Subtitles A or C will not cause the plan to lose its grandfathered status. However, the application of the rule to collectively bargained plans remains unclear in several respects. For instance, the statute does not clarify whether the termination of the collective bargaining agreement subjects the collectively bargained plan to all provisions of Subtitles A and C, or whether "regular" grandfathering (as described above) will then apply. In addition, the language of the statute suggests that grandfathering may only apply to fully insured (not self-insured) collectively bargained plans. Finally, it is also unclear how the grandfather rule will apply to plans subject to "evergreen" bargaining agreements.

Q-7: Are all of my medical plans that covered employees as of March 23, 2010, grandfathered?
A-7: Grandfathering applies to all group health plans that are welfare benefit plans under ERISA section 3(1) and all health insurance coverage to the extent that the plan or coverage provides medical care to employees and their dependents through insurance, reimbursement, or otherwise, even if coverage is offered through a medical service policy or an HMO offered by a health insurance issuer.

Q-8: Will my grandfathered plan satisfy the minimum essential coverage requirement under Section 5000A and 4980H of PPACA?
A-8: PPACA creates a new section 5000A of the Internal Revenue Code (IRC), which mandates that individuals maintain "minimum essential coverage." PPACA also creates new IRC section 4980H, which mandates that large employers offer the minimum essential coverage to their full-time employees. Each of these provisions becomes effective January 1, 2014. To the extent that an individual is covered under, or an employer offers, a grandfathered plan (that otherwise meets the provisions of the PPACA, as amended) the individual and the employer will be treated as satisfying the respective mandates as of the effective date.

Q-9: When will I need to make amendments to the plan to comply with the market reform provisions that are applicable to grandfathered plans? A-9: The effective date for each of the provisions applicable to grandfathered plans is outlined on the attached chart. Grandfathered plans should be amended to comply with these provisions before each applicable effective date. However, depending on individual circumstances, some employers that are in the process of drafting amendments for the 2011 plan year may consider making one set of amendments to comply with provisions that become effective as late as 2014. The last section of the chart lists provisions that it currently appears will never apply to grandfathered plans.

Q-10: Are the agencies planning to issue guidance on the grandfather provisions in PPACA in the near future?
A-10: While it is difficult to predict when any particular PPACA guidance will be issued, agency officials have informally indicated that clarifying the grandfather rules is an important issue that will likely receive priority as guidance is developed.

In Business Madison Magazine Details Small Business Decisions Under the PPACA

2010-06-02T07:16:00.000-07:00

Insuring Resources Commentary:

The article below provides a great analysis on small business decision-making as health care is implemented. Dr. Samitt does a great job of laying out the small business issues and also suggests that more could have been done on the quality and cost containment side but he notes that better coordination among providers is essential. He notes that Wisconsin is well-positioned in that regard.

I've highlighted a couple of noteworthy items within the article below. These pertain to small business decision-making on whether to offer coverage or pay the penalty and on quality and cost issues and Wisconsin's current insurance marketplace.

A couple of items the article does not touch on:
1. State creation of Health Insurance Exchanges (statewide or regional) and other important decisions
***(stay tuned for a post from me on implementing HIE's in a few days)***

2. Enhancement of Wisconsin's High risk pool- Expansion of HIRSP pre -2014 to provide coverage for those with pre-existing conditions

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Health Care Calculation for Businesses: Coverage Versus Paying the Penalty
June 1, 2010
In Business Madison Magazine- http://www.ibmadison.com/healthcare?id=514

Large and mid-sized businesses have some calculating to do regarding the recently enacted Patient Protection and Affordable Care Act, the federal health care law, but that calculation will not be entirely monetary, according to Dr. Craig Samitt.

Samitt, president and CEO of Dean Health System in Madison, said the comparison small and mid-sized businesses must begin to make is the respective cost of providing insurance versus the cost in penalties for not providing it. That final decision does not have to be made until January of 2014, but provisions clearly prescribe that employers will have this choice themselves. (Qualified small businesses would be able to purchase insurance for their employees through state-based Small Business Health Options Programs or SHOPs.)

Since the law goes into effect in stages, Samitt believes affected businesses should map out a strategy to take advantage of the various changes that occur each year leading up to full implementation. There is the immediate benefit of small business tax credits that are retroactive to Jan. 1, 2010, and then there is the aforementioned coverage question.

Large and mid-sized employers that fail to offer what the law calls "minimum essential coverage" would be liable for an additional tax. That penalty would equal the product of the applicable payment amount (with respect to any month, 1/12 of $2,000) and the number of full-time employees employed by the employer during such month.

The penalty would apply to employers with 50 or more workers, but would subtract the first 30 workers from the payment calculation. In a hypothetical example, a company with 51 full-time employees that does not offer the still-to-be-determined "minimum essential coverage" would pay an amount equal to 51 minus 30 (or 21) times the applicable per employee payment amount up to $2,000 per full-time employee. (Businesses with fewer than 50 employees would be exempt from any employer responsibility.)

If employer-provided insurance exceeds 9.5 percent of the employee's household income, or the employer plan has an actuarial value of less than 60 percent, the coverage will not qualify as minimum essential coverage.

So the question becomes, "Do you provide coverage to employees, or do you pay penalties and have [individual] employees enter into an exchange," Samitt noted. "Obviously, this will be a challenging call for employers because it's not just about cost."

More immediately, the Act provides a temporary, sliding-scale tax credit to help small employers offset the cost of employer-provided coverage. For the purpose of the credit, a small employer generally is defined as one with fewer than 25 employees and average annual wages of less than $50,000. From 2011 through 2013, eligible employers may qualify for a tax credit for up to 35 percent of their contribution toward the employee's health insurance premium.

In 2014 and beyond, eligible employers who purchase coverage through a state exchange may qualify for a credit for two years of up to 50 percent of their contribution. (Employers with 10 or fewer employees and average annual wages of less than $20,000 would be eligible for the full credit.)

If a business belongs to an industry where the provision of health benefits is a competitive advantage, enabling them to attract and retain quality employees, Samitt believes it may be in the businesses' best interest to provide health insurance even if it costs more than paying the penalty. "Those are the things that small employers are going to have to start thinking about in terms of options regarding reform," he stated.

In general, Samitt regards the Act as good law for small businesses and for people who want to start a business but can't due to their concerns about health insurance affordability. "Businesses have had this challenge of affordability as it pertains to health care," he noted. "With these tax credits in short term, and with exchanges in longer term, smaller businesses have an opportunity to insure their employees like large businesses do."

Reform Measures
The Act tried to accomplish three things which are important to reform: broadening access to coverage, where it scores more highly in Samitt's view; and improving quality and affordability, where the jury is still out. According to Samitt, the bill's strengths are really more on the coverage side, but there is much less detail and only references pertaining to quality and cost. "At this point, it's hard to predict the impact on insurance premiums in the short- or long-term," he opined. "It's in an area where there is a lot more detail that needs to be worked out in terms of what will actually be covered, and in terms of changes in the payment system."

There is a ripe area for cost control, however. Historically, Samitt said the health care reimbursement model has been more based upon the quantity of care rather than the quality of care; because quantity of care has been rewarded, costs have continued to rise. "There are references in this bill to rewarding the quality of care, not just the quantity of care," he noted, "and if reimbursement changes to reward value, this should bend the cost curve and the premium curve."

Citing information from the Organization for Economic Cooperation and Development (OECD) Samitt said the cost curve must inevitably be bent downward. The OECD notes that U.S. health care expenditures as a percentage of gross domestic product rose from about 5% in 1960 to a projected 18% in 2010. By 2018, health care expenditures are projected to grow to 20% of GDP.

"The cost of health care is rising at an exponential rate, and rising faster than inflation, so when we look at how much we, as a society, are spending for health care, that trend is unsustainable," Samitt opined. "We will have no choice but to find a way to bend the cost curve while improving quality at the same time."

Health Care a la Carte
Ideally, Samitt said health insurance should be structured with preventive care, regular check ups, pharmacy, and catastrophic coverage. Asked if individual consumers, in order to hold down costs, should be able to pick and choose the rest, paying a la carte for things like mental health coverage, Samitt said that would be problematic and weaken universal coverage principles.

"The cost of broader insurance coverage can only be managed if the risk is adequately spread among the population," he explained. "Allowing people to shop a la carte can work for items that are truly non-necessities, like cosmetic surgery and items like that. But mental health care is not a luxury. It's a real health care concern that must be part of the 'must-haves' like preventive care, regular check ups, and catastrophic care."

"You can't have people just pay a la carte when they get sick because it's not how current coverage works," he continued. "That would be equivalent of deciding to buy auto insurance only after accidents happen."

Dr. Samitt commented on a number of topics, including the following:

On whether the bill is structured, as critics contend, to drive private insurers out of business and health care consumers into the government's arms? "The bill is not intended to drive private insurers out of business. I don't think it's designed to nationalize health care. There is no public plan in the bill. What the bill does do, though, is bring more accountability to the insurance world. The ultimate goal of the bill is to provide more citizens with better care at a lower cost.

"On the health care delivery and insurance side, this will mean the need for more integration and coordination where physicians, hospitals, and insurance plans are all working together with patients at the center, and with a focus on managing quality and cost. So that accountability is critical and the pressure to integrate is essential. What's great about Wisconsin is there are so many integrated systems like Dean-St. Mary's that are already practicing these integrated models. But that level of integration is absent in many of the greatest population areas of the nation. In most other markets, what you see more often are independent, non-aligned entities, which may drive up health care costs while not necessarily delivering higher quality care."

On whether he has any issues with the Act's requirement for insurers to use at least 80% of premiums for care services rather than administrative costs or profit taking? "In my view, the more dollars that can be directed to heath services, the better off we'll be. What we see in many integrated systems like those in Wisconsin, is those administrative costs are already on the lower side. So if there are health plans that can deliver a high quality product and spend less on administrative services and reduce waste, then why can't all health plans achieve that same level of reduction in administrative costs? So yes, that is a good provision. We should be spending more on clinical services than less."

On whether the federal government will be back to address health care reform: "Whenever you can provide more coverage, that's good. The insurance provisions in the bill are the right things to do. They make sense. However, the concern everyone has is how are we going to pay for this? That's why a big part of reforming health care will require us to think more about prevention, wellness, the appropriateness of hospitalization, and the appropriateness of getting care in the doctors' office rather than the emergency room. Those are the parts of reform that actually have to happen that are not well-specified in the bill."

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COMMENTS

Businesses find they may have unexpected costs as part of PPACA's reforms

2010-05-30T22:17:00.000-07:00

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.

Small Business Tax Credit- Let's look at the fine print

2010-05-26T06:58:00.000-07:00

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.

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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

Pricing Transparency Gaining Interest

2010-05-24T07:37:00.000-07:00

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.

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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.”

5 Points for Families to Consider Before Taking Advantage of New Age Extension

2010-05-23T22:51:00.000-07:00

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.

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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.

Mercer Survey: Employers See Small Premium Hikes in 2011

2010-05-22T06:41:00.000-07:00

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.

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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.

More on Small Business Health Care Issues

2010-05-19T07:15:00.000-07:00

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.

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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."

Fascinating Proposal: Creation of a new field- Health Care Delivery Science

2010-05-18T21:07:00.000-07:00

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.

IRS Lays Groundwork for Tax Credit For Health Insurance

2010-05-17T21:55:00.000-07:00

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.

Dartmouth gets grant to demo increasing health quality, reduce costs

2010-05-17T06:59:00.000-07:00

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

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$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.

Health Care Reform Implementation Timeline

2010-05-11T00:05:00.000-07:00

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.

Mental Health Parity Rules Fight Underway

2010-05-10T07:08:00.000-07:00

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?

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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.

PPACA Retiree Health Benefits Program Described

2010-05-06T20:12:00.000-07:00

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.

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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

2010-05-06T07:14:00.000-07:00

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.

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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

WPS Recognized for its Ethical Practices

2010-05-05T20:56:00.000-07:00

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.

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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.

Examples of Insurers Stepping Up, Implementing Reform Measures Early

2010-04-30T06:58:00.000-07:00

Insuring Resources Commentary:

The vast majority of insurers act with integrity and follow the law appreopriately. This article illusatrates how some are implementing reform rules early, it can only help them in the race to insure the currently uninsured. I highlight some key aspects below....

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Health insurers adopt some new rules early-

By David S. Hilzenrath
Washington Post Staff Writer
Friday, April 30, 2010

After being criticized as obstructionists during the long health-care debate, insurance companies now are implementing some popular provisions even sooner than the law demands.

Major insurers said this week that they will soon end the practice known as rescission, which involves going back and scrutinizing the applications of people who develop costly illnesses and dropping their coverage based on even minor or innocent misstatements.

In addition, dozens of health plans will allow dependents up to age 26 to stay on their parents' plans by this spring, months ahead of the September deadline -- a step that will be especially helpful to many families with students graduating from college.

Those promises follow an industry pledge not to exploit a potential loophole in a requirement that insurers cover children with preexisting conditions.

"Our focus right now is on implementing these reforms in a way that's going to minimize disruption and provide greater peace of mind for the more than 200 million people we serve," Robert Zirkelbach, a spokesman for the industry group America's Health Insurance Plans, said Thursday.

In each case, the industry's concessions were requested by the Obama administration or members of Congress. By quickly complying, insurers could repair their battered image and build goodwill with the administration, which drove the legislation to passage this year largely by going on the offensive against insurers.

For all concerned, the health-care battle is not yet over. Government officials must now translate the new legislation into more detailed regulations, and the industry's fortunes could rise or fall based on the eventual fine print. Meanwhile, candidates for House and Senate seats will be debating the legislation's merits.

The administration and congressional Democrats could benefit politically if voters see favorable results from the new law before they go to the polls in November.

Many Americans will find themselves unable to take advantage of the insurers' offer to extend family coverage for young adults this spring. The federal government told its workers last week that it is legally prohibited from granting that option until Jan. 1, 2011.

"Though we are eager to provide coverage to young adults prior to Jan. 1, the current law governing the FEHB [Federal Employees Health Benefits] Program specifically prohibits us from doing so," the Office of Personnel Management said. "We are working diligently with the Congress to address this matter."

Families covered by private-sector employers may have to wait, too. At big companies, it is often the employer rather than the insurer calling the shots; many large employers pay medical claims out of their own coffers and simply enlist insurers to administer the coverage.

Officials at two organizations for large employers, the National Business Group on Health and the ERISA Industry Committee, said Thursday that they did not know of any member companies offering to expand coverage for young adults ahead of schedule.

"Every employer I know is still trying to figure out what to do with this provision," said Steven Wojcik, vice president for public policy at the National Business Group on Health. "They're waiting, not sure how to react."

Employers are reluctant to make a short-term change before they know the long-term rules, said Gretchen Young, senior vice president for health policy at the ERISA Industry Committee, which takes its name from a federal law.

Employers are trying to figure out how to implement the provision, not just when. Questions include whether they will charge families additional premiums to let young adults stay on or rejoin their health plans. The law does not prohibit them from doing so.

The Internal Revenue Service removed one impediment for employers this week when it clarified that employees can take advantage of expanded coverage for dependents on a tax-free basis.

Spokesmen for some insurance companies interviewed Thursday said they did not know details of how their coverage for young adults will work, including whether it will involve extra premiums and whether the dependents' medical status will affect premium costs.

The White House posted a list of dozens of insurers that will offer the early coverage, including WellPoint, Cigna, Aetna, United HealthCare, Humana, Kaiser Permanente, and BlueCross and BlueShield plans. The offer could spare insurers the headaches of dropping people this spring only to restore them a few months later. The fact that young people tend to be healthier could mitigate costs.

WellPoint said earlier this month that, beginning June 1, its health plans will automatically keep dependents up to age 26 on their parents' policies in the individual market and in group health plans where the employers buy insurance. Employers that use WellPoint in a strictly administrative role will have the option of not offering extended coverage, WellPoint said.

Secretary of Health and Human Services Kathleen Sebelius asked WellPoint to end rescissions after a news report accused it of targeting women with breast cancer. WellPoint disputed the article but agreed to the request.
Congressional Democrats asked other companies to do the same.

Karen Ignagni, president of America's Health Insurance Plans, replied Wednesday that her group is committed to implementing the new standard for rescissions in May. Insurers are still permitted to revoke policies if the applicant made a fraudulent or intentional misrepresentation.

"It's heartening to see that the insurance companies who employed these terrible practices -- and fought reform -- are coming around doing the right thing by instituting the ban right away," Nancy-Ann DeParle, director of the White House Office of Health Reform, said in a statement. "We'll be watching closely and holding them to their word."

Implementation Discussion

2010-04-27T07:28:00.000-07:00

Insuring Resources Commentary:

As the Dept of Health and Human Services begins the process of developing the administrative rules to implement the PPACA the industry and advocates are gearing up to influence this process.

The article below discusses the implementation of the Medicaid expansion, the temporary high risk pools, the fines, and the numerous pilot programs that the PPACA authorizes. The federal HHS will also need to set up the rules for the COOP programs (which the articel below fails to mention). That program authorizes the creation of Consumer Operated and Oriented Plans (COOPs) ---- these are non-profit health plans that can be created in states using federal grant funds. These grants will allow the creation of the COOPs by 71/1/2013.

WISCONSIN:
In Wisconsin I'll be heavily involved as the Commissioner of Insurance has stated that his Health Insurance Advisory council (which I am appointed to) will play a large role in advising OCI on implementation of its rules.

For instance, the PPACA requires each state to establish an Ombudsman office to aide consumers in navigating the State Health Insurance Exchanges. The OCI will also develop the rules regarding the implementation of both state-based Exchanges. The Small business Health Options Program (SHOP) is a state- based exchange for small businesses. In addition there will be a Health Insurance Exchange for individuals to gain access to insurance if they don't have employer-based coverage.

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Next phase in health care war: Applying the law
Cabinet braces for lobbying blitz by industry advocates
April 27, 2010
By John Fritze
USA TODAY

WASHINGTON — The debate in Congress over President Obama's health care law is done. The battle over how to carry out the law is just getting started.

Dozens of special-interest groups that helped shape the 10-year, $938 billion health care measure over the past year — from insurance companies to patient advocates — are gearing up for a second wave of lobbying as the Obama administration prepares to implement the law.

The U.S. Chamber of Commerce, which opposed the measure in Congress, is fighting to protect businesses that might be required to provide insurance, for instance. Drugmakers who supported the bill are monitoring how much they may have to discount prices.

Watchdog groups say patients can get lost in the lobbying blitz. "Industry dominates this process even more than they dominate the legislative process," said Robert Weissman of Public Citizen. "It's more of an inside game."

Congress gave sweeping power to federal agencies, especially the Department of Health and Human Services, to fill in gaps lawmakers left in the 906-page legislation — an effort that will take years. The law refers more than 1,000 times to Cabinet secretaries who will make decisions on how to carry out the law.

For example, the law requires insurance companies to spend 80% of premiums on medical claims, as opposed to administrative costs, by 2011. But it directs the health department to decide whether gray-area expenses, such as health-and-wellness programs offered by insurers, count as care or overhead.

Karen Ignagni, president of the industry group America's Health Insurance Plans, said her staff is "already geared up" and is providing data and suggestions on that and other issues to the department. But, she said, agencies implementing the law will weigh many arguments before making a decision.

"I don't think regulators are influenced by the classic sense of lobbying," she said. "There's a level playing field."

Unlike the legislative process, much of the battle over regulations takes place behind the scenes, Weissman said. The public may comment on proposed decisions, but many groups try to gain access to decision-makers early on, he said.

The health department declined to discuss industry attempts to influence implementation, but Secretary Kathleen Sebelius said in a statement that the department is "working closely with states, insurers, providers and other partners. … We want to hear from everyone."

Other looming battles over the new law include: •The health department must create high-risk insurance plans to provide temporary coverage for people with pre-existing conditions. Private insurers are watching to make sure those plans don't affect their bottom line, said Mark Pauly, a University of Pennsylvania health economist.

•Firms with more than 50 full-time employees would face fines in 2014 if they don't provide health insurance to workers. The Treasury Department must determine who qualifies as a full-time employee, a decision that will affect businesses on the edge of the 50-worker threshold. "We really have to make our case early," said Randel Johnson with the U.S. Chamber of Commerce.

•Health department officials must develop a review process to judge dozens of pilot programs created in the law — and decide whether they should be expanded. The National Partnership for Women & Families, a patient-advocacy group, wants the process to take quality of care into account. "It can't just be about saving money," the group's president, Debra Ness, said. "We also want to make sure they deliver better care."

Health care interests spent heavily on lobbyists as the legislation worked its way through Congress. In all, health industries spent $652 million in 2009, up 14% from 2008, according to the non-partisan CQ Moneyline.

Last year, the Obama administration passed a sweeping series of rules requiring federal agencies to disclose contacts their officials had with lobbyists about the economic stimulus. Similar rules do not exist for the health care law.

"We all want to … meet with folks to describe some of the issues and concerns we think need to be navigated," said Ron Pollack of Families USA, which supports the law. "I have no doubt that industry and others are going to be doing the same thing."

Dartmouth Atlas Launches New, Informative Website

2010-04-23T06:56:00.000-07:00

Insuring Resources Commentary:

http://www.dartmouthatlas.org/?cid=xem-emc-ca

On the home page, on a map of the US you can see the wide disparities that exist here in Wisconsin on Medicare reimbursement per enrollee.

For example-
Milwaukee- $8,057
Wausau- $7,894
Marshfield- $6,975
Appleton- $6,935
Green Bay- $6,931
Madison- $6,813
La Crosse- $6, 008

Specifically I want to direct you to the following key topics discussed at great length within the website:

Effective Care: http://www.dartmouthatlas.org/keyissues/issue.aspx?con=2939

Accountable Care: http://www.dartmouthatlas.org/keyissues/issue.aspx?con=2943

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http://www.dartmouthatlas.org/?cid=xem-emc-ca

Here's an overview:
Understanding of the Efficiency and Effectiveness of the Health Care System
For more than 20 years, the Dartmouth Atlas Project has documented glaring variations in how medical resources are distributed and used in the United States. The project uses Medicare data to provide information and analysis about national, regional, and local markets, as well as hospitals and their affiliated physicians. This research has helped policymakers, the media, health care analysts and others improve their understanding of our health care system and forms the foundation for many of the ongoing efforts to improve health and health systems across America.

Health Insurers Analyzing Reform's Impact

2010-04-19T07:14:00.000-07:00

Insuring Resources Commentary:

I've highlighted a couple of key points in the article below.

1. It is assumed that insurers will take advantage of the opportunity to "cherry-pick" customers while they still can--- in other words avoid covering the sickest individuals until they are mandated to do so.

2. Medicaid expansion will be a boon for insurers as states will seek to contract with managed care insurers to reduce costs per individual as the coverage expands to include many more individuals. This makes perfect sense and is an obvious way to improve health outcomes for individuals on Medicaid as managed care does generally reduce costs and improve care. And yet again, Wisconsin is way ahead on this as the state has contracted with managed care HMOs for years in its Medicaid program.

3. The third item is where the Feds need to ensure that the rules are tight on what insurers can do related to the risk-adjustment rules moving forward. The tighter the rules, the more effective this reform package will be in the long-run at controlling costs.

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Health insurers weighing options to get ahead of reform

By David S. Hilzenrath
Washington Post Staff Writer
Sunday, April 18, 2010

The idea was simple enough: Make sure that health insurers spend the vast majority of their revenue on patient care, instead of using it for things such as advertising, profits and executive pay.

To that end, the new health-care law says an insurer must give money back to consumers if it devotes less than 80 percent of premiums to paying medical claims and improving care. For insurers serving large groups, the target is 85 percent.

But even before the health-care overhaul was signed into law last month, one of the nation's largest insurance companies reclassified certain expenses in a way that increased its so-called medical-loss ratio. In January, WellPoint began including under medical benefits such costs as nurse hotlines, "medical management," and "clinical health policy," a WellPoint executive said in a March briefing for investors.

Redefining medical spending to make the requirement more attainable is just one way insurers might adapt to the new legislation.

Weeks after the law was enacted, insurers are still scouring it to figure out precisely what it allows. Many of the details won't be known until government officials translate the legislative language into specific regulations, and some of the tightest restrictions won't take effect for years. In the meantime, health insurers face tactical and strategic choices that could alter their short-term fortunes. Should they boost premiums before rates become subject to greater oversight? Should they step up efforts to avoid people with preexisting conditions before they are required to accept even the sickest applicants?

Some analysts say the new law gives insurers powerful motivation to try to increase profits and reserves while they still can.

"They will absolutely try to cherry-pick as much as they can get away with between now and when the legislation is fully implemented," said Wendell Potter, a former spokesman for big insurer Cigna.

Insurers might conclude that they should "get our prices up while we can because after the revolution we're not going to be able to," said Mark V. Pauly, a health-care economist at the Wharton School at the University of Pennsylvania.

But for all the incentives to get more aggressive in the short term, there are also counter-incentives, and it is hard to tell how they balance out.

From an economic standpoint, raising rates could cause insurers to lose business, especially in the more competitive markets.

From a regulatory standpoint, charging excessive premiums during the next few years could give authorities grounds to bar insurers from new marketplaces known as exchanges when they open for business in 2014.

From a political standpoint, pushing limits while officials are still writing the rules could boomerang for insurers. WellPoint's plan to raise rates in California by 39 percent fueled arguments for reform earlier this year and helped drive the legislation to final passage.

Some of the openings for insurers are plain to see. For example, although the law bans annual and lifetime limits on the dollar value of benefits, it does not ban limits measured in other terms. That leaves the door open to limits based on, say, the number of courses of treatment for an expensive problem such as infertility.

The coming expansion of Medicaid could trigger a land rush by private insurers seeking to manage care for Medicaid beneficiaries. In a report issued Thursday, big insurer UnitedHealth Group said state Medicaid programs serving low-income Americans could save billions of dollars by moving recipients into managed care.

(Private insurers have made the same argument about Medicare in years past, but the government has concluded that it was overpaying private health plans to care for Medicare beneficiaries. It cut such reimbursements in the recent legislation.)

Other issues are more complex.

Turning away the seriously ill while insurers still can might seem like an obvious choice. To be sure, the fact that insurance companies will be prohibited from rescinding policies once people get sick gives them cause to be more selective in the first place, said industry analyst Carl McDonald of Oppenheimer & Co.
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But in the not-too-distant future, some insurers will be subject to a process called risk-adjustment, which will attempt to neutralize the incentive to cherry-pick. Under risk-adjustment, health plans that attract disproportionately healthy populations will be penalized, and plans that attract disproportionately sick populations will be awarded additional payments. Depending on how the risk-adjustment rules are written, insurers could lock in a lasting advantage by cherry-picking more vigorously now, or they could see that benefit erased, said Jerry Flanagan of the advocacy group Consumer Watchdog.

Similarly, the requirement that insurers devote 80 or 85 percent of premiums to medical claims and related expenses creates conflicting incentives. At its simplest, it encourages insurers to cut overhead expenses. In addition, it might give insurers pause before raising copayments and deductibles, turning away applicants with preexisting conditions, or squeezing payments to doctors and hospitals, because each of those steps would reduce medical spending and make it harder for insurers to meet the required ratios.

On the other hand, the target ratios might give them added incentive to raise premiums. By doing so, they could keep overhead and profit fixed, even as those items decline as a percentage of the premium dollar.

WellPoint spokesman Jon Mills said in an e-mail that it is appropriate for his company to reclassify expenses related to the management of members' health.

In effect, WellPoint turned more than $500 million of administrative items into medical expenses, the Senate Commerce Committee's Democratic staff said in report Thursday.

Scott Serota, chief executive of the Blue Cross and Blue Shield Association, said the insurers in his group "are committed to make sure that both the letter and the intent of this law is implemented in a manner in which benefits all Americans.

"The cynic can find all kinds of opportunities here," he said. "That's just not what we're going to do."

Gallup Poll results concerning cost issues and health care reform

2010-04-16T06:43:00.000-07:00

Here are some interesting poll results since the passage of health care reform. These questions were focused on cost.

Gallup released its latest poll on health care reform and the findings continue to echo the concern about health care costs that independent experts and economists have been raising (and that the Campaign has highlighted.) Here are some key findings from the poll:

"Proponents, as well as opponents, of the new healthcare reform law think the legislation is less than perfect. Both groups agree that the bill didn't do enough to deal with rising healthcare costs."

56% of independents do not think the bill does enough to address costs.

Even among those who think the bill was a good thing, 62% think the bill does not do enough to address costs.

Important Health Care Payment Reform Session

2010-04-15T16:36:00.000-07:00

Insuring Resources Important Link:

I want to draw your attention to an important event that took place last week, on April 6th. Health care leaders from across the state met to discuss methods to improve health care payment methods to better reward health care quality and efficiency.

Please check this out:

http://www.createhealthcarevalue.com/blog/post/?bid=160

Here's an excerpt: "The Center has outlined what we think real health reform looks like. It boils down to three things: paying for value not volume, transparency of healthcare performance through public reporting, and redesigning the care delivery process to take out waste. We took a step closer to paying for value with the day long meeting in Pewaukee on (April 6th)." - Dr. Toussaint

Better Access to Preventive Care- key goal of health insurance reform

2010-04-12T06:42:00.000-07:00

Insuring Resources Commentary:

This should go a long way toward improving health outcomes for many, many Americans, particularly for the chronically uninsured and underinsured who will now have first dollar coverage of preventive services-- no copays, deductibles, etc.

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From the NY Times
By LESLEY ALDERMAN
Published: April 9, 2010

A PRIMARY goal of the health care overhaul was to provide insurance for more people, namely those who could not afford coverage and those with pre-existing conditions for whom insurance was too costly.

But the new law also aims eventually to improve health insurance for everyone. By now you have probably read or heard about big changes like the rules that will require insurers to cover everyone who applies, regardless of health status, and forbid them from dropping people when they get sick.

You may not yet be aware, though, of another notable improvement to insurance, a change that could save a consumer or family hundreds of dollars a year. Under the new law, insurers must offer preventive services — like immunizations, cancer screenings and checkups — to consumers as part of the insurance policy, at no additional out-of-pocket charge.
The idea is that healthy Americans will be less costly Americans.

“This is transformative,” says Helen Darling, president of the National Business Group on Health, a nonprofit organization for large employers. “We’re moving from an insurance model that was based on treating illness and injury, to a model that’s focused on improving an individual’s health and identifying risk factors.”

The trend toward offering free preventive care has been gaining steam for a decade among large companies that provide employee health benefits. “Employers recognize that if they want to control costs, they have to persuade their workers to be healthier, including their children,” Ms. Darling said.

Three out of four large companies now offer free preventive health services to their workers, according to a 2009 survey by Mercer, a benefits consulting firm. Smaller employers, though, and individual health plans have been less likely to offer free care of any type.

But under the new law, more generous “wellness” benefits should eventually be available to almost all Americans with insurance.

“Eventually” is the operable word, though. Although this feature of the law goes into effect at the end of September, it will apply to new insurance policies only. That means if you switch to a different policy, or buy a new one, the preventive services will be offered.

But if you are already in a plan, your benefits probably will not be upgraded until the plan makes a significant change, like modifying its cost structure. Simply signing up again during next fall’s annual enrollment for the same coverage you now have may not necessarily cause the new preventive-care requirement to begin. Until the Department of Health and Human Services actually writes the new regulations for this and many other parts of the law, though, no one can say for certain what will count as a event that sets the preventive care requirement in motion.

A clear exception is Medicare. Starting next year, all enrollees — even if they do not change insurance plans — will be entitled to a free annual checkup and free screenings, like colonoscopies and mammograms.

For people of all ages, many details of the new prevention benefits will remain sketchy until Health and Human Services writes the rules.

“Here, as with many other places in the legislation, much will depend on how H.H.S. writes the implementation regulations,” says Timothy S. Jost, a professor of law at Washington and Lee University School of Law and an expert on health reform.

Generally, though, here is how preventive services will be integrated into health insurance plans, beginning this fall.

NO OUT-OF-POCKET FEES New group and individual health plans must provide preventive health services at no additional charge to consumers — the services will not be subject to a co-payment or to a deductible.

BASED ON FEDERAL GUIDELINES The preventive services will include those that the United States Preventive Services Task Force, a panel of outside experts under the Health and Human Services Department, has given their top A or B rating, like screenings for H.I.V., depression, osteoporosis in postmenopausal women, as well as breast, colorectal and cervical cancer. Children will receive free screenings for conditions including iron deficiency, sickle cell diseases and hypothyroidism. A government Web site has a handy calculator that lets you enter a person’s age and gender to see what those screening recommendations would be. (We have also posted the task force’s entire list of recommendations with the online version of this column.)

In addition, immunizations recommended by the Centers for Disease Control and Prevention will be covered, including vaccines for Hepatitis A & B, tetanus-diphtheria, seasonal flu vaccines and human papilloma virus for girls 9 to 26 years old.

WHEN IT TAKES EFFECT The parts of the law governing preventive care go into effect on Sept. 23 (six months after it was signed by the president). At that point, new plans, and plans that make changes, must start to offer free preventive care. If you are covered by Medicare, the upgrades will go into effect on Jan. 1.

If these changes sound too far off, or you have resigned yourself to not seeing any benefit because you will not be changing insurance plans any time soon, take note: if you have group coverage, you may already be entitled to some free preventive benefits. Check what your plan offers, either by calling the toll-free customer service number on your membership card, looking at your insurer’s Web site, or reading the plan’s summary plan description booklet (free services are usually listed up front).

“Employees tend not to read their benefits information,” Ms. Darling said.

One of your best health habits should be to make good use of the services that will not cost you a cent.

State of WI Creates Office of Health Care Reform

2010-04-07T22:18:00.000-07:00

Insuring Resources News Update:

State creates health care reform office

By Guy Boulton of the Journal Sentinel

Posted: April 7, 2010 10:14 p.m. |

Gov. Jim Doyle has created an Office of Health Care Reform to prepare for the sweeping changes from health care reform that take effect in 2014.

Those tasks will range from developing an exchange, where individuals and small businesses will be able to buy health insurance, to helping people understand the pending changes.

"Our direction now is pretty simple. It isn't to rehash the political debate," Doyle said at Froedtert Hospital on Wednesday. "It isn't just to fight this all out. It is to make sure we are really looking out for Wisconsin citizens."

The new office will be overseen by Karen Timberlake, the secretary of the Department of Health Services, and Sean Dilweg, the state insurance commissioner.

Some changes from the new law take effect immediately.

Small businesses that provide health benefits to their employees, for example, may be eligible for tax credits this year, Doyle said. The new Office of Health Care Reform will help make small businesses aware of the credit.

But implementing the most significant changes will take years. And designing easy-to-use exchanges - basically Web sites - will be one of the key tasks.

The health plans sold on the exchange will be required to offer a minimum standard of benefits, enabling consumers to make apples-to-apples comparisons when shopping for health insurance.

The exchanges are expected to offer a choice of benefit packages from a variety of insurance companies. People and families with incomes of up to 400% of the federal poverty level - $88,200 for a family of four this year - also will be eligible for subsidies to offset the cost of the coverage.

The sites also could provide consumer information on a health plan's performance.

The exchanges could be one of the most significant changes from the new law, with some economists contending they could increase competition among health insurers by allowing consumers to easily compare plans and their costs.

But the exchanges also could force insurance agents who sell individual policies out of the market. For one thing, health insurers will not have to pay sales commissions for the policies sold on the exchanges.

The exchanges also could affect agents and brokers who focus on small businesses.

Dan Schwartzer, executive vice president of the Wisconsin Association of Health Underwriters, which represents agents and brokers, said the effect is uncertain. But he said most small businesses probably would continue to work with agents because of their understanding of the market.

Doyle said he hoped to have an exchange up before 2014. But how that would work is unclear.

Before 2014, health insurers will not be required to cover people with pre-existing conditions. Health plans also would not be required to offer a minimum set of standard benefits, making apple-to-apple comparisons difficult. And small business rates would remain tied to the medical claims of their employees.

Schwartzer also noted that setting up the exchanges before 2014 could cause additional confusion when the new regulations kick in.

Health Care Implementation Details Discussed at the NAIC

2010-04-02T05:39:00.000-07:00

Insuring Resources Commentary:

As I've mentioned I'm a member of the Wisconsin Insurance Commissioner's Health Insurance Advisory Council. Our next meeting is April 13 and I expect the issues detailed in the article below will consume the majority of our agenda and discussion.

As the article states implementation of health care reform is going to be job 1 for insurance commissioners over the next five to ten years.

I'm looking forward to aiding in the implementation.

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Health Care Implementation Details Discussed at the NAIC

By ALLISON BELL
National Underwriter

State regulators tried to get an idea of how big is big this past weekend as they talked about implementing the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act.

President Obama created years–and possibly decades–of work for state insurance regulators, state health regulators, and the National Association of Insurance Commissioners, Kansas City, Mo., when he signed the bills creating PPACA and HCERA into law.

Policy experts are just starting to dig behind the act summaries and read the actual language in the new laws, but thoughts about just what state insurance regulators will have to do to put PPACA and HCERA into effect came up often at the NAIC’s spring meeting in Denver.

News surfaced that U.S. Health and Human Services Secretary Kathleen Sebelius, a former Kansas insurance commissioner and former NAIC president, already has hired Jay Angoff, a former Missouri insurance commissioner, to help her communicate with the NAIC and keep tabs on the private insurance market.

Kevin Lucia, a Georgetown University health policy researcher who receives NAIC funding to represent consumer interests in NAIC proceedings, tried to give members of the NAIC’s Consumer Liaison Committee an idea of the size of the task facing regulators by discussing PPACA provisions that refer directly to the NAIC.

The committee has posted Lucia’s list of those provisions on its Web site.

Some of the PPACA sections cited will do the following:

—Require the U.S. Department of Health and Human Services to consult with the NAIC to develop the summary of benefits and coverage disclosure documents required under the act.

—Create health plan external review procedures that must comply with the NAIC’s Uniform External Review Model Act.

—Require HHS officials to define permissible health insurance pricing age bands in consultation with the NAIC.

—Provide that the new health insurance exchanges must use a “uniform enrollment plan that takes into account criteria submitted by NAIC to HHS.”

—Require HHS to work with the NAIC to set the regulations needed to create the exchanges; establish qualified health plan requirements; and create risk-adjustment and reinsurance provisions and other terms of the insurance reform.

—Require NAIC to help figure out how commercial long term care insurance policies will or will not coordinate with the new CLASS Independence Benefit federal long term care benefits program.

Lucia suggests in a separate document that PPACA and HCERA indirectly will create a need for the NAIC to help with many other tasks.

“As states consider the list of legislative and regulatory tasks before them, many will seek other ‘best practice’ recommendations from NAIC, even if not required by the legislative language,” Lucia says in the document. “For example, new premium rate review standards, to be used by state and federal regulators in connection with the 2010 plan year, are an area in which the NAIC will likely need to play a larger role than the one envisioned in the federal legislation.”

NAIC will have just 6 to 9 months to give HHS officials recommendations about many PPACA and HCERA provisions, Lucia says in the document.

Also at the spring meeting, the NAIC took these actions:

—Adopted Actuarial Guideline 43-CARVM, which sets variable annuity reserving guidelines.

—Adopted a white paper on methods for helping troubled companies.

—Adopted a guideline on life and health guaranty fund disclosure notices.

In addition, the NAIC’s Internal Administration Subcommittee took these actions:

—Adopted a proposal to reinstitute salary increases for NAIC staffers effective July 1. Salaries were frozen July 1, 2009. The NAIC can increase salaries about 3.5% because its defined benefit pension plan has been doing better, officials say.

—Adopted a proposal to restructure the lines of credit that the NAIC provides for the Interstate Insurance Product Regulation Commission. The NAIC will defer principal and interest payments owed by the IIPRC until the IIPRC makes a profit of $250,000 or achieves an accumulated cash balance from operations of $500,000, officials say.

The NAIC’s Life Insurance and Annuities Committee took these actions:

—Released several valuation manual section drafts for public comment. They include sections on experience reporting requirements and reporting formats and a section on principles-based report requirements for business subject to a principle-based reserve valuation.

Also at the spring meeting, the Executive Committee of the NAIC announced it had established a Market Regulation Accreditation Task Force; a Multi-State Enforcement Task Force; and a Regulatory Modernization Task Force.

And in another development, the Accident and Health Working Group found that the 1985 NAIC cancer cost tables cannot be replaced because of a lack of data. The group is asking the American Academy of Actuaries, Washington, to help insurers and regulators cope with the deficiency by “giving “appropriate guidance on current application of the 1985 tables.”

PPACA Package To Lead To Intense Regulatory Scrutiny

2010-03-30T21:43:00.000-07:00

Insuring Resources Commentary:

As President Obama has reiterated throughout this process, ad nauseum at times, the insurance companies no longer have a free ride. Or at least in paraphrasing-- he has used language like that. And perhaps its true, not in Wisconsin, but perhaps for most of the country. In Wisconsin, I'd bet that little will change comparatively. Through our insurers and our Medicaid program we'll still cover more residents than almost every other state and we'll still regulate insurers like its a matter of life and death, because here it always has been serious business. In Wisconsin we'll continue to have insurers and providers push the envelope toward better quality and efficient care, because, that's what we do.

So bring on the scrutiny, Wisconsin will continue to excel and we'll continue to light the way for states like Alabama, Louisiana, and Georgia. Regulators, the state Medicaid programs, and domiciled insurers alike are scared stiff in the South, and they should be. Ever wonder why they are screaming and suing the federal gov't saying this federal health reform and the individual mandate are unconstitutional? Because down there insurance regulations and Medicaid coverage are virtually non-existent. The PPACA ends that and starts an era of accountability.

But yes, I agree with Milliman and their analysis that follows below. Scrutiny is going to be intense and is yet another reason I'm upset with Wisconsin's Congressional delegation. Now, Rep. Ron Kind (D-LaCrosse) and Sen. Herb Kohl have tried to add a Wisconsin flavor to health care reform. For the most part, I believe, they tried diligently but failed to convince their colleagues. Congress had a chance to expand our quality and efficient care processes nationwide, but didn't.

Sen. Feingold, Rep's. Baldwin, Obey, Petri, Sensenbrenner, Kagen and Moore were virtually non-existent in the debate and ideas process. Rep. Ryan in contrast has plenty of ideas and has provided a thoughtful counter proposal to the process. Although I disagree with most of Ryan's HSA and tax credit ideas I applaud his effort.

As for the Milliman analysis below I've highlighted in bold the portions I want you to pay the most attention to...... but again we're way ahead of the game.

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Milliman: Expect The PPACA Package To Lead To Intense Regulatory Scrutiny

The health insurance industry will face intense regulatory scrutiny due to the new Patient Protection and Affordable Care Act and its companion, the Health Care and Education Reconciliation Act of 2010, according to Milliman Inc.

PPACA was created by H.R. 3590 and HCERA, which was signed into law today, was created by H.R. 4872.

“While new regulation does not necessarily go into effect immediately, it is clear that health insurers now face increased scrutiny and a new layer of regulatory complexity,” researchers at Milliman, Seattle, write in an analysis of the new laws. “Health plans will have to focus on minimum loss ratios and administrative efficiency and will have to balance challenging cost dynamics against the need for affordable policies.”

PPACA would create a new system of health insurance exchanges that would help individuals and small businesses buy subsidized, standardized packages of health benefits. The new exchanges will change the level competition, the researchers say. The effects will be different in each state, and they may include reduction of distribution costs and potentially tempering of rate increases in the individual and small group insurance markets, the researchers add.

Also, due to an influx of an estimated 30 plus million new people into the insurance and Medicaid markets, “insurers will face unique pricing and risk-mix challenges,” the researchers write.

Some of the other considerations the researchers have identified:

- Cost effectiveness will be central, as in provider risk-sharing methods and evidence-based medicine. However, the researchers also note that “a new emphasis on prevention has uncertain cost implications.”

- New requirements—such as minimum loss ratios for insurers and the new tax on health insurers that sell relatively expensive "Cadillac plans," which is set to take effect in 2018--will affect plan design.

- Medicare Advantage plans will become less attractive to consumers and carriers, and the plans will face difficult questions about efficiency and benefits mix.

- Enterprise risk management will become essential.

- Strategic considerations will be influenced by local dynamics, including geographic cost variation and the existing regulatory environment in each state.

Wisconsin Physicians Weigh in on the PPACA

2010-03-26T21:29:00.000-07:00

Insuring Resources Commentary:
So what do Wisconsin physicians think of the newly enacted health insurance reform law of the land- the Patient Protection Affordable Care Act (PPACA)? Well, for the most part they like it, but they too, would like to see more emphasis on quality and efficiency. That speaks volumes doesn't it? Please see the statement below from the Wisconsin Medical Society.

I hope readers don't see this is as self-serving when I post opinions that agree with my take on this legislation. If you look back at the beginning of this blog in August 2009 you'll see that I have been a consistent advocate for payment reform and for Wisconsin's quality and efficient care.

As I've noted all along Wisconsin is in a pretty good place overall when it comes to our health care and health insurance systems.

1) We have numerous health plans that focus on quality and efficiency that are seen as national models.

2) We have a very low number of uninsured persons due to Wisconsin's BadgerCare program which provides greater Medicaid access to low-income individuals than the PPACA.

3) We have perhaps the strongest set of proactive insurance regulations in the nation.

4) We possess additional safety net programs like our Health Insurance Risk Sharing Program (www.hirsp.org) and Medicaid Purchase Plan (http://dhs.wi.gov/medicaid/Publications/p-10071.pdf) that together cover more than 30,000 Wisconsinites.

Wisconsin is a national model for how reform should be done. Its a pity our Congressional leaders couldn't expand Wisconsin's models nationwide.

********** ********** ***********
Reaction to health care reform legislation mixed
Madison (March 22, 2010)—“Members of the Wisconsin Medical Society have advocated for access to high quality health care for all patients in Wisconsin since the organization’s inception in 1841. Yesterday’s passage of health system reform (Patient Protection Affordable Care Act) by the U.S. House of Representatives extends coverage to millions of Americans who are currently uninsured, eliminates both lifetime caps on coverage and insurers’ ability to deny coverage for children because of pre-existing conditions. These are definitely steps in the right direction.

“At the same time, many issues remain unresolved, such as national lawsuit reform and the permanent fix of Medicare’s flawed payment formula, which penalizes cost-efficient states such as Wisconsin and threatens access to care for our seniors.

“Wisconsin physicians have been recognized nationally for providing the highest quality care at a low cost, and we support payment efforts such as those championed by Rep. Ron Kind that focus on value, not volume. Because Wisconsin’s health care safety net is already severely stressed, we are concerned about how this legislation and the subsequent reconciliation bill will impact the delivery of care in our state.”

Statement attributable to Robert Jaeger, MD, President, Wisconsin Medical Society.

Health care costs out of control - a cartoon

2010-03-25T06:58:00.000-07:00

Insuring Resources Commentary:
I like to post viepoints from others, particularly when they agree with mine.

* * * * * * * * * * * * *

Health care ambulance is out of (cost) control

From The Capital Times, Madison WI
Cartoon and opnion by Phil Hands
Wednesday, March 24, 2010 10:33 pm |

I don’t usually draw cartoons on national issues, but I thought this cartoon did a pretty good job of summing up my feelings on our new health care bill.

Don't get me wrong, I'm glad the Democrats passed a health care reform bill.

It's good that insurance company's can no longer cry "pre-existing condition” and drop paying customers as soon as they get sick. I'm glad kids won't be denied insurance on the basis of pre-existing conditions anymore, and it's good that millions more Americans will have access to health insurance.

But for as massive as this bill is, there is very little in it that will actually make health care cost less and that is the crisis we are facing. Health care is too darn expensive, whether or not you have insurance to pay for it.

This bill needed to include serious tort reform and incentives to end the obscene practice of paying doctors by the amount of tests they order and not by the health of their patients. If you could somehow add provisions like these the bill, it would have been a lot better.

Lean Process in Practice

2010-03-24T06:42:00.000-07:00

Insuring Resources Commentary:

I found the article included below on GE Healthcare's website. It details how Brigham and Women's Hospital in Boston, MA, implemented Lean tools in their clinical laboratory. These processes streamlined their laboratory operations and reduced wait times for lab tests.

The article states:
"The effort brought about rapid and significant improvements in key measures of quality and consistency. For example, in just six months, average wait times in phlebotomy decreased from 14-17 minutes to 4-5 minutes. In addition processing in the laboratory for specific tests (see table) now meets cycle time goals more than 90percent of the time."

This was accomplished by "Eliminating non-value-added tasks, such as duplicative sample container labeling, and "Reconfiguring one station that had been reserved for patients susceptible to fainting by installing a chair that can be used for all patients."

There's no information in the article about cost savings, but reduced wait times and elimination of non-value added tasks must achive some savings.

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LEAN TOOLS IN THE CLINICAL LABORATORY
Rapid-improvement events enhance laboratory performance

As plans advanced to automate the Clinical Laboratories, Brigham and Women’s Hospital faced growing specimen volumes in constrained space amid concerns about technician retention and recruitment.

The hospital staff worked with the Performance Solutions consulting group of GE Healthcare and the hospitals’ Center for Clinical Excellence as a part of a Lean Skills Transfer engagement to assess laboratory performance and design process improvements at all key steps in the value stream, from the time the patient arrives to provide a specimen until the lab report is complete.

The effort brought about rapid and significant improvements in key measures of quality and consistency. For example, in just six months, average wait times in phlebotomy decreased from 14-17 minutes to 4-5 minutes. In addition processing in the laboratory for specific tests (see table) now meets cycle time goals more than 90percent of the time.

“While our volumes were growing, we were also planning for laboratory automation,” says Dr. Milenko Tanasijevic, the Director of Clinical Laboratories. “We wanted to optimize workflow first, rather than automate suboptimal processes. Lean offered a unique set of tools that allowed our staff to break processes down into discrete steps to discern between non-value-added and critical, value-added steps.

“We achieved significant improvements in patient satisfaction, reduced wait times in
phlebotomy, streamlined processes and shortened laboratory turnaround time.”

Streamlining phlebotomy

A team made up of Clinical Excellence process improvement leaders, laboratory staff, and GE lean experts conducted a value stream mapping session in November 2007. Then they performed five kaizen rapid-improvement events over the next six months, each focusing on specific process areas.

One kaizen addressed wait times in the outpatient phlebotomy clinic, a small space with five drawing stations. Patients arrive without appointments and are seen on a first-come, first-served basis. Wait times were inconsistent: some patients were seen almost on arrival, but others waited 30 to 40 minutes, or longer.

The analysis found an imbalance between demand and staffing, especially early in the day. Patients arriving before the actual opening time caused a backlog that had a ripple effect lasting into the morning. To address that, the team decided to open the center 30 minutes earlier and increase staffing during the morning hours.

The kaizen also identified ways to manage patients’ expectations and improve patient flow. A “take a number” system allowed patients to anticipate their wait time. Those patients needing urine testing had their specimens collected in the interval between arrival and blood draws.

The team also introduced a flow coordinator role, responsible for escorting patients from the waiting area to the drawing stations, instead of having the phlebotomists walk to the waiting area and call for patients. The team also took several steps to make the phlebotomists’ work more efficient. These included:

> Eliminating non-value-added tasks, such as
duplicative sample container labeling.

> Reconfiguring one station that had been reserved
for patients susceptible to fainting by installing a
chair that can be used for all patients.

Improving laboratory workflow Four kaizens addressed various aspects of laboratory sample handling and processing workflow. The critical metrics included cycle time from logging of the specimen to entry of the result to the Laboratory Information System, measured for average time and percent compliance with cycle time goals.

The team made a variety of changes in staffing and procedures to eliminate issues that caused processing bottlenecks. Data gathered during the process made it possible to optimize staff levels to meet demand.

In addition, instead of having individual technicians perform all specimen processing steps, the Lean participants devised a team-based approach, reducing technician travel distance significantly. The group also reconfigured workspace layouts and co-located equipment for efficiency.

Sustaining momentum
Using lean tools to make processes more visible to staff and patients was a key tenet in working across the value stream. Surveys showed that phlebetomy patient satisfaction increased by more than 20 percentage points after the kaizen improvements.

The benefits of Lean and the kaizen have lasted well beyond the original engagement. For example, after the first 5S project, the hospital staff undertook two more such activities in other areas of the chemistry laboratory.

“Lean and the kaizens have enabled us to brainstorm solutions and actually go out and test them in a real-time mode,” says Tanasijevic. “It shortened the interval from issue identification and idea generation to trying out proposed changes in the laboratory.”

Dorothy Goulart, MS, RN, Director of Performance Improvement with the Center for Clinical Excellence, observes, “We have had success with facilitating design sessions
and involving staff and managers in problem solving, but we were challenged to consistently implement and sustain changes. By combining change acceleration, Lean and kaizen event approaches, we have been able to strengthen our institution’s ability to achieve tangible results while building new capabilities and knowledge.”

More Details on Final Health Insurance Reform Bill

2010-03-22T21:07:00.000-07:00

Insuring Resources Commentary:

I will now refrain from calling this a health care reform bill. This is health insurance reform and therefore is an ugly stepsister of true reform. This reform does not provide the incentives we need for quality and efficiency. Therefore, I do not believe it will rein in health care costs. Opportunity Lost.

The insurance reforms listed below are essential, there is no question about that. But the opportunity to make health care and health insurance affordable has been botched. The efficiency and quality incentives apply only to Medicare, which covers about 15% of Americans.

------------------
This list was posted by CBS News
Cost: $940 billion over ten years.

Deficit:
Would reduce the deficit by $143 billion over the first ten years. That is an updated CBO estimate. Their first preliminary estimate said it would reduce the deficit by $130 billion over ten years. Would reduce the deficit by $1.2 billion dollars in the second ten years.

Coverage:
Would expand coverage to 32 million Americans who are currently uninsured.
Health Insurance Exchanges:

The uninsured and self-employed would be able to purchase insurance through state-based exchanges with subsidies available to individuals and families with income between the 133 percent and 400 percent of poverty level.
Separate exchanges would be created for small businesses to purchase coverage -- effective 2014.
Funding available to states to establish exchanges within one year of enactment and until January 1, 2015.

Subsidies:
Individuals and families who make between 100 percent - 400 percent of the Federal Poverty Level (FPL) and want to purchase their own health insurance on an exchange are eligible for subsidies. They cannot be eligible for Medicare, Medicaid and cannot be covered by an employer. Eligible buyers receive premium credits and there is a cap for how much they have to contribute to their premiums on a sliding scale.
Federal Poverty Level for family of four is $22,050

Paying for the Plan:
Medicare Payroll tax on investment income -- Starting in 2012, the Medicare Payroll Tax will be expanded to include unearned income. That will be a 3.8 percent tax on investment income for families making more than $250,000 per year ($200,000 for individuals).
Excise Tax -- Beginning in 2018, insurance companies will pay a 40 percent excise tax on so-called "Cadillac" high-end insurance plans worth over $27,500 for families ($10,200 for individuals). Dental and vision plans are exempt and will not be counted in the total cost of a family's plan.
Tanning Tax -- 10 percent excise tax on indoor tanning services.

Medicare:
Closes the Medicare prescription drug "donut hole" by 2020. Seniors who hit the donut hole by 2010 will receive a $250 rebate.

Beginning in 2011, seniors in the gap will receive a 50 percent discount on brand name drugs. The bill also includes $500 billion in Medicare cuts over the next decade.

Medicaid:
Expands Medicaid to include 133 percent of federal poverty level which is $29,327 for a family of four.

Requires states to expand Medicaid to include childless adults starting in 2014.

Federal Government pays 100 percent of costs for covering newly eligible individuals through 2016.

Illegal immigrants are not eligible for Medicaid.

Insurance Reforms:
Six months after enactment, insurance companies could no longer deny children coverage based on a preexisting condition.

Starting in 2014, insurance companies cannot deny coverage to anyone with preexisting conditions.

Insurance companies must allow children to stay on their parent's insurance plans through age 26.

Abortion:
The bill segregates private insurance premium funds from taxpayer funds. Individuals would have to pay for abortion coverage by making two separate payments, private funds would have to be kept in a separate account from federal and taxpayer funds.
No health care plan would be required to offer abortion coverage. States could pass legislation choosing to opt out of offering abortion coverage through the exchange.
**Separately, anti-abortion Democrats worked out language with the White House on an executive order that would state that no federal funds can be used to pay for abortions except in the case of rape, incest or health of the mother. (Read more here)

Individual Mandate:
In 2014, everyone must purchase health insurance or face a $695 annual fine. There are some exceptions for low-income people.
Employer Mandate:

Technically, there is no employer mandate. Employers with more than 50 employees must provide health insurance or pay a fine of $2000 per worker each year if any worker receives federal subsidies to purchase health insurance. Fines applied to entire number of employees minus some allowances.

Immigration:
Illegal immigrants will not be allowed to buy health insurance in the exchanges -- even if they pay completely with their own money.

House approves Health Insurance Reform- a timeline of how it will roll-out

2010-03-22T06:48:00.000-07:00

Insuring Resources Commentary:
Health Insurance Reform is almost a reality. Sorry, we didn't get health CARE reform. The Senate must now pass by a simple majority the changes the house made to the original Senate bill. Then the President must sign it and that's it.

But what happens, when? See below courtesy of the Wall Street Journal.

--------------------------------
WSJ- 3/22/10

What happens in 2010

Subsidies begin for small businesses to provide coverage to employees.
Insurance companies barred from denying coverage to children with pre-existing illness.

Children permitted to stay on their parents' insurance policies until their 26th birthday.

What happens in 2011

Set up long-term care program under which people pay premiums into system for at least five years and become eligible for support payments if they need assistance in daily living.
Taxes and fees

Drug makers face annual fee of $2.5 billion (rises in subsequent years).

What Happens in 2013
Taxes and fees

New Medicare taxes on individuals earning more than $200,000 a year and couples filing jointly earning more than $250,000 a year.
Tax on wages rises to 2.35% from 1.45%.
New 3.8% tax on unearned income such as dividends and interest.
Excise tax of 2.9% imposed on sale of medical devices.
Cost control

Medicare pilot program begins to test bundled payments for care, in a bid to pay for quality rather than quantity of services.

What Happens in 2014

Create exchanges where people without employer coverage, as well as small businesses, can shop for health coverage. Insurance companies barred from denying coverage to anyone with pre-existing illness.
Requirement begins for most people to have health insurance. Subsidies begin for lower and middle-income people. People at 133% of federal poverty level pay maximum of 3% of income for coverage. People at 400% of poverty level pay up to 9.5% of income. (Poverty level currently is about $22,000 for a family of four.)
Medicaid, the federal-state program for the poor, expands to all Americans with income up to 133% of federal poverty level.
Subsidies for small businesses to provide coverage increase. Businesses with 10 or fewer employees and average annual wages of less than $25,000 receive tax credit of up to 50% of employer's contribution. Tax credits phase out for larger businesses.
Taxes and fees

Employers with more than 50 employees that don't provide affordable coverage must pay a fine if employees receive tax credits to buy insurance. Fine is up to $3,000 per employee, excluding first 30 employees.
Insurance industry must pay annual fee of $8 billion (rises in subsequent years).
Cost control

Independent Medicare board must begin to submit recommendations to curb Medicare spending, if costs are rising faster than inflation.

What Happens in 2016
Taxes and fees

Penalty for those who don't carry coverage rises to 2.5% of taxable income or $695, whichever is greater.
2017
Coverage

Businesses with more than 100 employees can buy coverage on insurance exchanges, if state permits it.

What Happens in 2018
Taxes and fees

Excise tax of 40% imposed on health plans valued at more than $10,200 for individual coverage and $27,500 for family coverage.

Final Health Care Reform Vote May Occur Sunday

2010-03-18T07:09:00.000-07:00

Insuring Resources Commentary:Health care reform passage is inching closer to passage.

But the cost efficiency and quality initiatives STILL only pertain to Medicare. Dems are still not opening their eyes to the bi-partisan possibilities that lean and efficent health care payment reforms would foster. I firmly believe if the package included a timeline for real payment reforms based on efficiency some Republicans would vote for it. Or at the very least some of the conservative public would view them very negatively for not voting for reforms that tackle cost across the board.

Both sides apparently agree this is needed, I've cited several quotes from Senators and Representatives from both sides (Waxman, Grassley, Harkin, Kohl, Hatch and others) on this blog since I started in August. Why is it not in the bill? I'll let you the reader speculate on that one.

As you'll see from the article below, the actual details have changed very, very little.

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Source: Associated Press (March 18, 2010)
House Dems on track for vote on $940B health bill
WASHINGTON – House Democrats are pushing to the brink of passage a landmark, $940 billion health care overhaul bill that would simultaneously deliver on President Barack Obama's promise to expand coverage while slashing the deficit, a strategy aimed at attracting support from the party's fiscal conservatives.

The 10-year plan would provide coverage to more than 30 million people now uninsured through a combination of tax credits for middle class households and an expansion of the Medicaid program for low income people. Release of the legislation later Thursday sets the stage for a House vote on Sunday.

It would restructure one-sixth of the U.S. economy in the biggest expansion of the social safety net since Medicare was created in 1965. It would also impose new obligations on individuals and businesses, requiring for the first time that most Americans carry health insurance and penalizing medium-sized and large companies that don't provide coverage for their workers.

Hospitals and doctors, drug companies and insurers would gain millions of new paying customers, but they would also have to adjust to major changes. Medicare cuts would force hospitals to operate more efficiently or risk going out of business. Insurance companies would face unprecendented federal regulation. Health care industries would be hit with new federal taxes. Upper-income households would face a new tax on investment earnings.

Rep. Steny Hoyer of Maryland, the Number 2 House Democrat, said the economy would be stronger in the long run. The bill is estimated to reduce federal deficit by more than $130 billion over its first 10 years — and $1.2 trillion in the second decade, he said. Hoyer called it the biggest deficit reduction bill since the 1990s, when President Bill Clinton put the federal budget on a path to surplus.

Authoritative numbers from the Congressional Budget Office were expected later Thursday, but Speaker Nancy Pelosi, D-Calif., was already pleased. "We loved their number," said Pelosi, who is privy to the estimates.

"I think the momentum is growing for this bill," said Hoyer. "The more and more people have looked at this bill...a greater number of people are becoming more comfortable."

The Democrats' drive took on a growing sense of inevitability, picking up endorsements Wednesday from a longtime liberal holdout and from a retired Roman Catholic bishop and nuns who broke with church leaders over the bill's abortion provisions.

"This is a magnificent bill for the American people," said the Democrat's top vote-counter, Rep. Jim Clyburn, D-S.C. Leaders appeared increasingly confident of getting the 216 votes they need to pass the bill.

But House Republican Leader John Boehner of Ohio said his party's lawmakers will "do everything that we can do to make sure this bill never, ever, ever passes."

The legislation would be vulnerable to attack after it passes, since the biggest changes would be phased in slowly. The major expansion of coverage would not come until 2014, when new health insurance marketplaces open for business.

In the meantime, the legislation calls for a series of new consumer benefits. Starting this year, insurers could not deny coverage to children because of an pre-existing health problem, nor could they place lifetime dollar caps on the amount of coverage. A nhigh-risk health insurance pool would provide coverage to uninsured people who can't get private coverage because of health problems.

Democrats are following a complicated two-track legislative strategy for passing the bill. First, the House will have to approve a Senate bill that many of its Democratic members object to. Then both chambers will quickly pass a package of fixes agreed to in negotiations with the White House.

Since the House will vote first, Hoyer said lawmakers are seeking assurances from their Senate counterparts that they have enough votes to pass the follow-up measure as well.

Democrats are promising 72 hours for lawmakers and the public to review the legislation once it's released, so that would push a House vote on the bill until Sunday at the earliest — "during daylight hours," said Rep. Henry Waxman, D-Calif.

Sunday is also the day Obama plans to leave for an overseas trip. Obama already has delayed the trip once so he can be present for the vote and help with the 11th-hour arm-twisting that inevitably will precede it.

Hoyer said Obama's travel plans would not interfere with Democrats' ability to pass the bill. "I think the president's presence helps, but is it needed?" said Hoyer. "You can dial a cell phone anywhere in the world."

Obama expressed optimism in an interview Wednesday with Fox News Channel. "I'm confident it will pass," he said. "And the reason I'm confident that it's going to pass is because it's the right thing to do."

In a last minute flurry Wednesday, Democrats were revisiting details of a planned tax on high-cost insurance plans that's been a sticking point for organized labor. Richard Trumka, head of the AFL-CIO, met with Obama at the White House on Wednesday, and officials said the labor leader raised concerns. Obama has proposed significantly softening the tax in keeping with an earlier deal with organized labor, and labor leaders want to preserve that accord, at a minimum.

Trumka was to brief members of the AFL-CIO's executive council on Thursday, and the federation was expected to announce whether it would support the legislation.

The long-anticipated measure is actually the second of two bills that Obama hopes lawmakers will send him in coming days, more than a year after he urged Congress to remake the U.S. health care system. The first cleared the Senate late last year but went no further because House Democrats demanded significant changes — the very types of revisions now being packaged into the second bill.

After heavy lobbying from Obama, liberal Rep. Dennis Kucinich, D-Ohio, announced his support Wednesday, becoming the first Democrat to declare he would vote in favor of the legislation after opposing an earlier version. Shortly after Kucinich's announcement, a letter was released from 60 leaders of religious orders urging lawmakers to vote for the legislation.

The endorsement reflected a division within the Catholic Church. The U.S. Conference of Catholic Bishops opposes the Senate-passed legislation, contending it would permit the use of federal funds for elective abortions.

Late Wednesday, however, retired Bishop John E. McCarthy of Austin, Texas, told The Associated Press he was urging approval of the legislation.

Reflecting growing opposition among states to the health care bill, Idaho Gov. C.L. "Butch" Otter, a Republican, signed a measure Wednesday requiring the state attorney general to sue the federal government if residents are forced to buy health insurance. Similar legislation is pending in 37 other states.

Insurance Industry Offers Data on Means to Reduce Skyrocketing Health Care Costs

2010-03-11T20:04:00.000-08:00

Insuring Resources Commentary:
Now we're getting somewhere!

If this data allows some alteration in the p[ending reform bills this could be the catalyst to lead to a bipartisan solution on health care reform. This is very encouraging, but we'll see...

****Full disclosure: I write and edit health insurance continuing education textbooks and study guides for AHIP****
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WASHINGTON BUREAU -- The health insurance industry has agreed to give the Obama administration detailed data on what a health reform bill must do to reduce the skyrocketing cost of health care.

The data will be available “very shortly,” a spokesman for America’s Health Insurance Plans, Washington, said today.

AHIP President Karen Ignagni promised to provide the data Wednesday during AHIP’s annual National Policy Forum.

She made her comments after Health and Human Services Secretary Kathleen Sebelius told health insurers that continued health insurance industry opposition to health reform and continued escalation of premiums will ultimately hurt the industry.

In response, Ignagni said she hoped that providing the data and Sebelius’s appearance will mark the “beginning of a change” in the tone of the health reform debate.

In comments at the conference Tuesday, Ignagni had decried the “vilification rather than problem solving” that now marks the debate over health reform legislation.

In her comments, Sebelius said that opposition to the Democratic legislation “won’t work in the long run for the American people or our healthcare system.”

Her concern, she said, is that if insurers continued to oppose Democrats’ health legislation, premium increases would continue and more small businesses would drop health coverage for their employees.

“You can continue your opposition to reform,” Sebelius said. “If you do, and reform goes down to defeat, we know what will happen.”

In response, Ignagni said after Sebelius’ comments that “insurers have been concerned that the current legislation will make the current system more expensive and not more affordable.”

Her specific concern is that health coverage mandates in the current versions of health reform legislation do not provide enough incentives to buy health insurance are not strong enough.

If enough young, healthy individuals choose not to buy insurance, “the people in the pool will be the oldest ones and the ones with the highest health problems,” Ignagni said.

At the same time, the White House issued a memorandum to all government departments calling for them to use “payment recapture audits” designed to curb waste and fraud, presumably primarily in the Medicare and Medicaid system.

This would give incentives to private auditors to examine government payments and report fraud to the agencies.

This was designed to adopt a key Republican proposal on health reform, curbing fraud and abuse in government programs.

This is What I'm Talking About When I Argue for Efficient Care Incentives

2010-03-11T06:21:00.000-08:00

Insuring Resources Commentary:

We need to improve the efficiency of care and provide doctors inentives to try less invasive and less costly tests first. The article suggests: To decide whether someone needs an angiogram, a doctor assesses a patient's medical status and symptoms, and usually tries a noninvasive test, such as an ultrasound of the heart or having the patient run on a treadmill. It is this gatekeeper process that needs improvement, researchers suggested in Thursday's issue of the New England Journal of Medicine.

The current health care reform proposals do nothing to combat this problem.

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Study Suggests Too Many Invasive Heart Tests GivenAssociated Press
Malcolm Ritter
March 10, 2010

A troublingly high number of U.S. patients who are given angiograms to check for heart disease turn out not to have a significant problem, according to the latest study to suggest Americans get an excess of medical tests.

The researchers said the findings suggest doctors must do better in determining which patients should be subjected to the cost and risks of an angiogram. The test carries a small but real risk - less than 1 percent - of causing a stroke or heart attack, and also entails radiation exposure.

"We can do better. There is no doubt in my mind," said Dr. Ralph Brindis of the University of California, San Francisco, one of the study's authors.

Every year in the United States, more than a million people get an angiogram, in which a thin tube is inserted in the arm or groin and threaded up to the heart to check for blocked arteries that could lead to a heart attack. Dye is injected through the tube to make blockages show up on X-rays.

Angiograms are often given to patients who might be having a heart attack or have symptoms that suggest a serious blockage. They are also sometimes done on people who may have some less clear-cut symptoms, like shortness of breath, or no symptoms but some risky traits like high cholesterol and an abnormal result on another heart test. This group accounts for about 20 to 30 percent of angiogram cases.

In the study, nearly two-thirds of the patients in this second group were found to have no serious blockages.

The researchers could not establish why so few proved to have heart disease. But Dr. Harlan Krumholz, a Yale cardiologist and health-outcomes researcher unconnected to the study, said he thinks the problem arises because doctors are afraid of missing something, and also getting sued.

"We fear doing too little," he said. "I think that we developed a culture where people feel that doing more and knowing more is always the proper course. What that does is sometimes lead us to overuse."

To decide whether someone needs an angiogram, a doctor assesses a patient's medical status and symptoms, and usually tries a noninvasive test, such as an ultrasound of the heart or having the patient run on a treadmill. It is this gatekeeper process that needs improvement, researchers suggested in Thursday's issue of the New England Journal of Medicine.

White House Holds Meeting with Top Insurers

2010-03-09T06:12:00.000-08:00

Insuring Resources Commentary:
President Obama has said that he is incorporating GOP ideas into the final last ditch effort to enact health care reform. From the GOP he has heard repeatedly that his plan does not control rising health care costs.

Then on March 5th, as detailed in the article below, he met with Insurers that told him, and his Secretary of Health Kathleen Sebelius, that health care costs are the real problem. His chief budgetary advisor Peter Orszag has also been talking about this for a year. Let's hope its beginning to sink in.

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White House Holds Meeting with Top Insurers

Increasingly cast as the villain in the nation’s rising cost for health care, five of the nation’s largest health care insurers met with the Obama Administration to argue that they are bit players in a much larger production.

The meeting, called by U.S. Department of Health and Human Services Secretary Kathleen Sebelius, focused on premium increases by large insurance companies, the growing focus of health care reform efforts in Washington, D.C., amid a shaky economy.

The White House meeting included Sebelius and chief executives from UnitedHealth Group, WellPoint, Aetna, Health Care Service Corp. and CIGNA, along with a brief appearance by President Barack Obama.

White House spokesman Robert Gibbs said the president “stopped by” the March 4 meeting, armed with a letter from a 50-year-old woman from Ohio, diagnosed with carcinoma and struggling to find affordable health insurance, pleading with the president for help. Gibbs said the letter was “to remind everyone what’s at stake with the final push for health care reform and …what happens if we walk away.” He added that the president talked about the need for comprehensive reform with the health insurance executives, the need to stop blocking such reform on their part and echoed Sebelius’ call for actuarial data justifying large increases in premiums “at a time in which health care inflation is not nearly on the order of magnitude of what we’ve seen here.”

Following the meeting, Sebelius said the nation needs “some transparency” for “people to understand what’s going on.” She said the meeting “focused on what is happening with the kind of jaw-dropping rate increases that people are seeing,” according to media reports.

A Matter of Rising Costs

Ronald Williams, chairman and CEO of Aetna, was one of the attendees of the meeting and told PBS’ Nightly Business Report the session “was a strong focus on understanding the impact that these rate increases are having on working families and individuals who may be reaching the limits of affordability for individual health insurance.”
He added that all parties had a “constructive dialogue” on what is driving rate increases and steps needed to make individual insurance more affordable and sustainable for the future.
“But I think we have to start with the increase in the premium is based on the increase in the health care cost,” Williams said. “And so the premium is a cumulative result of how much more hospitals need and get in their renewals. Some hospitals are asking [for] 40% increases.”

Williams cited increases in pharmaceuticals, in physicians’ cost device and younger, healthier people dropping insurance, making the larger pool “progressively composed of those individuals who tend to be older and sicker and use more services.”
In a statement, UnitedHealth Group President and CEO Stephen J. Hemsley said, “To achieve true and sustainable reform, it is essential to first bring costs under control.

“Trying to focus the debate on insurance premiums masks the complexity of the challenge our country faces to effectively reform our health care system.,” he said. “The cost of insurance is driven by the underlying cost pressures we see throughout the health care system. The majority of our medical cost increases will be from hospitals and doctors charging higher prices and, to a lesser extent, from increased treatment volumes.”
Hemsley added that UnitedHealth Group knows “from first-hand experience” the financial challenges facing nearly 70 million Americans and wants to help find the solution.

“Unfortunately, up to this point the health reform debate has yet to truly confront the cost issue,” he said. “Our participation in today’s meeting affirms our commitment to constructive engagement and a desire to identify a fiscally responsible, sustainable path forward that truly bends the cost curve. If we can slow the soaring cost of care, our shared goal of expanding access and improving quality will be achievable.”

Regulators’ role
Also attending the session were four of the nation’s insurance regulators, representing the National Association of Insurance Commissioners (NAIC).
In a statement, the NAIC said its representatives stressed the importance of thorough and objective rate review, echoing the call for actuarially justified work without discriminating unfairly against any policyholders.

“It is absolutely critical that the state role in assuring the solvency of health plans and promoting competitive markets be preserved,” said Sandy Praeger, chair of the NAIC Health Insurance and Managed Care Committee and Kansas insurance commissioner. “Protecting consumers from high premiums remains a priority, but it is even more important to protect them from insolvency.”

President's statement moving forward with health care reform

2010-03-08T07:05:00.000-08:00

Insuring Resources Commentary:

It will be interesting to see if the measure includes the cost control measures on health CARE that I have promoted since the beginning. When I started this post I realized that it is the 99th post I have entered on this blog. When I started this in August I did not envision posting 99 items. I certainly did not envision this process lasting until March. There are several items I disagree with in the Senate bill, including the Cornhusker Kickback and some others. I belive there should be a stronger employer mandate. I believe the abortion language should be tougher.

But the most egregious error by far is the omission of a game changer on the way health care is financed. This is a BI-PARTISAN issue as Republicans have been shouting about this from the beggining. Obama started the whole process during his campaign talking about this but now barely utters a word on it. If this had been the center piece of health care reform I believe strongly that we would have had a bi-partisan bill passed before The end of 2009.

We must have a health care reform bill that includes, at the very least, efficiency and quality provider incentives across all payment sources- Medicare, Medicaid and the private health plans. I realize implementing this takes time but we could do it incrementally like the incentives in place right now for electronic medical records that were passed in the ARRA last February.

We should change health care financing to an EPISODE of CARE reimbursement, rather than fee-for-service. This change would create higher quality and efficiency of care. We could easily implement these changes in Medicare by 2014 and the whole system by 2017 and manintain the private health market like the Republicans want. We wouldn't need a public plan option if we followed the above prescription.
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President Obama 3/6/10:
“This week, I asked Congress to schedule a final vote on reform that will give families and businesses more control over their health care by holding insurance companies more accountable. This comes after nearly a year of debate, as well as a seven hour summit with Democrats and Republicans where we had a public and substantive discussion on health care. Since then, I’ve said that I’m willing to incorporate some ideas offered by Republicans, and we’re eliminating special provisions that had no place in health care reform.

Now, despite all the progress and improvements we’ve made, Republicans in Congress insist that the only acceptable course on health care is to start over. But you know what? The insurance companies aren’t starting over."

If Only We Could do it like Singapore- the only way to do it correctly with HSAs

2010-03-05T06:48:00.000-08:00

Insuring Resources Commentary:

Health Savings Accounts give individuals who buy insurance a tax deduction for money they set aside for a high-deductible plan. Since tax deductions are worth more to people in higher tax brackets, and since high-deductible plans appeal more to those with lower medical expenses, the plans attract the rich and healthy, leaving the poor and sick behind. This is why the Republican's plan is not workable for most Americans.

Singapore does it by setting affordable pricing benchmarks with which private providers compete. Supply-side rules that favor training new family doctors over pricey specialists are more extensive.

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An article on Singapore's very effec tive health care insurance system....
by Matt Miller at the Washington Post 3/3/10

The only rich nation that boasts universal coverage with health outcomes better than ours while spending one-fifth as much per person on health care. Introducing (drum roll please): Singapore.

Yes, it's an island city-state of just 5 million people. Yes, it's more or less a benevolent dictatorship. And, yes, until recently, bringing chewing gum into Singapore could land you in jail. But Singapore, a poor country a few decades ago, now boasts a higher per capita income (when adjusted for local purchasing power) than the United States. And here's the astonishing fact: Singapore spends less than 4 percent of its GDP on health care. We spend 17 percent (and Singapore's somewhat younger population doesn't begin to explain the difference). Matching Singapore's performance in our $15 trillion economy would free up $2 trillion a year for other public and private purposes.

Do I have I your attention?

Today we can't find cash to recruit a new generation of great teachers, rebuild our roads and bridges, pay down the national debt, or invest in better airports, high-speed rail, a clean energy revolution or any of a hundred other things sensible patriots know we should do to renew the country. We can't do these things in large part because the Medical Industrial Complex vacuums up every spare dollar in sight. It's only slightly melodramatic to assert that if we could run our health-care system as efficiently as Singapore's, we could solve most of our other problems.

So how does Singapore do it?

In health circles it's always conservatives who bring up Singapore, because of the primacy it places on personal responsibility. According to Phua Kai Hong of the National University of Singapore, roughly one-third of health spending in Singapore is paid directly by individuals (who typically buy catastrophic coverage as well); in the United States, by contrast, nearly 90 percent is picked up by third-party insurers, employers and governments. Singaporeans make these payments out of earnings as well as from health savings accounts. The system is chock-full of incentives for thrift. If you want a private hospital room, for example, you pay through the nose; most people choose less expensive wards.

Conservatives are right: Singaporeans have the kind of "skin in the game" that promotes prudence.

But that's only half the story. There's also a massive public role. For starters, adequate savings for retirement and health expenses are mandated by government (employees must sock away 20 percent of earnings each year, to which employers add 13 percent). Public hospitals provide 80 percent of the acute care, setting affordable pricing benchmarks with which private providers compete. Supply-side rules that favor training new family doctors over pricey specialists are more extensive than similar notions Hillary Clinton pushed in the '90s. And in Singapore, if a child is obese, they don't get Rose Garden exhortations from the first lady. They get no lunch and mandatory exercise periods during school.

There's more (including an ample safety net for the poor), but you get the gist: Singapore achieves world-class results thanks to a bold, unconventional synthesis of liberal and conservative approaches. It's further to the left and further to the right than what President Obama or his foes now seek. The island's real ideology is pragmatic problem-solving. It works thanks to cultural traditions that let this eclectic blend flourish. The system is nurtured by talented, highly paid officials who have the luxury of governing for the long-term without being buffeted much by politics.

We obviously can't transplant Singapore's approach wholesale to the United States. But the reason we can't emulate even some of Singapore's success has to do with that iron law of health-care politics: Every dollar of health-care "waste" is somebody's dollar of income. As a stable advanced democracy, we're so overrun by groups with stakes in today's waste that real efficiency gains are perennially blocked.

Any hope for something better starts with tallying the price of today's paralysis. Think about that $2 trillion the next time you see states, citing budget woes, shut the door to college on tens of thousands of poor American students. Or when the next firm moves jobs overseas because health costs here are soaring. Or when the next bridge collapses. Thanks, Medical Industrial Complex!

We return now to our regularly scheduled political battle, which (no matter the outcome, according to some projections) will leave health costs headed to more than 20 percent of GDP by 2019.

How to Fix the Cost Issue.... while increasing quality

2010-02-26T23:52:00.000-08:00

Insuring Resources Commentary--

Yesterday at the Wisconsin State Capitol a leading expert on cost and quality issues in ehalth care gave a presentation to state lawmakers and others.

Here are some of the details:

Dartmouth Atlas Author Sees ACOs as Solution to Cost, Quality Concerns

Elliott Fisher, MD, Professor of Medicine at Dartmouth Medical School, presented his ideas on how Accountable Care Organizations (ACOs) could be promoted and implemented as a way to improve population health and lower costs. Fisher presented to a group of health care professionals and policymakers on February 25 in the State Capitol at a forum sponsored by the Evidence Based Health Policy Project. Fisher was a principal author of the Dartmouth Atlas that highlighted wide variations in national Medicare spending and utilization. The Atlas showed Wisconsin as having among the nation’s lowest Medicare costs, mainly due to more efficient provision of care.

The ACO model envisions provider organizations that can effectively manage the full continuum of care as real or virtually-integrated local delivery systems. This structure would be joined with targeted spending levels and health care performance measures to help achieve lower costs and better outcomes, with the providers sharing in any savings.

Fisher said while the ACO model is relatively new, it has shown promise in a number of settings. "Aligning financial and professional incentives, together with having better information that engages physicians and consumers, will enhance their ability to improve health and lower costs." He added that those areas of the country that have ACOs in place tend to have shared aims, physician engagement, use of data to drive change, and communities that are energized to make it happen.

Fisher recommends that policymakers promote the proliferation of the ACO model by legislation (as in enacting Medicare ACOs) or by easing regulatory barriers that complicate the formation of ACOs.

So How is "Insurance" Defined- i.e. What is the standard in the Exchange

2010-02-26T23:01:00.000-08:00

On this one I'll just highlight some points to think about....

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From the Washington Post's Ezra Klein

The best exchange of the day came moments before the attendees at the Blair House summit broke for lunch. "There is a philosophical difference," Rep. Eric Cantor said. "There is a fear that if you let Washington define what essential health benefits are, there won’t be an end to that."

But is this a philosophical difference? When I interviewed Rep. Paul Ryan, who's one of the Republican participants at the summit, I asked him how his health-care plan ensures that people can trust that the coverage they're buying won't let them down when they get sick. "In the Patient’s Choice Act," he explained, "we do an actuarially equivalent minimum in each exchange that’s equal to the Blue Cross/Blue Shield Standard Option." That seems a lot like how the Senate bill works, I said. "You need to define what insurance is," Ryan replied. "I agree with that."

Everyone agrees with that, in fact. The Wyden-Bennett bill, which many Republicans have co-sponsored, also sets up a basic benefit equivalent to the Blue Cross/Blue Shield Standard Option (politicians like to use this because it's the basic insurance offered in the Federal Employees Health Benefit Program, which all of them use). Similarly, Republicans favor a policy to sell insurance across state lines. That would also mean that there is a single national standard for insurance -- but rather than being decided by Washington, it will be decided by whichever state has the most lax insurance regulations. We'd have a national standard being written by South Dakota's legislature, which would be a strange fate indeed.

Whoever writes the definition, however, both sides agree that someone needs to do: Insurance is a complicated product, and if it's deceptively sold, it can cost people their lives, or their homes. Most of us are not professional actuaries; it's hard for us to truly understand what's contained in the dozens of pages of fine print that our plans contain. We outsource that job to regulators who, we hope, will do some of the work for us. It's not ideal, but it's better than the alternative.

Philosophically, Republicans do have a disagreement with this. It's regulation, after all. But in practice, they accept it. When Republican passed health savings accounts into law, they included definitions of the minimum standards a plan had to meet to qualify. When they passed the Medicare Prescription Drug Benefit into law, they defined what a plan would have to do to qualify for the program. Philosophy is important, but when you're passing legislation, it takes a back seat to making the policy work.

The Senate health-care bill (pdf) explains how it will define essential benefits in Section 1301. It's not particularly detailed:

The Secretary [of Health and Human Services] shall define the essential health benefits, except that such benefits shall include the following general categories and the items and services covered within the categories:

(A) Ambulatory patient services.
(B) Emergency services.
(C) Hospitalization.
(D) Maternity and newborn care.
(E) Mental health and substance use disorder services, including behavioral health treatment.
(F) Prescription drugs.
(G) Rehabilitative and habilitative services and devices.
(H) Laboratory services.
(I) Preventive and wellness services and chronic disease management.
(J) Pediatric services, including oral and vision care.

The other requirement is that the plans have to fit one of the four actuarial values in the Exchange (an explanation of actuarial values). This is, well, a pretty general definition. It doesn't define how your insurance will work. it sets a floor that says insurers have to cover the basic array of things a person needs, and they need to cover a certain percentage of the costs people are expected to need covered (either 60 percent, 70 percent, 80 percent or 90 percent). But beyond that, it's left to the secretary of Health and Human Services.

The reason it's left to the secretary is because, as one Senate aide explained, "legislation is harder to change." If a future Republican administration wants to add a new type of consumer-directed insurance plan to the exchanges, they have the power and flexibility to do so. If an insurer wants to propose an innovative product legislators never dreamed of, the secretary can give them the go-ahead. If the legislation defined any of this precisely, all that would be impossible.

You may ask, of course, why the Secretary needs to be involved at all. Why not just let insurers add products on their own? The answer, basically, is that they'll need technical issues clarified. "When you say the plans need to cover emergency services," the aide says, "health insurers will want to know if an insurer can use financial incentives to encourage people to use primary care rather than go to the emergency room." That's freedom we want to give them, which means we need a human being in the process able to interpret the legislation in light of its goals rather than just in light of its words.

Democrats are trying to strike a balance between offering necessary definition and protections and making certain that insurers can continue to innovate. That's a delicate project, and Republicans can certainly disagree with the precise way that Democrats propose to achieve it. Maybe they don't think that insurers should have to cover pediatric services, for instance.

But there is no disagreement over whether someone needs to define, in broad terms, what counts as health-care insurance. Republicans do it in their bills, Democrats do it in their bills. Cantor is creating a philosophical dispute out of something more properly understood as a practical question, and it's much harder to compromise between philosophies than over operational details.

The Health Care Summit Condensed in 4 minutes

2010-02-26T07:12:00.000-08:00

Insuring Resources Commentary:

See this for a quick summary: http://prescriptions.blogs.nytimes.com/2010/02/25/video-the-health-care-session-in-4-minutes/

Philosophical differences between the Democrats and Republicans ruled the day.

Mitch McConnell (Rep- KY) argued for starting over one step at a time starting with a blank page. Sen. LaMar Thompson (R-Tenn) argued, "We don't do comprehensive well."

Sen. Tom Harkin (Dem- Iowa) argued that a comprehensive bill is necessary because its all intertwined. He's right and here's why.

1. Everyone agrees we need to eliminate pre-existing conditions. Slam dunk.

2. The first item however requires the implementation of an individual mandate or else people will wait to purchase health insurance until they get sick. If we allow that prices will be much higher because of the risk associated with insuring those individuals.

3. #2 requires the implementation of health insurance exchanges to cover individuals and small businesses to pool the risk and put millions of people in to groups to spread the risk. If we require individuals to purchase their own insurance premiums will be astronomical.... but that is what Cong. Paul Ryan (Rep- Wisconsin) wants to do by providing individuals a $2500 tax credit. That would buy about two- three months of health insurance if we have people do it on their own.

The Republicans oppose both # 2 and # 3.

Here's more from Paul Ryan- fact checking provided by Politico.com

Ryan overhypes Medicare Advantage hit

Rep. Paul Ryan (R-Wis.) claimed that under the Democrats’ plan, millions of seniors will lose their Medicare Advantage plans.

Not quite.

According to health policy experts, it’s fair to say that if the Democrats have their way, the benefits provided by Medicare Advantage will be reduced — which means that a number of seniors might choose not to enroll in the program in the future. That doesn’t mean people are going to “lose” their plans, exactly — just that fewer are likely to enroll. Seniors would still be guaranteed their traditional Medicare benefits.

Then I saw former Senator Bill Frist on MSNBC this morning and he talked about cost and changing how health care is performed and financed. He talked aboput more efficient and quality care through provider incentives. He gets it and a lot of Republicans do as well. I don't get why the Democrats still don't get this point because it could be the bridge to a major compromise..... as I've said here since August. Senator Kohl (D- Wisconsin) offered an amendment to the Senate Bill on Dec. 14th to take a huge step toward this but the amendment FAILED. At the time the Democrats had a 60-40 advantage in the Senate, and yes the amendment offered by a Democratic Senator from a blue state, FAILED.

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Link to a 4 minute video summary
http://prescriptions.blogs.nytimes.com/2010/02/25/video-the-health-care-session-in-4-minutes/

Something has been missing from the debate...

2010-02-24T22:06:00.000-08:00

Insuring Resources Commentary:

Please view this very informative podcast on the American obesity epidemic.

https://www.brainshark.com/brainshark/vu/view.asp?pi=801897475

So far on this blog I've barely touched on a key factor within the issue of improving health outcomes facing America's health care system. The epidemic of obesity. Better late than never I guess because this is a costly problem that we need to address and fix very soon. Here's some startling statistics:

Currently 64% of U.S. adults are either overweight or obese. What's an easy test? 80% of U.S. men with a waist size of 40 or above are obese.

Obesity is defined as: A person has traditionally been considered to be obese if they are more than 20 percent over their ideal weight. That ideal weight must take into account the person's height, age, sex, and build.

My ideal weight is between 160- 196lbs, that;s a huge range. So let's take the midpoint of 178 lbs. 20% more than that would be about 36 lbs or 214 lbs. At my heaviest when I was 34 I briefly weighed 217. I was most likely obese. Now I'm about 190-192.

34% of US adults are obese.

In the podcast Dr. Handel says that if we returned to 1987 obesity levels we could cover all our uninsured Americans in full right NOW.

What about children? 40% are either overweight or obese today. That means our future workforce is ENTERING employment with a chronic health condition that decreases their productivity and increases their health care costs.

What's the projection for 2030 if we don't get a handle on this?

In 2030 90% of Americans will be overweight or obese.

What's the Solution? Employer incentives within health care reform to introduce and or expand worksite wellness programs focusing on better nutrition, exercise and employee incentives. as Dr. Handel says in the podcast we also need to look at disincentives for not taking action meaning increased health insurance premiums for those who remain obese or for employers without wellness programs.

Is Health Care Reform Popular?

2010-02-23T23:22:00.000-08:00

Insuring Resources Commentary:

So what do the polls, and the American public actually think about health care reform?

Is it Needed? What do people think?

Overall health care reform itself IS unpopular as the overall poll shows, BUT...
41% favor
51% oppose

Unpopular, right? Not quite...

81% support for a "new insurance marketplace -- the Exchange -- that allows people without health insurance to compare plans and buy insurance at competitive rates."
67% agree with ending discrimination against Americans with pre-existing conditions."
80% said insurance companies should be required to sell coverage to people regardless of preexisting conditions; 67 percent said so "strongly."
56% of those surveyed would be more likely to back a reform package that reduced "the federal deficit by at least $132 billion over 10 years."
68% favor closing the Medicare prescription drug 'donut hole' coverage gap."
56% said they back a requirement "for all Americans to have health insurance, either from their employer or from another source
72% support for requiring businesses to offer private health insurance for their full-time employees.
60% support raising taxes on higher-income individuals to pay for health-care reform
(couples making more than $250,000)
56% of Americans said they would be more apt to back a plan that allowed "children to stay on their parents' insurance plans through age 25."

Popular!

Looking at the specific issues INSIDE health care reform... they are very POPULAR.

According to the article below in the Washington Post, it depends on how close we're paying attention. For those who are paying attention its very popular. For those that don't analyze it, which is the vast majority of us, we don't get it and therefore oppose it. Its pretty simple.
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Is health-care reform popular?
by Ezra Klein
http://voices.washingtonpost.com/ezra-klein/2010/02/is_health-care_reform_popular.html

It's pretty common for Republicans to say that health-care reform is wildly unpopular. It's not even untrue. But nor is it true, exactly. Rather, it depends on the numbers you look at, and how you interpret those numbers.

I want to show you two graphs charting the popularity of health-care reform. The first summarizes the Republican position. It's a chart from Pollster.com tallying surveys asking whether you support or oppose the health-care reform bill.

Health-care reform is unpopular. But if you actually tell people what's in the health-care reform bill, then it becomes quite popular. A recent Newsweek poll found the same thing: "The majority of Americans are opposed to President Obama's health-care reform plan — until they learn the details."

You can spin this information in a lot of different directions: The GOP has mounted a huge disinformation campaign. People are stupid. The polls are biased in one direction or another. The media covers conflict and ignores substance. Pick your favorite.

Here's how I understand this information: Voters don't pay very close attention to politics, and they pay even less attention to policy. Making the problem worse, the outlets that should inform them don't actually do so: The news focuses on conflict and points of interest, and also what's changing each day, which is, almost by definition, not the most popular parts of the bill. And don't just blame the media for that: It's what audiences want.

Another important contributor to voter opinions is their perception of the political process. If all Democrats and all Republicans harmoniously agreed on a piece of legislation, well, it's probably a pretty good piece of legislation, right? But if the process is relentlessly angry and partisan, there's more natural mistrust of the product. This would be fine if it was actually an accurate way of assessing the content of legislation, but it's really not. It's an accurate way of figuring out whether the opposition party is interested in winning the next election.

They also take their cues from politicians. This is similarly useless. As a thought experiment, imagine that George W. Bush, who proposed the Medicare Prescription Drug Benefit, had also proposed this health-care reform bill. It's actually pretty plausible: The two had fairly similar structures. But in that scenario, many Republicans would have supported the legislation as an effort to bring free market principles to universal health care, and many Democrats would have opposed it.

You do realize we already have a public plan, right?

2010-02-18T21:18:00.000-08:00

Insuring Resources Commentary:

The House health care reform bill includes a public plan option, meaning its a plan that would compete against insurers. This story is about the public plan that is the last available option, Medicaid, for many folks.

The attached story below is about the huge expansion nationwide of state Medicaid programs in the wake of the recession. During these tough times, Wisconsin has expanded its Medicaid program while most others have seen their enrollment expand without trying. But Wisconsin has expanded Medicaid through its BadgerCare program to cover more low-income uninsured persons... many of whom ARE employed. Wisconsin now covers uninsured persons with and WITHOUT kids up to 200% of fpl if they don't have employer coverage. For a family of four that's about $37,000 annually. The expanded group do pay a subsidized premium. Do you know a family on BadgerCare? I bet you know several. I'd bet several of my son's elementary school classmates are covered by it.

So for those who talk and warn about the "government takeover of health insurance", please get your head out of the sand. Its been happening for awhile.

By most estimates in 2009 we had between 45-47 million uninsured in the US. So now we have a roughly equal amount, according to Kaiser 46.9 million, on Medicaid programs.

Guess what folks, fewer and fewer of us have employer-based coverage- the last number I saw, for 2008, was 59%. You know that's lower now, right? By the way, in 2000 69% of us had employer-based coverage.

Isn't it time for an overhaul?

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Kaiser Analysis Finds Record Medicaid Enrollment Growth in 2009

Largest Ever One-Year Increase Illustrates Medicaid's Role In Covering People During Economic Downturns But Further Strains Tight State Budgets

WASHINGTON, Feb. 18 /PRNewswire-USNewswire/ --
With the country mired in a deep recession, nearly 3.3 million more people were enrolled in state Medicaid programs in June 2009 compared to the previous June, according to a new analysis by the Kaiser Family Foundation's Commission on Medicaid and the Uninsured. It was the biggest ever one-year increase in terms of absolute numbers, and boosted the June monthly Medicaid enrollment by 7.5 percent to 46.9 million people nationally.

It was the first time in decades that every state experienced an increase in Medicaid enrollment, and in 32 states enrollment grew at least twice as fast as the year before, according to the analysis, which includes data breakouts by state.

"State Medicaid programs have been able to help millions of Americans who have nowhere else to turn in a recession," said Diane Rowland, Executive Vice President of the Foundation and Executive Director of KCMU. "But the states obviously face significant fiscal pressures as increases in enrollment push up costs at a time when state budgets are already severely constrained."

The increase in enrollment reflects the role that Medicaid plays in reducing the numbers of people who become uninsured when the economy falters, with many people turning to the program for help after being laid off and losing their employer-based health insurance. Millions more who were not eligible for Medicaid likely joined the ranks of the nation's uninsured.

A new Kaiser survey of state Medicaid directors finds that 44 states and the District of Columbia are experiencing higher than expected program enrollment, resulting in increased spending for fiscal year 2010. At least 29 states say they are considering additional mid-year cuts in provider rates and program benefits.

Enhanced federal matching money for Medicaid provided through the American Recovery and Reinvestment Act of 2009 has proved critical in helping states maintain coverage. But that money is scheduled to expire on Dec. 31, 2010, which will increase the strain on state fiscal year 2011 budgets, Medicaid directors reported.

Although Medicaid enrollment is on the rise, costs of the program as measured on a per-person basis are not climbing at a faster rate than health costs more generally. (See "An Actuarial Rorschach Test" [link to http://www.kff.org/pullingittogether/021610_altman.cfm]). Moreover, in past recessions, after the economy has improved, Medicaid enrollment growth has slowed and sometimes contracted, suggesting that the record rate of enrollment growth seen in 2009 will eventually subside.

UA-10096920-2

White House Summit may Include Unveiling of New Plan

2010-02-17T07:03:00.000-08:00

Insuring Resources Commentary:

Stay tuned for my analysis as soon as the bill is released, but in the meantime I'll offer my wish list:
1) eliminate pre-x conditions,
2) mandate individual coverage by offering a catastrophic, inexpensive health plan,
3) expand Medicaid to 150% FPL but eliminate the special deals like the Cornhusker Kickback and provide Medical Home operation incentives for states,
4) create incentives for provider transition to episode of care based reimbursement to be fully operational by 2015,
5) create efficiency and lean operation incentives and NOT just for Medicare,
6) Create 10 regional Health Insurance Exchanges to cover small businesses with less than 25 employees and individuals without employer access-- include multiple plan options

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Details from multiple news sources----------

Kaiser News: White House officials "hinted on Tuesday that President Obama might post his own [health care] bill on the Internet before the bipartisan health care summit he is planning" next week, The New York Times reports. "In the nearly a year since Congress began debating a health care overhaul, Mr. Obama has yet to make his own priorities explicit. He said at the outset that he would set broad parameters for the measure and leave the details to lawmakers." Obama said last week that hoped to post to the Internet a merged bill that would address costs and expand coverage. "But Mr. Obama may be running out of time. His press secretary, Robert Gibbs, was asked Monday if the president would simply post his own bill if the House and the Senate cannot come to terms. 'Stay tuned,' Mr. Gibbs said" (Stolberg, 2/16).

Politico: "White House officials have said the president expects a unified House and Senate bill by the Feb. 25 summit. But given the lack of tangible progress on Capitol Hill during the past two weeks, it is hard to see how the president will walk into the summit with a bill that's been agreed to by both chambers" (Budoff Brown, 2/16).

Reuters: According to Gibbs, "'The president will lay out his ideas, and I would expect that Republicans will, and others will, lay out their solutions,' he said." Although Gibbs did not offer a specific timeline for its release, he did make assurances that the measure would be made public "far enough before the meeting to allow it to be reviewed. 'I don't have the exact day yet. But it will be in — in time for — for you and for others around the country to evaluate a plan,' he said" (Zengerle, 2/16).

CNN: Health and Human Services Secretary Kathleen Sebelius said Tuesday that Obama plans to use the already-passed bills as a starting point for the summit next week. "But Sebelius, in an interview with CNN Chief Medical Correspondent Dr. Sanjay Gupta, said the House and Senate bills already incorporate many GOP ideas." Among the specific examples she cited were "provisions to create special pools to make it easier for people with pre-existing illness to purchase insurance, the offering of low-cost insurance plans for young and healthy people, and regulations letting people purchase insurance across state lines —a version of which is included in the Senate bill." The president's plan will not likely include a public option, she said (2/16).

The Associated Press: After some early questions about the health summit, the GOP is now seeing its possible political upside. Although Democrats are likely to focus on expanding affordable health insurance to more people — they offer to cover 30 more million people instead of Republicans who are offering 3 million more covered — Republicans hope that "during a time of ballooning deficits … reining in rising medical costs — not coverage — could resonate with voters in an election year. ... With the summit more than a week away and lawmakers out of town for the Presidents Day recess, Republicans are in the early stages of planning their strategy for the event. … One potential hitch for Republicans is that there is not a single GOP plan" (Werner, 2/17).

Judd Gregg Could be Key to Health Care Reform Compromise....

2010-02-11T07:18:00.001-08:00

Insuring Resources Commentary:

This could be quite constructive especially since Gregg is open to creating Accountable Care Organization's which have been proven to provide efficient, quality care. Sen. Gregg (R- New Hampshire) is a moderate and focuses his reform ideas on preventive care, disease management, and wellness program incentives for employers. The Democrats need to compromise by including Gregg's proposals and scaling back just a bit. There appears to be some room in the middle here particularly if Gregg can bring along some of his GOP colleagues like Sen. Olympia Snowe (R-Maine).

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From Politico, 2/11/2010
Is Judd Gregg a tease or a real potential partner for President Barack Obama in trying to salvage some health care reform in this Congress?

That’s one question the White House has to answer for itself before the much-ballyhooed televised sit-down with Republicans on Feb. 25 on how to break the current stalemate. But it’s clear already that Gregg’s restless energy is drawing him back into the fray, and the New Hampshire conservative brings both a proven ability to swing Republican votes and a background in health care and deficit issues.

In a letter to Obama released late Tuesday, Gregg welcomed the meeting as a chance for “constructive dialogue” and is promoting his own lower-cost approach focused on preventive care and guaranteed catastrophic coverage for all families.

His letter warns the president that the House- and Senate-passed health care bills can’t be the sole basis for the discussions. But in a series of interviews with POLITICO, Gregg has been open to specific deficit-reduction and cost-containment steps that could be taken to win Republicans’ support for health reform.

“I’m not on their reach-out list, so nothing may come of this,” Gregg said in an interview Wednesday. “But I’m ready to sit down and try to be helpful.”

Obama may feel burned already by Gregg, who famously accepted then gave back the president’s nomination to be commerce secretary last year. And the changes Gregg will want are sure to aggravate the White House’s already frayed relationship with the left.

Yet the same qualities that first made Gregg attractive as a Cabinet nominee remain. He brings a record of bipartisan deal making and good personal ties to Senate Majority Leader Harry Reid (D-Nev.). And getting Gregg on board makes it far easier for Maine’s two moderate Republicans, Sens. Olympia Snowe and Susan Collins, to work with the White House.

If anything, the political ground has shifted in his direction since he gave up the Commerce option. And Obama’s own budget projections this month make it harder for Congress to separate health care from the debate over the government’s mounting deficits and debt — Gregg’s natural turf.

What’s more of a mixed blessing is his lame-duck status since he will step down from the Senate at the end of this year.

Gregg is anxious to make a difference in his last months. At the same time, conservatives recently used his retirement date as a way to isolate Gregg and undercut his bipartisan plan — embraced by Obama — to create a statutory fiscal commission empowered to force votes on deficit reduction after the November elections.

Going into the Feb. 25 meeting, the White House is still pursuing a more comprehensive and costly package than Gregg can accept. The half-day session may prove a last gambit by the president to help him bring Democrats together for a final push.

DETAILS
Below is the Essentials of Greg's plan:

The centerpiece is his plan to begin reform by first guaranteeing access to a low-premium policy that protects against catastrophic costs but also expressly allows preventive benefits and disease management under the deductible. He would modify the existing Health Insurance Portability and Accessibility Act to allow employers greater freedom to reward workers who participate in wellness programs, such as giving up smoking or losing weight. And given his New Hampshire roots, he subscribes to a host of the so-called Dartmouth reforms to promote accountable care organizations and incentivize “shared decision making” between physicians and elderly patients about treatment options.

His approach is sure to face criticism for being too late and too small bore. But Gregg’s already shown a willingness to work with Democrats on a compromise related to the HIPAA changes he wants. Having a true catastrophic, major medical option for people being mandated to buy insurance fits his mode of “middle working out.”

“We can all agree that no American should lose their life savings or their home because of illness or injury and that the rising cost of health care severely burdens individuals, families and businesses,” Gregg wrote in his letter to Obama this week. “Report after report also confirms that health care costs are a systemic risk to the long-term fiscal health of our nation.”

Rea

Individual Premiums on the Rise 39% in Calif.

2010-02-11T07:02:00.000-08:00

Insuring Resources Commentary:
The article below illustrates whats at stake for individuals in the insurance market if they don't have access to group coverage. For instance, if I did my insurance writing for AHIP full time my health insurance would cost me $1,000 / mo for family coverage and I'd have a $5,000 annual deductible. That's a best case scenario.

For those of you who "enjoy" group health coverage through your employer hopefully this article provides a bit of perspective.

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Anthem raises Californian's individual health insurance preiums 39% for 2010LA Times 2/11/2010

The prospects for healthcare reform legislation in Washington are cloudy, but Anthem Blue Cross apparently isn't taking any chances. The company recently informed many of the approximately 800,000 Californians who buy its individual policies that premiums will rise sharply March 1. Although Anthem provided no details, insurance brokers say they're already seeing increases of up to 39%. That's on top of even larger rate hikes last year. With the pending healthcare bills proposing new limits on premiums and profits, the Anthem increases look suspiciously like an attempt to extract as much as possible from customers before the rules change.

The response from state and federal regulators was swift and heartening. California Insurance Commissioner Steve Poizner, who can't regulate rates directly but can limit insurers' profit margins, announced that he was hiring an independent actuary to scrutinize the planned increase. The House Energy and Commerce Committee and Health and Human Services Secretary Kathleen Sebelius also launched inquiries. To truly protect consumers, though, Congress should pass a healthcare reform bill that makes it easier for people to switch insurers without sacrificing coverage.

Anthem's official explanation for the hikes is that rapid increases in the cost of treatments and greater demand for healthcare services are driving up expenses at an "unprecedented" rate. It also asserts that the recession has prompted many healthy people to give up their insurance, leaving fewer policyholders to cover the cost of caring for a sicklier group. Those are valid complaints, but they don't automatically justify jacking rates up to the roof. In fact, Anthem's rate increases are contributing to the problem by pricing younger, healthier people out of the market for individual policies.

The company has called on Congress to start over on healthcare reform, rather than trying to improve on the bills passed by the House and Senate. In particular, Chief Executive Angela Braly of WellPoint Inc., Anthem's parent company, recently told the Wall Street Journal that lawmakers should find more effective ways to prod healthy people to buy insurance, promote competition among healthcare providers and put the brakes on rising costs. Those are all worthy aims, and the pending healthcare bills could be improved on all three fronts.

But the bills do make important changes in those areas -- and others as well. They would bar insurance companies from cherry-picking customers and denying coverage for preexisting conditions, enabling people to switch insurers easily. The bills also would promote competition and clarity in pricing through a new marketplace for individual policies. Anthem's actions offer the best argument yet for Congress to complete work on a comprehensive bill without delay.

Health Care Reform Summit Feb 25th

2010-02-08T06:52:00.000-08:00

Insuring Resurces Commentary:

This summit creates a next step for health-care reform. The House and the Senate have not been able to agree on a path forward. The president is bringing the two houses together, but not starting over. The basis for the discussion will be the two bills that have already passed, but the discussion is aimed at leading a way forward which means there may be some alterations in hopes of getting a few Republican votes.

The President, I presume will also use the occasion to change the perception on the back room Senate deals for multiple conservative Democratic Senators. But by setting this summit, he's bought them a few weeks to figure out how to hold a vote themselves. That won't be easy, but it'll be easier with the White House summit giving some structure and narrative to an effort that had collapsed into murky chaos.

Hopefully a way forward will highlight cost efficiency and quality which the GOP has been touting. Now's the time to play that card in front of a television audience.

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From the Wall Street Journal- 2/8/10
President Barack Obama, seeking to give new momentum to his languishing health-care legislation, said he would sit down with Republican and Democratic lawmakers to exchange ideas on an issue that has deeply divided the parties.

With the GOP united against the Democratic bill, Mr. Obama said Sunday he would ask Republicans "to put their ideas on the table." The half-day meeting will be Feb. 25 and broadcast live, the White House said.

"I want to come back and have a large meeting, Republicans and Democrats, to go through systematically all the best ideas that are out there and move it forward," the president told CBS in an interview broadcast Sunday.

More Evidence for Health CARE Reform

2010-02-05T19:31:00.000-08:00

This is Data from the federal Centers for Medicare and Medicaid Services:

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Source: Health Affairs
February 05, 2010

Health care's share of the economy grew 1.1 percentage points in 2009 - the largest one-year increase in GDP share since the federal government began keeping track in 1960:

Rising health care costs are crushing our economy and adding a burden on working families and employers across the country. The new CMS data confirm that rising health care costs are driven by increases in underlying medical costs, not health plan administrative costs. In fact, the proportion of health insurance premiums that go towards administrative costs is declining as overall health care costs continue to soar. Without a national, long-term strategy to address the rapid growth in underlying medical costs, health care spending will continue to grow far faster than the economy as a whole, crowding out other important domestic priorities, such as education, energy, and deficit reduction.

The report, published today in Health Affairs, notes that the "two primary drivers of growth…are medical prices and utilization", which saw a projected increase in spending by 3.2 percent and 1.5 percent in 2009, respectively. Other key findings include:

"Hospital spending growth is projected to have accelerated from 4.5 percent in 2008 to 5.9 percent in 2009, as spending reached $760.6 billion."

"Spending growth for physician and clinical services is expected to have accelerated to 6.3 percent in 2009, up from 5.0 percent in 2008, with expenditures having reached $527.6 billion."

"Prescription drug spending is expected to have grown 5.2 percent in 2009, an acceleration of 2.0 percentage points from 2008, and to have reached $246.3 billion."

This is consistent with national data and information received from health plans (PDF) showing that health care costs are expected to increase even further due to the underlying growth in the cost of health care services.

Obama supposedly, but not really, maps a way forward

2010-02-05T08:27:00.000-08:00

Insuring Resources Commentary:
See below for a very non-specific, mediocre strategy

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Obama Maps a Way Forward on Health Care Reform
NY Times- Feb 5, 2010
Speaking to enthusiastic supporters at a fund-raiser here, President Obama on Thursday evening presented his clearest plan yet to move forward with comprehensive health care legislation, saying that he wanted to meet with Democrats, Republicans and independent experts, lay out the facts for the American people and then, he said, “I think that we have got to move forward on a vote.”

Mr. Obama said he would first work with Congress to enact a jobs package that would encourage new hiring, which he said was “the thing that is most urgent right now, in the minds of Americans all across the country.” But he also said that he would take the time to refute false statements and misunderstandings about the health care legislation and to hear alternate ideas from Republicans.

After “several weeks” of work, he said, he would be prepared to live with whatever decision is made by Congress, but he also warned that voters, too, would be watching and would decide at the polls in November whether lawmakers had made the right choice.

Mr. Obama still did not chart a specific legislative strategy for moving a bill through Congress.

But the president’s comments, in prepared remarks at the fund-raiser at the Capitol Hilton and then in response to a question submitted by a supporter from Milwaukee, offered more clarity about how he plans to proceed on the health care legislation than the White House has provided in the two and half weeks since a Republican, Scott Brown, won the special election for Senate in Massachusetts.

The victory by Mr. Brown, who was sworn in on Thursday, effectively stalled the health care legislation by ending the Democrats’ 60-vote supermajority in the Senate, which would have allowed them to defeat a Republican filibuster and advance the health care measure.

Congressional Democratic leaders and the White House have been groping for a way forward on the health care legislation. Their main strategy seems to be to work on devising changes to the Senate-passed health care bill that could be attached to a budget measure, which would allow it to be approved by a simple majority. The House could then approve both the Senate bill and the changes and send them in tandem to Mr. Obama for his signature.

The House speaker, Nancy Pelosi, and the Senate majority leader, Harry Reid, attended a meeting with Mr. Obama at the White House on Thursday, but officials said that no firm decisions were reached.

At the fund-raiser for the Democratic National Committee later on Thursday, however, Mr. Obama said that once Congressional Democrats had worked out their differences and settled on a final bill, he would push for a vibrant, public debate over the health care legislation. He said he planned “to call on our Republican friends to present their ideas.”

“What I’d like to do is have a meeting whereby I am sitting with the Republicans, sitting with the Democrats, sitting with health care experts and let’s just go through these bills,” Mr. Obama said. “Their ideas, our ideas. Let’s walk through them in a methodical way, so that the American people can see and compare what makes the most sense. And then I think that we have got to move forward on a vote. We have got to move forward on a vote.”

Mr. Obama said that Americans were apprehensive about the health care legislation because there was too much misinformation that he would now work to clear up.

“They are certain that they would have to go onto a government plan, which isn’t true,” the president said. “But that’s still a perception a lot of people have. They are still pretty sure that they would have to give up their doctor. They are still pretty sure that if they are happy with their health care plan, that it’s bad for them. They are still positive that this is going to add to the deficit. So there is a lot of information out there that people understandably are concerned about.”

He continued, “That’s why I think it’s very important for us to have a methodical, open process over the next several weeks, and then let’s go ahead and make a decision. And it may be that if Congress decides, if Congress decides we’re not going to do it, even after all the facts are laid out, all the options are clear, then the American people can make a judgment as to whether this Congress has done the right thing for them or not. And that’s how democracy works, and there will be elections coming up and they will be able to make a determination and register their concerns one way or another during election time.”

At one point, as the president insisted that he would continue to fight for the health care bill, the crowd chanted, “Yes, we can! Yes, we can!”

Despite their enthusiasm and Mr. Obama’s, it is no longer clear that Senate leaders could muster even 51 votes to make fast-tracked changes to the Senate-passed health bill, let alone the 60 votes it would take to approve a revised measure under the normal rules.

In the House, Ms. Pelosi, too, now faces an uphill climb. Perhaps the toughest differences are those that separate Senate and House Democrats, disagreements that were in the process of being resolved when the election in Massachusetts upended the entire process. House Democrats, for instance, still fiercely oppose a proposed tax on high-cost, employer-sponsored insurance policies that Senate Democrats included in their bill and that Mr. Obama has said he supports.

Post-mortem

2010-02-03T06:44:00.000-08:00

Insuring Resources Commentary:

No timeline, no idea what to do-- are there any leaders left?

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From the Wall Street Journal:
2/3/2010
by Janet Adamy and Patrick Yoest
With their sweeping health-care bill on hold, House Democrats plan to revive a sliver of the legislation as soon as next week that would repeal an antitrust exemption for insurance companies.

The move underscores growing doubts on Capitol Hill that Democrats can pass their ambitious plan to expand health insurance to more than 30 million Americans.

After focusing intensely on health care for months, Democratic leaders have removed completion of the overhaul from their agenda indefinitely, and even talk of the subject is scarce.

Instead, House Democrats are turning to a targeted provision with populist appeal in search of a small victory. They say repealing the federal antitrust exemption would drive insurance prices down in regions where one health insurer dominates. Insurers say they already face tight regulation by the states, and the practical impact of the move is uncertain.

Top Democrats said Tuesday they remained confident they would pass a broader health bill, but they acknowledged they had no time frame for doing so and no feasible strategy in sight. House Majority Leader Steny Hoyer, a Democrat from Maryland, when reminded that he said last week Democrats would have a plan by now, responded: "Did I say that? I was in error."

Democrats have struggled to explain the legislation and persuade Americans that the measure, with a nearly $1 trillion price tag over 10 years, would benefit consumers.

Republicans are showing no signs of helping the Democrats out of their predicament, saying Democrats should start from scratch on health care. That would require weeks or months of additional work, which isn't politically feasible when Congress wants to focus on job-creating legislation.

In recent days, supporters of the legislation, including the seniors group AARP and the American Medical Association, have sent letters to the Capitol urging lawmakers not to abandon the legislation. Some supporters say further delay could mean the bill effectively dies without fanfare.

Senate Majority Leader Harry Reid was noncommittal Tuesday. "Don't pin me down as to days or number of weeks," he said. "We plan to do health care this year, and do it as quickly as we can."

Supporters of the overhaul have made some attempts to link the health bill to job creation, pointing out that expanding insurance would spur hiring in the health sector. Republicans say the legislation's new taxes and requirements for businesses to provide insurance could chill job growth.

"It raises considerable concern and raises the cost of doing business," said Sen. Olympia Snowe, a Republican from Maine who voted for a health overhaul in the Senate Finance Committee but voted no on the version that came before the full Senate.

Senate Democrats said their best hope was still for the House to pass the version of the health overhaul that the Senate passed Dec. 24, along with a package of modifications that would use a parliamentary procedure requiring fewer votes for approval. But centrist Democrats in both chambers are nervous that using such a technicality will be unpopular with voters.

Congressional staff members are struggling to surmount legislative hurdles for that route and say it may not be sufficient to resolve all of House Democrats' concerns about the bill.

House speaker Nancy Pelosi confirmed the plan to take up the antitrust exemption Tuesday.

A House Democratic aide said leaders hoped the measure would revive the momentum for the broader bill.

Polls suggest public support for the bill has diminished, and Americans were turned off by provisions in the Senate bill to win the votes of wavering lawmakers.

State of the (Health Care Reform) Union

2010-01-27T20:50:00.000-08:00

Insuring Resources Commentary:

There is no clear path forward, especially since our President displayed an astounding lack of leadership, saying only "I will not quit", and Congress needs to pass health care reform, but providing no actual direction. The next steps Thursday and Friday of this week will be very telling.

In particular I want readers to pay special attention to the health care reform comments by Gov. McConnell in the Republican response after the President's speech.
Please see below and I'll analyze his 3 main points here:

1)Most (Americans) "do not want to turn over the best medical care system in the world to the federal government."
The Democrats proposals do not even come close to "turning the best (actually its #33 in the world) health care system over to the federal gov't." 'Gov't takeover'- its amazing they're still getting way with that rhetoric.

The House plan does include a public plan option.... for about 10% of the market!

2) McConnell- "Republicans in Congress have offered legislation to reform health care, without shifting Medicaid costs to the states, without cutting Medicare, and without raising your taxes."
Yes he's right, it does those things, BUT it would change access to health insurance through tax credits and the plans are high deductible health plans with HSAs. Eventually most Americans would have $5,000 deductibles and pay for most of their care themselves with little if any help from their employers purchasing power reducing risk.

3) "let families and businesses buy health insurance policies across state lines".

The reason why we have state regulated insurance plans is because the public demanded and WANTED mandates like mammograms, birth control coverage, 48-hour minimum hospital stay after giving birth, chiropractic care, and others.

If we allow interstate purchase its going to be a race to the bottom with pared down coverage competing to be the cheapest. That's what's good for business owners, not consumers. Plans sold and barely regulated by the likes of Alabama will pervade the market. Alabama doesn't regulate insurance, they rubber stamp the weakest coverage possible. Where do you want your employer to buy YOUR health insurance.... Alabama... or Wisconsin?

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Here's what the President had to say on health care reform earlier tonight in the State of the Union address: Video link: http://www.cnn.com/video/#/video/politics/2010/01/27/sotu.sot.obama.healthcare.cnn?hpt=C2

Here's what he had to say on Health Care Reform: Obama apologized for not making the case clearer to the public for health care reform and noted that the back room deals involved tarnished the public's view but he concluded by saying, "I will not walk away."

Yesterday the New York Times reported the following:

With no clear path forward on major health care legislation, Democratic leaders in Congress effectively slammed the brakes on President Obama’s top domestic priority on Tuesday, saying they no longer felt pressure to move quickly on a health bill after eight months of setting deadlines and missing them. The Senate majority leader, Harry Reid, Democrat of Nevada, deflected questions about health care. “We’re not on health care now,” Mr. Reid said. “We’ve talked a lot about it in the past.”

And now for the Republican response to Obama's address on health care reform from Gov. McConnell of Virginia:
"While Americans agree that an affordable, high-quality health care system is needed, most of them "do not want to turn over the best medical care system in the world to the federal government."

"Republicans in Congress have offered legislation to reform health care, without shifting Medicaid costs to the states, without cutting Medicare, and without raising your taxes," he said. "We will do that by implementing common-sense reforms, like letting families and businesses buy health insurance policies across state lines, and ending frivolous lawsuits against doctors and hospitals that drive up the cost of your health care."

What a Bipartisan Bill May Look Like.... if we get one at all

2010-01-23T20:50:00.000-08:00

Insuring Resources Commentary:
Below is a link to a New York Times article depicting possible items included in a health care reform package. In this NY Times reporter's analysis of conversations with lawmakers, aides and health care policy experts he compiled these items as still doable in the post Super-majority Democratic Senate health care reform era. His list is similar to the blog post I provided a few days ago so you get the benefit of my analysis of what's possible again.

Here's my further analysis of these items:

-No pre-x for children makes sense, this probably has 85-90% support in both houses and would be agreed to easily in any health care bill.

-Dependent coverage up to age 25 is also a given. Wisconsin just approved this in 2009, effective 1/1/2010 for ages up to 27. This too would have substantial bi-partisan support.

-Grants to establish state-based health insurance exchanges for individuals and small businesses. This probably would pass both houses as it would most likely not be mandated for businesses or individuals. This could help alleviate some cost pressures for these groups. If a wide range of coverage options were offered through the Exchanges and states were encouraged to be innovative this could be very positive.

-The fed. gov't offer financial incentives for state Medicaid expansion to cover childless adults and parents. Wisconsin, with its BadgerCare program and other states who have already done this, would not be happy about this measure. In those cases perhaps there can be adjustments or bonuses to state's who go above and beyond the minimum or who have already accomplished it. This too has broad bipartisan support as long as Nebraska doesn't get its Cornhusker Kickback. Special deals cannot be a part of a compromise bill at this point. The public backlash would be too enormous.

-Tax credits for small business purchase of health insurance-- This is very bi-partisan friendly as most GOP health care proposals, including those offered by Rep. Paul Ryan (R-Janesville) and Sen. John McCain (R-Arizona), were centered on tax credit use to purchase health insurance.
This would perhaps get more GOP than Dems supporting it and would pass both houses.

For a lengthy analysis I authored of the Paul Ryan proposal for WPRI
2 years ago go to the web link at the upper left hand sidebar.

-The package could also include changes in Medicare, to reduce the growth in payments to doctors and hospitals while rewarding providers of high-quality, lower-cost care. To help older Americans, it could narrow a gap in Medicare coverage of prescription drugs, sometimes known as a doughnut hole. I don't understand why again the incentives only apply to Medicare for high quality, more efficient care. I just don't get why Congress is so reluctant to address the whole system rather than just Medicare. If they're going to make regulatory changes why sell it short and stop only at Medicare rather than addressing the whole system and the whole cost problem.

See link below to read the whole article
---------------------
From the New York Times article
"A New Search for Consensus on Health Care Bill"
The entire article linked: http://www.nytimes.com/2010/01/22/health/policy/22health.html?ref=todayspaper

By ROBERT PEAR and DAVID M. HERSZENHORN
Published: January 21, 2010

So What Happens Now--- Forecasting What's Possible

2010-01-21T19:28:00.000-08:00

Insuring Resources Commentary:
Now that Senate Democrats have lost their Supermajority and only
have 59 votes they are quickly assessing the art of the possible to save face.

Here's my view of what we'll get:

These are definitely out
Public Option
Employer Mandate

I believe these might be in (Analysis follows)
Elimination of Pre-x exclusions
Individual Mandate
State Pilot Health Insurance Exchanges
Expand Medicaid in states at their option
Reduced tax on Cadillac Plans

Let's assess what I believe might be in from the list above:

Eliminate pre-x conditions- This is a must but insurers must have flexibility to deal with adverse selection of millions of uninsureds suddenly getting tremendous coverage for many for the very first time. Treatment costs may go through the roof and cost-shifting may be drastic upon the employer side.

Individual Mandate See above, but also what penalty will be set and will it be in proper balance to be both a carrot and a stick?

State Pilot Health Insurance Exchanges

I think we'll see Congress want to test this and not go with it nationwide. That will be a compromise both sides may be able to live with and I believe there will be employer "penalties" that they must pay if their employees access coverage through the HIE. Again, those penal;ties must be in the proper balance.

Medicaid Expansion

Ok' let's start with some state examples to set the stage.
Wisconsin: currently covers most adults and children up to 200% of the federal poverty level. Nebraska (which got the 'Cornhusker Kickback' thanks to Senator Nelson only covers up to 100% and the Senate Bill requires 133%. The House bill required 150%.

Louisiana I've heard is far below 100%.

I think the final bill will allow state's to experiment with some additional matching funds from the Feds. Currently most state Medicaid programs are 60% funded by the individual state and then they receive the remaining 40% from the feds. There are some nuances to this but that's the basics. I think the feds may sweeten that match within select pilots and allow a few states to experiment on a limited basis a la BadgerCare, except it might be a better financial deal for states to have waited.

But what about those with existing employer coverage?

I believe there will be a reduced tax on the so-called Cadillac plans as a compromise. Reform will probably include minimum required standard benefit plans which set a floor for the employer market. Employers may also be mandated to provide several options based on how many employees they have.

Employer size for inclusion in the Exchange will be interesting since I don't feel there will be a mandate if a compromise is found in the next few weeks. The impact on small businesses is perhaps the hardest issue to predict. If there's no mandate I think employees without coverage will be allowed in the Exchanges and the employer may face a fee because of that but what level of fee, what amount of payroll might be set for that. All these questions remain.

There also appears to be little impact on self-funded employer plans except in the areas of multi-state regulations, standard benefit plan offerings and a few other items that may or may not be included. If an employer's self-funded plan is deemed a Cadillac plan there may be a tax on the benefits.

What should happen but most likely won't

>Large Lean Efficiency pilots in multiple states- I won't harp on my pet issue again today.

Change health care reimbursement to episode of care basis, not fee-for-service.

-------------------------------------

Obama Weighs Options
1/21/10- The Wall Street Journal
Inside the White House, top aides to the president said Mr. Obama had made no decision on how to proceed, and insisted that his preference was still to win passage of a far-reaching health care measure, like the House and Senate bills, which would extend coverage to more than 30 million people by 2019.

On Capitol Hill, Democratic leaders said they were weighing several options. But some lawmakers in both parties began calling for a scaled-back bill that could be adopted quickly with bipartisan support, and Mr. Obama seemed to suggest that if he could not pass an ambitious health care bill, he would be willing to settle for what he could get. In the interview with ABC, he cited two specific goals: cracking down on insurance industry practices that hurt consumers and reining in health costs.

“We know that we need insurance reform, that the health insurance companies are taking advantage of people,” Mr. Obama said. “We know that we have to have some form of cost containment because if we don’t, then our budgets are going to blow up, and we know that small businesses are going to need help so that they can provide health insurance to their families. Those are the core, some of the core elements to this bill.”

Republican Congressional aides said a compromise bill could include new insurance industry regulations, including a ban on denying coverage based on pre-existing medical conditions, as well as aid for small businesses for health costs and possible steps to restrict malpractice lawsuits. But as Mr. Obama noted on ABC, a pared-down package imposing restrictions on insurers might make coverage unaffordable, which is one reason he prefers a broad overhaul.

As the full Congress returned to Washington to start a new legislative year on the first anniversary of Mr. Obama’s inauguration options were limited and there were signs of a divide between the White House and Democrats on Capitol Hill. House leaders signaled that they had effectively ruled out the idea of adopting the Senate bill, which would send it directly to the president for his signature. Yet close advisers to the president said such a move was still on the table.

Mr. Brown’s victory in Massachusetts on Tuesday denies Democrats the 60th vote that they need to surmount filibusters and advance a revised health measure. Senate leaders said they would not risk antagonizing voters by trying to rush a bill through before Mr. Brown could be sworn in, and Mr. Obama agreed.

“People in Massachusetts spoke,” the president told ABC. “He’s got to be part of that process.”

Another option considered by Democrats would be to use the procedural maneuver known as reconciliation to pass chunks of the health care bill attached to a budget measure, which requires only a simple majority. But there appeared to be little appetite for such a move on Capitol Hill.

Senior Republicans showed little new willingness to collaborate with the Democrats. Asked where he might be willing to work across the aisle, the Senate Republican leader, Mitch McConnell of Kentucky, offered praise for Mr. Obama’s strategy in Afghanistan but not a single example on domestic policy.

Mr. McConnell was asked if the health care bill was dead. “I sure hope so,” he said.

Senator Susan Collins, Republican of Maine, said she was eager to work with Democrats in devising an alternative to the health care bill passed four weeks ago by the Senate on a party-line vote.

“What I hope the White House will do is start from scratch and, instead of pushing this bill through the House, work with a bipartisan group of senators to achieve a consensus bill that would have widespread support,” Ms. Collins said. “There are many provisions of the bill that have bipartisan support. And I believe the president would be wise to draft a new bill that he could get through both the House and the Senate with supermajority votes.”

Robert Pear contributed reporting.

Health care reform divide grows deeper

2010-01-20T05:00:00.000-08:00

Insuring Resources Commentary

I attended the Wisconsin Insurance Commissioner's Health Insurance Advisory Committee yesterday where we received an update on health care reform from the Nat'l Assoc. of Insurance Commissioners. I am an appointed member of the committee.

With the Massachusetts Senate victory by the GOP last night the next two weeks will define what happens with health care reform. The legislative options depicted by NAIC were not pretty and we'll see if they can compromise to improve U.S. health care. The Democrats need a Republican to pass it and that's unlikely. Hopefully they get past the rhetoric and enact true bipartisan reform that focuses on quality and efficiency while ending pre-exisitng condition exclusions and covering the majority of the uninsured.

Its ironic, for me anyway, that at the same OCI meeting we also heard an update from WHIO--- the Wisconsin Health Information Organization http://www.wisconsinhealthinfo.org/. They have established a database of 7.3 million episodes of care for 1.5 million Wisconsinites from their insurer, provider and employer health care purchasing partners. As you've heard me say before, episodes of care reimbursement is how we should reform U.S. health care to emphasize quality and efficiency and create true cost competition on both the health care and health insurance sides of the equation. Through the WHIO database providers quality and efficiency can be compared against their peers and national standards to improve health outcomes and efficiency.

I've attached the article below as it illustrates the health care debate specifically in Wisconsin and the impact of Tea Party's and the anti-gov't backlash of doing health care reform incorrectly.

--------------- -----------------
From the Jan. 19th Milwaukee Journal Sentinel
Jeff Uhlir, an accountant from Manitowoc, opposes the health care reform legislation making its way through Congress and wants more competition among private insurers to drive down costs.

"I think Americans, given the opportunity and freedom, will get their own health insurance," said Uhlir, who recently attended a tea party rally.

Barbara Aho, a self-employed landscape designer from Milwaukee, wants health care reform and wants it now.

"I don't know any health insurance company that has gone broke," she said.

The fight over health care has divided the country for nearly a year, and rather than losing steam, it appears to be reaching a fever pitch locally and nationally.

In Wisconsin, several thousand people turned out Saturday for an anti-tax "tea party" rally in Racine County. People in the movement oppose key planks of the Obama agenda, including health care reform.

And U.S. Sen. Russ Feingold, a Democrat, has been getting blistered at recent listening sessions, which he holds regularly across the state. Last week, a standing-room-only crowd at Waukesha County Technical College in Pewaukee, a Republican stronghold, overwhelmingly opposed Obama's health care effort. They questioned in particular how Feingold could champion transparency in government while negotiations on the health care legislation continue behind closed doors. Several in the crowd told Feingold that if he voted for the health care bill, he should be voted out of office. Feingold faces re-election in the fall.

Tuesday, Feingold was on Democratic home turf, holding a listening session at Washington High School in Milwaukee. The crowd there was more supportive of health care reform. If anything, several of the speakers voiced displeasure that Democrats didn't go further in the legislation by introducing a so-called public option, allowing people to buy health insurance from the government.

"I'm not surprised by the Milwaukee meeting being more favorable toward the president's plan and the Waukesha meeting being less favorable," Feingold told reporters. "I wouldn't know much about Wisconsin if I didn't know that."

Nevertheless, Rep. Jim Sensenbrenner of Menomonee Falls put in a total of 25 town hall meetings and office hour events during the recent long holiday weekend, and said people are angrier than ever over health care legislation. Compared with the comments he heard in September and October, "these were more heated, more emphatic and more concerned" as a possible final vote looms while people become more familiar with what is in the bill, he said. Sensenbrenner said people are particularly angry about the sweet deals certain lawmakers were able to carve out for their own states, such as an exemption that would allow Florida seniors to keep their Medicare Advantage plans.

Even "the few people who spoke up in favor of the bill said it had its problems," he said.

Regarding the feedback Feingold has been getting at town hall meetings, Sensenbrenner said: "I don't think he had a good two weeks."
2010 midterm impact

Even if the Democrats do get their reform bill through Congress - and to President Barack Obama's desk for signature - the issue will likely continue to resonate with the public all the way to the 2010 midterm elections.

The bill's opponents have criticized everything from what's in the bill to how it was created to the fact it was passed in the Senate on Christmas Eve. The bill's supporters have said the reform measure will insure up to 30 million people who don't currently have insurance.

And get this: According to a Jan. 8-10 Gallup survey, Americans want their member of Congress to vote for health care legislation by a margin of 49% to 46%. Yet a recent Pew Center survey found 39% favored the health care bills before Congress while 49% opposed them.

"If you think all of those people that say they don't want the bill, are people that don't want health reform - there's a good chunk of them who want a much stronger bill," Feingold said. "I think the largest group is probably the people that are for the bill. The second largest group is the people that are against the bill because they don't think they want to do anything. And then there is a third group, which is significant because they want a stronger bill."

Feingold supported the Senate version of the bill, which he said "is a reasonable compromise. It is not a government takeover of health care."

Candice Owley, a local labor leader and former nurse from Milwaukee, said two of her sons are in the restaurant business, and only one of them has health care.

"People's lives are on the line," she said later, explaining why she supported reform legislation. "We have to get moving and get the bill passed."

But Lynne Wallis, a saleswoman from Whitefish Bay, told Feingold that she supported him in previous Senate races but won't back him this fall because of his support for the Senate health care bill.

"The government does not belong in health care," she said.

Feingold responded that Medicare and the health system for veterans are government programs.

Later, Wallis said that if a vote of the American people were taken now, the reform bill "would not pass."

The next closest thing may have happened Tuesday in Massachusetts. Republican Scott Brown defeated Democrat Martha Coakley in a special election to fill the Senate seat held by the late Ted Kennedy. Brown, who opposes the reform legislation, will become the Republicans' 41st senator, smashing the Democrats' filibuster-proof supermajority in the Senate.

That could change everything, and give added fuel to the opposition.

"I can't go grocery shopping or fill up my gas tank without my neighbors asking how we can stop this train wreck and encouraging me to keep up the fight against this," Rep. Paul Ryan of Janesville said in a statement. "These aren't just Republicans. Independents and Democrats even are fed up with Washington, sick of being shut out of the process, and genuinely worried with just how quickly the federal government is encroaching into their lives."

America's #1 job- The Actuary... no seriously I mean it

2010-01-18T21:31:00.000-08:00

Insuring Resources Commentary:

Health care reform is serious business so I thought I'd post this article on the unheralded, til now, Actuary, to lighten the mood a bit.

----------------------
Top ranked job is – surprise – the unheralded actuary

By Bill Glauber of the Journal Sentinel

Posted: Jan. 18, 2010

They are the odds-makers of life.

With computers, calculations and curiosity they place a financial value on risk and can run the numbers on everything from health insurance to pensions to hurricanes.

They are actuaries.

"We are kind of at the bottom of the geek chain. Unfortunately, the accountants try to make fun of us," said Steve Sperka, an actuary who is vice president of the Long-Term Care Department at Northwestern Mutual.

These days, actuaries are riding high.

The profession got a boost recently when actuary was ranked as the No. 1 job in America according to a study for CareerCast.com The study attempted to rank 200 jobs by measuring environment, income, hiring outlook, physical demands and stress.

Actuary was placed ahead of software engineer, computer systems analyst, biologist and historian. Roustabout was No. 200, falling behind lumberjack, ironworker, dairy farmer and welder.

The news caused a brief stir in the actuarial profession when the survey was publicized by the Wall Street Journal.

Suddenly, workers who labor behind-the-scenes had something to crow about.

Well, not too loudly; they are actuaries, after all.

"We're rated the No. 1 job," Sperka said, "the No. 1 job that most people have never heard of and those who have heard of it don't understand what we do."

It's a very serious and very important job.

Sperka said he tells people that "actuaries are the engineers of the insurance industry."

"If you think about what an engineer does with a car, makes sure everything fits, the doors work, an actuary does the exact same thing with insurance products," he said.

Karen Ferguson, a recent college graduate who works as an actuarial associate with Northwestern Mutual, is even more succinct.

"We predict the future," she said. "That's what we try to do, using different statistics and probabilities."

When they do their job well, actuaries make the insurance world run smoothly.

But when they miss, trouble looms.

Milwaukee County sued its actuary for the controversial pension deal that crippled the county's budget. Last year, Mercer Inc. reached a $45 million settlement with the county with no admission of wrongdoing.

Actuary is not a job people fall into.

Some hear about the profession from relatives. Others are pointed to the profession by mathematics teachers.

In this job, you really need to like calculus.

Being an actuary calls for strength in mathematics, agility in business problem solving and solid communication skills. A college degree is just one step on the actuary ladder.

Actuaries must also pass a series of exams to earn professional designations. They work in life insurance, health insurance, pensions and property and casualty.

"If you have a life insurance plan, it's the actuaries who design the features of the plan and come up with the price," said Marjorie A. Rosenberg, chair of the University of Wisconsin-Madison Actuarial Science Department. "It's the actuaries that follow that insurance policy and payments so enough money is held in liability when you have a claim. That would be for life and health.

"The pension people help employers design pension plans so people have enough money at retirement."

Rosenberg said there are about 200 students in her program, which is lodged in the business school. There are another 35 students in the UW-Milwaukee actuarial science program, which is housed in the mathematics department.

Eric Key, co-director of the actuarial science program at UWM, said he wasn't surprised that actuary rated highly among American jobs since the profession usually ranks in the top 10.

"It's sort of self-selecting," he said. "This is not an easy thing to do, so the people who are likely to want to do it are inclined to like it in the first place."

Key said almost every student who graduates from the program manages to quickly nab a job. He doesn't worry that publicity for the profession will lead to a surplus of actuaries.

"You would think that whatever happens with health care reform, that will create work for actuaries," he said. "If there is any kind of radical change to how health care is delivered in the U.S., someone will have to tell you how much it will cost."

Sen. Grassley says costs will increase with health reform

2010-01-15T06:40:00.000-08:00

Insuring Resources Commentary:

Yet another opinion, on how the health care reform bills before us do not address the cost issue. This time a Republican Congressman- Sen. Grassley- cites the Congressional Budget Office and the Chief Actuary at the Dept. of Health and Human services who have analyzed the legislation and find that costs will increase.

Grassley was a key Republican in most of the Senate bill formulation talks in the fall but voted against the bill in committee and on the Senate floor because it did not address or attempt to control spiraling health care costs.

The bills do not create incentives for sustainable efficiency in the health care system. we need fundamental health care payment reform that incents efficiency based on quality health outcomes through episode of care based reimbursement. Drs and hospitals need to be paid based on outcomes not per procedure on a fee-for-service basis.

If reform does not address the cost issue the system will deteriorate further and premiums will increase.

----------------------- -------------------------
From the New York Times blog: Jan. 14, 2010
by DAVID M. HERSZENHORN

At the crux of the debate over major health care legislation is the question of why health care in America is so expensive – or to be more precise, why the cost of medical care has been growing far faster than the cost of everything else. It is far outpacing regular inflation and threatening to bust not only the federal budget but the finances of individuals and families as well.

Earlier this week the Prescriptions blog asked two experts of differing political perspectives to address two simple questions: Why is health care in American so expensive? And will the legislation emerging in Washington take sufficient steps to control costs? The experts, Joseph R. Antos, health policy researchers at the conservative American Enterprise Institute, and Jacob S. Hacker, a liberal proponent of a government-run insurance plan at Yale University, agreed – though for very different reasons – that the legislation would not do enough to control cost. You can read their responses here.

Next, Senator Max Baucus, Democrat of Montana, chairman of the Finance Committee and a leading architect of the legislation, weighed in with his own view that the bill incorporates virtually every idea put forward in the last 50 years to improve the health care system. Read the Baucus post.

Today, we hear from Mr. Baucus’s counterpart, Senator Charles E. Grassley of Iowa, the senior Republican on the Senate Finance Committee.

For months, Mr. Grassley was part of a small group of senators working to develop the legislation, but he ended up turning against the bill and opposing it both on the finance panel and on the Senate floor.

Mr. Grassley, who enjoys using Twitter to communicate with his constituents, offered the most succinct answer to the cost question so far.

“High costs come from flawed payment systems and defensive medicine,” Mr. Grassley wrote. “The system contains incentives that many times provide too much care and the wrong care, and there’s too much waste, fraud and abuse.”

Mr. Grassley’s opposition to the Democrats’ health care legislation is well known. Asked to elaborate on the reasons that he feels the bill will increase rather than decrease health care expenses, he offered the following.

A major goal for comprehensive health care reform was to lower spiraling costs, so it’s regrettable and really pretty unbelievable how the $2.5 trillion legislation that’s been passed fails to reduce rising costs. That judgment isn’t mine. It comes from the independent experts.

The nonpartisan Congressional Budget Office said on Dec. 19, “Under the legislation, federal outlays for health care would increase during the 2010-2019 period, as would the federal budgetary commitment to health care. The net increase in that commitment would be about $200 billion over that 10-year period.” The Congressional Budget Office and the Joint Committee on Taxation also estimated, on Nov. 30, that “the average premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law.”

Separately, the chief actuary for the Department of Health and Human Services said on Jan. 8 that under the Senate bill “total national health expenditures . . . would increase by an estimated total of $222 billion during calendar years 2010-2019.” In the same report, the chief actuary anticipated “an increase in overall national health expenditures ranging from $5.8 billion in 2011 to $13.8 billion in 2019.” The actuary said the Senate bill also would bend the spending growth curve upward for federal spending on health care, increasing it by $279 billion from 2010-2019.

These facts back up the majority opinion at the grassroots that health care bills passed by the House and Senate would make things worse, not better. Instead of sending this legislation to the president’s desk, Congress should work on the fundamental problems in the health care system and pass common sense medical malpractice reform to stop wasting so much money on defensive medicine, end pre-existing condition exclusions and waiting periods, start paying for value rather than volume, and empower consumers to shop around for health care and lower costs with competition, just like with other services we buy. Congress should make market reforms that help small businesses and the self-employed access health insurance.

Fifteen states may sue over 'Cornhusker Kickback'

2010-01-14T08:41:00.000-08:00

Insuring Resources Commentary:

Most backroom deals never asee the light of day, or at least not the immediate backlash this has received. Sen. Nelson secured a deal worth billions for Nebraqska's Medicaid program for his one vote which allowed the passage of the senate health care reform bill on Christmas Eve. Every other state should be suing over this, not just the 15.

One of Wisconsin's senators, Herb Kohl, in contrast tried and failed to get an amendment added that would create a demonstration program to implement and test Lean processes in health care which could SAVE billions in making health care more efficient. Priorities.

WASHINGTON (Reuters) - More than a dozen U.S. state attorneys general visited Washington on Wednesday threatening to sue the U.S. government if the so-called "Cornhusker Kickback," a special subsidy offered to Nebraska, is included in pen1ding healthcare reform legislation.

The subsidy, which was included in the Senate version of the bill, is "capricious and arbitrary treatment of Nebraska," said South Carolina's Republican Attorney General Henry McMaster, who has organized a group of 15 attorneys to pursue a lawsuit.

The group includes two Democrats, one from Oklahoma and one from American Samoa.

Many states are outraged by the caveat, which would have the federal government cover increases in Nebraska's obligations for Medicaid, the healthcare program for the poor jointly funded by the 50 states and federal government.

Medicaid already consumes large parts of states' budgets and would require even more funding under the reform plan, which would allow greater numbers of people to enroll in the program.

If the provision is removed they will not sue, McMaster said, but the attorneys are discussing where to file a suit and if the Supreme Court would have to hear the case.

McMaster wrote to Senate Majority Leader Harry Reid and House of Representatives Speaker Nancy Pelosi in December urging them to remove the provision as they hammer the bills into a single piece of legislation for President Barack Obama to sign into law.

He has yet to hear back from them. He has spoken to Sen. Bill Nelson, who represents Nebraska and who inserted the provision. Nelson has said he is fighting to ensure all states receive equal treatment to the Cornhusker State in the final law.

Meanwhile, the White House has said Obama is discussing how to handle Medicaid
and the states.

Removing that provision may not stop other lawsuits, McMaster warned. He has joined another group of attorneys general who are concerned that an "individual mandate," or requirement that citizens buy health insurance, violates a clause in the Constitution about regulating interstate commerce.

Employer health mandate may be dropped: AP

2010-01-13T07:12:00.000-08:00

Below is an AP article detailing the latest Senate / House health care reform negotiations attempting to create a compromise bill that 60 Senators can live with and 50% + 1 in the House of Reps.

--------- ---------- -----------

AP article:
House and Senate negotiators working on President Barack Obama's health overhaul bill appear likely to drop a proposed income tax increase on high-wage earners and possibly jettison a requirement for large businesses to offer coverage to their employees, Democratic officials said Tuesday.

Negotiators are considering extending the Medicare payroll tax, which now applies only to income from wages, to cover some of the investment earnings of couples making more than $250,000 a year, and individuals earning above $200,000. That could make up lost revenue from dropping the high-wage income tax and scaling back a proposed tax on high-value insurance plans, which is strongly opposed by organized labor and House Democrats.

On another high-profile issue, the negotiators are discussing a hybrid of a proposed national insurance exchange contained in the House bill and the state-by-state approach favored by the Senate. House Democrats are pressing for a national system to apply pressure to the insurance industry after their proposal for a new government-run insurance option was ruled out due to opposition from Senate moderates.

These officials also said key lawmakers and the White House were hoping to include more money to protect state governments from the cost of an expansion of the federal-state Medicaid insurance program for the poor. That issue flared after Sen. Ben Nelson, D-Neb., the critical 60th vote for the health care bill in the Senate, got a deal for the federal government to pay the full cost of Medicaid expansion in his state forever, whereas other states would have to pick up part of the tab after a few years.

The officials spoke on condition of anonymity, saying they were not free to disclose details of the negotiations.

The developments came as the pace of negotiations on health care legislation quickened with House members returning to Washington on Tuesday from a holiday recess. The White House wants a final bill for Obama to sign in time for his State of the Union address early next month.

House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid and other Democratic leaders were scheduled to meet with Obama at the White House on Wednesday to narrow the numerous issues that remain unresolved. The president has weighed in forcefully in recent days, telling lawmakers he wants at least a pared-down tax on high-cost insurance plans as well as a commission with authority to order cuts to Medicare spending under limited circumstances - both measures designed to hold down spiraling health care costs.

The House-passed bill included an income tax increase on individuals making more than $500,000 a year and couples making over $1 million, as well as a requirement for large businesses to cover their workers. The Senate bill contained neither. It included a tax on high-value insurance plans and a modest increase in the Medicare payroll tax. Instead of requiring employers to offer health coverage, the Senate bill penalized businesses if any of their workers obtained government-subsidized health care.

The move away from the House approaches is a bow to the influence of moderates in the Senate, who oppose those and other liberal priorities and are critical to Reid's fragile majority in support of the bill.

Officials said Obama has indicated support for a national version of the exchange - a clearinghouse where consumers could shop for health coverage. He also is signaling support for ending the decades-old antitrust exemption enjoyed by insurance companies. On those two issues the president is siding with House Democrats over their Senate counterparts.

The legislation passed by both chambers before Christmas is similar in many respects, including expanding Medicaid and imposing a first-time requirement for almost everyone to purchase insurance. Both bills would extend health coverage to more than 30 million uninsured Americans over the next decade.

Healthcare overhaul could save money and boost jobs, researchers say

2010-01-10T23:29:00.000-08:00

Insuring Resources Commentary:

I have shared with readers recently my thoughts and numerous reports that suggest the health care reform bills under consideration would raise insurance premiums and not curtail the increases we've seen in health care costs.

In contrast, the report below argues that the health care reform bills will cut costs and lead to job growth.

Here's my analysis of their review:

This article lacks details but here is the full length report if you're interested:
http://www.americanprogress.org/issues/2010/01/pdf/health_care_jobs.pdf

***Note: I took items 1 and 2 below from the full length report***

For me, it is hard to believe that the taxes on cadillac health plans will have a positive effect so I agree with the Heritage Foundation on that point, as the article shows their viewpoint below. In addition the phased in penalties for businesses with payrolls over $500,000 annually could be a huge detriment to job growth in the all-important small business sector. The phased-in penalties will be key. If they are properly indexed they should have little effect, but if the penalties do not follow incremental and appropriate steps, the effect could be harsh for small business job growth.

In looking at the full length study here are some of the findings:
1) The study estimates that "insurance exchanges should lower average employer-paid premiums by about 2 percent".

2)"Aspects of the health reform legislation now before Congress that would promote more efficient care include bundling payments for different health care providers to encourage practice of more coordinated care, increased use of pay-for-performance systems for providers rather than the pay-per-visit system used by most insurers, and greater funding to support health care transitions, such as between hospitals and outpatient care, and for so-called medical homes, a primary care model that emphasizes coordinated care for the patient. These reforms would initially be implemented within the Medicare program, but are expected to extend to privately insured patients as reforms take hold, as has happened in the past."

The authors estimate cost reductions from these initiatives of about 0.75 percentage points annually after a phase-in period, or 6 percent by 2019. "Other work suggests savings as high as 1.5 percentage points annually are feasible. These cost reductions will enable employers who gain from these increased efficiencies to hire more workers and enable employees to seek higher wages as rising health care costs slow down."

My Final analysis: The authors acknowledge that the bundling cost savings an other reforms begin in Medicare, but they expect that they will be expanded to the rest of the health care system "as has happened in the past."

Here's the problem-- we have no idea when or if that will happen BECAUSE there is no timeframe for it in the bill. Saying it will happen is wishful thinking at best.

As I've argued from the beginning of this blog in August: payment reform and incentivizing lean processes is essential now for the whole system. Voluntary, Medicare programs will not get it done.

Details below from the Harvard/ USC study
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Healthcare overhaul could save money and boost jobs, researchers say
In a report to be released January 8, 2010, Harvard and USC economists say legislation being considered would slow cost increases and free up money for companies to raise wages and hire more workers.

National healthcare legislation in Congress could slow the growth of medical costs, allowing employers to create 250,000 to 400,000 new jobs a year over the next decade, economists from Harvard University and USC are predicting.

Wading into the hotly debated issue of whether the legislation is a job creator or a job killer, researchers from the two universities say that the reforms under consideration would slow the rate of cost increases and free up money for companies to raise wages and hire more workers.

Specifically, healthcare savings could be achieved through proposals for greater competition in insurance markets, better coordination of care and shrinking administrative expenses, they said in a report to be released today. With those changes, employers could then reallocate money now spent on ever-growing premiums to other business priorities.

"We could achieve huge productivity gains," said Harvard economist David Cutler, one of the study's authors and a senior fellow at the Center for American Progress, a liberal think tank.

But conservative economists and many business leaders contend that the proposed legislation would drive up costs by imposing billions of dollars in new taxes and penalties, killing jobs and hurting the economy as the financial burden of healthcare shifts to employers and workers.

One analysis from the conservative Heritage Foundation determined that higher taxes levied on the wealthiest Americans -- a proposal in the healthcare bill approved by the House in November -- would eliminate more than 450,000 jobs over the next decade.

The foundation and other critics of the healthcare overhaul say such taxes would have a particularly harmful effect on small businesses, which operate on smaller margins but have historically played key roles in renewing economic growth after recessions.

"If small businesses are not hiring, you'll have higher unemployment and slower wage growth," said Rea Hederman Jr., a senior policy analyst at the foundation.

Several California employers said they found the Harvard-USC study hard to believe, given that the average employer has paid double-digit annual increases in insurance premiums for several years and experienced other escalating business costs.

Santa Monica attorney Jeffrey Lee Costell, for one, says he will probably hold off hiring additional clerical workers if provisions remain in the healthcare legislation that require companies like his -- those with payrolls exceeding $500,000 -- to pick up the bulk of insurance premiums or face penalties.

"It's going to have a chilling effect," Costell said. "We're getting penalized because we are productive entrepreneurs."

Members of Congress are preparing to hash out a compromise between House and Senate healthcare bills. The measures would, among other things, require most Americans to have health insurance, expand coverage for the poor and stop insurers from denying coverage for preexisting conditions.

The bills also would impose billions of dollars in new taxes on the insurance industry, with the Senate bill including the "Cadillac tax" on more expensive healthcare plans.

The Harvard-USC report could be a boost for President Obama, who has made the economic benefits of health reform a top selling point in his administration's efforts to forge public support for the overhaul.

The president's Council of Economic Advisors said healthcare reform would increase domestic growth, raising family incomes substantially and leading to significant new hiring.

The Harvard-USC economists concluded that industries with high rates of employer-sponsored insurance -- including manufacturing, utilities and financial services -- would see some of the largest employment gains.

"If you have a strong bill that will promote control of healthcare costs, there will be an effect on the number of jobs," said Neeraj Sood, director of international programs at USC's Schaeffer Center for Health Policy and Economics.

How to achieve the savings remains a matter of heated debate in Congress and other quarters. Insurance industry executives maintain that reining in premiums without also addressing surging costs of hospitals and doctors will do little to stem medicine's drag on the economy.

"Unless you have the entire system reduce costs, you won't get premium relief," said Jay Gellert, chief executive of Woodland Hills-based Health Net Inc.

Relief can't come soon enough for San Francisco business owner Scott Hauge, who has seen health premiums for his 30-employee insurance brokerage rise 14% annually over the last seven years.

Hauge, president of advocacy group Small Business California, said he didn't expect much relief from Congress -- at best a slowdown in his costs, as the Harvard-USC economists predict. He said he might use any savings to replace computers, to pay employee bonuses or perhaps to help pick up insurance costs.

He is closely watching the legislation in Congress but can't get any firm sense of how the healthcare overhaul would affect his bottom line.

"There are a whole lot of unknowns out there right now," he said.

Health bill 'loophole' could allow rate hikes

2010-01-10T20:53:00.000-08:00

Insuring Resources Commentary:

The key provision being addressed in the article below is one that allows employers to establish "workplace wellness" programs giving financial incentives to workers who meet certain health or fitness criteria such as maintaining body mass or blood sugar levels. Groups including the American Heart Association and Health Care for America Now held a conference call to argue that could create two-tiered health plans in which workers who are able to hit certain fitness targets pay less, subsidized by other workers who pay more.

The advocates do have a point but, including incentives for Wellness is an important way to achieve cost savings for employer plans while improving employee health outcomes. While it may create two-tier pricing it does provide incentives for greater health. Perhaps it can be expanded beyond body mass and blood sugar so that it doesn't just impact those with diabetes.

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Progressives, health groups say health bill 'loophole' could allow rate hikes

WASHINGTON (AP) -- Advocacy groups lobbied President Barack Obama and Congress on Thursday, trying to eliminate what they called a "loophole" in Senate health care legislation they said could allow insurers to raise rates on customers based on their weight or blood sugar levels.

The groups said that would contradict one of the main goals of the congressional health care overhaul, which is to eliminate insurance company practices such as charging more, or denying coverage, based on health status.

The push came amid intense behind-the-scenes negotiations on Capitol Hill and at the White House to reconcile sweeping health care legislation passed by the House and Senate into a final bill Obama could sign before his State of the Union address in early February.

House Democrats held a conference call during which a number of lawmakers vented frustration over provisions in the Senate bill they don't want to be forced to accept, most prominently a tax on high-value insurance plans that House Democrats fear could hurt middle-class workers and union members.
Obama will meet with union leaders on the issue Monday, union officials said. Aiming to build consensus on Capitol Hill over that issue and others, Obama met Thursday with key Senate architects of the health care bill, Democrats Max Baucus of Montana and Chris Dodd of Connecticut. Also, Health and Human Services Secretary Kathleen Sebelius convened a conference call of Democratic governors, some of whom have raised concerns about issues including costs to their state of a proposed Medicaid expansion.

That's been an irritant from some state officials because Sen. Ben Nelson, D-Neb., the Democrats' crucial 60th vote for the Senate health bill, got a deal to permanently exempt Nebraska from paying any cost of a Medicaid expansion in the bill. Nelson said Thursday he was working to extend the same deal to other states.

The so-called loophole is separate issue. It's a provision that allows employers to establish "workplace wellness" programs giving financial incentives to workers who meet certain health or fitness criteria such as maintaining body mass or blood sugar levels.

Current law allows employers to vary costs for workers based on whether they can hit those targets by as much as 20 percent. The Senate bill would raise that to 30 percent, with the possibility of a further increase to 50 percent at the discretion of government officials.

Groups including the American Heart Association and Health Care for America Now held a conference call to argue that could create two-tiered health plans in which workers who are able to hit certain fitness targets pay less, subsidized by other workers who pay more, even though some of them may not be physically able, through no fault of their own, to reach the goals.

"There could be an inclination to say, 'Let's raise everyone's costs and just lower them for the 15 percent that can meet the standards,'" Sue Nelson, a vice president at the American Heart Association, said in an interview.
"There's going to be a lot of people on that more expensive tier, I'm afraid. A lot of American adults."

The Senate bill also sets up a test wellness program beginning in 2014 for individuals and small businesses who buy insurance directly from insurance companies. Most Americans under age 65 are covered through their employers.
Separate provisions in the legislation would allow insurers to charge more to people who smoke and to older people.

Insurance companies generally support wellness provisions.
"Promoting prevention and wellness is a critical component of health care reform," Robert Zirkelbach, spokesman for America's Health Insurance Plans, said in a statement. He said the programs should have clear guidelines - something advocacy groups say is lacking in current law and the Senate bill - and noted they were often negotiated between employers and unions.

The wellness provision is not part of the House health care bill. Jim Manley, a spokesman for Senate Majority Leader Harry Reid, D-Nev., declined comment except to say the issue would be discussed with the House and the Obama administration during discussions for a final bill.

Effect on business- Senate and House health bill comparison

2010-01-06T07:23:00.000-08:00

Insuring Resources Comparison:

The House and Senate Democrats are currently negotiating a compromise between the two health care reform bills that have passed. The result will most likely be a hybrid of the two on many issues, especially those impacting small business employer-sponsored health coverage. It is instructive, however, to look at those differences while the negotiations take place.

Both bills expand Medicaid in most states, but not in Wisconsin as we have BadgerCare Plus and Core which already expand coverage to families and childless adults up to 200% of the federal poverty level. The Senate and House bills only expand coverage up to 133% and 150% respectively.

The Senate Bill includes:

REQUIREMENTS FOR EMPLOYERS: Not required to offer coverage, but companies with more than 50 employees would pay a fee of $750 per employee if the government ends up subsidizing employees' coverage.

BENEFITS PACKAGE: All plans sold to individuals and small businesses would have to cover basic benefits. The government would set four levels of coverage. The least generous would pay an estimated 60 percent of health care costs per year; the most generous would cover an estimated 90 percent.

The House bill includes:
REQUIREMENTS FOR EMPLOYERS: Employers must provide insurance to their employees or pay a penalty of 8 percent of payroll. Companies with payrolls under $500,000 annually are exempt – a change from the original $250,000 level to accommodate concerns of moderate Democrats – and the penalty is phased in for companies with payrolls between $500,000 and $750,000.

Small businesses – those with 10 or fewer workers – get tax credits to help them provide coverage.

SUBSIDIES: Individuals and families with annual income up to 400 percent of poverty level, or $88,000 for a family of four, would get sliding-scale subsidies to help them buy coverage. The subsidies would begin in 2013.

HOW YOU CHOOSE YOUR HEALTH INSURANCE: Beginning in 2013, through a new Health Insurance Exchange open to individuals and, initially, small employers. It could be expanded to large employers over time. States could opt to operate their own exchanges in place of the national exchange if they follow federal rules.

BENEFITS PACKAGE: A committee would recommend a so-called essential benefits package including preventive services. Out-of-pocket costs would be capped. The new benefit package would be the basic benefit package offered in the exchange.

Background material source: The Huffington Post

Health bills would shift Medicare money to Marshfield, Mayo and other 'high-value' hospitals

2010-01-06T06:50:00.000-08:00

Insuring Resources Commentary:

This article details a huge win for many hospitals including Marshfield Clinic here in Wisconsin and Mayo Clinic. The House and Senate bills both include a revised Medicare formula that helps efficient hospital systems. This is an important efficiency incentive that will provide the necessary inducements to create efficiency's nationwide.

The article states- "Hospitals now have little incentive to be parsimonious, because Medicare revenue is based on the number of procedures performed at a facility. But supporters say a value index -- by rewarding hospitals that spend less per patient -- would provide an incentive to limit procedures."

Hopefully this can also be expanded beyond just Medicare in the future.

----------------------
Link to article:
http://www.washingtonpost.com/wp-dyn/content/article/2010/01/05/AR2010010503572.html

As House and Senate lawmakers start to reconcile their health-care bills with an eye to final passage, a little-noticed provision is already prompting celebration from a small group of influential hospitals that stand to gain millions in Medicare dollars
Language in both the House and Senate bills would reward hospitals for efficiency in their Medicare spending, a dramatic change in the formula for parceling out the public dollars, which can account for as much as half of a hospital's budget. That could prove to be a windfall for some hospitals but a significant loss of funding for others, mostly those in big cities and the South.

A revised Medicare formula represents a major lobbying victory for a coalition of hospitals based in the upper Midwest, led by the Mayo Clinic. Their leaders sent a letter to House members in July demanding Medicare reform, as well as objecting to a government-run insurance plan, or "public option." Even the smallest in the group mobilized lobbyists and sent their leaders to Capitol Hill to press their case.

Mayo leaders met with White House officials several times in recent months, convincing them that "paying for value" was key to slowing the growth in health-care costs. Throughout, President Obama has praised Mayo and "high-value" care.

We are extremely pleased," said Karl Ulrich, president of the Marshfield Clinic in Wisconsin, a member of the coalition. He predicted a period of transition "that will be difficult for other providers to adapt to" but added: "We just think it's the way to go."

But those on the losing end are criticizing the provision as a brazen money grab. They predict that, instead of saving taxpayer money, it will simply take funding from areas with more poverty and racial minorities and send it to more homogenous communities that tend to have fewer health problems.

"The people in Minnesota are just going to say, 'We want our money,' " said J. Thomas Rosenthal, chief medical officer of the UCLA Medical System. "It's just 'Give us your money. You people are wasteful and we're not, and we deserve it.' "

Regional differences

Medicare payment rates are based on a mix of factors, including regional differences in the cost of living. Doctors and hospitals across the country have argued that the system underpays them for their services, but those in the Midwest, Mountain West and Northwest have been particularly aggrieved.

Hospitals in those regions perform well in oft-cited rankings by Dartmouth College researchers, which measure per-patient Medicare spending. And many of those hospitals also rank high in the quality of their care, suggesting it is possible to restrain the volume of medical procedures without affecting care.
Meanwhile, Dartmouth's surveys find that hospitals in some areas -- led by Miami, Los Angeles, New York City, and much of Texas and the South -- spend far more per Medicare patient than hospitals elsewhere.

That type of measurement is at the heart of the language in the health-care bills, which would introduce a "value index" or "payment modifier" to reward more efficient providers.

Just how much money is at stake depends on how the index is crafted. But even before the details are ironed out, many health policy experts say the provision may be one of the strongest cost-control tools in the legislation.

News Alert- Sen. Kohl offered lean methodology amendment on Dec. 15th

2009-12-30T20:30:00.000-08:00

Insuring Resources Commentary:
My apologies for getting this news to you all this late. Please call your Senators to have the language below reintroduced during the conference committee negotiations. We must, at the very least, get a pilot or demonstration in place illustrating the cost savings of the lean methodology. Thank you Senator Kohl for introducing this amendment.

The amendment introduced by Sen. Herb Kohl did not pass and is not contained within the Senate bill that was passed Dec. 24th.

Amendment language:

On page 731, between lines 16 and 17, insert the following:

‘‘(xix) Implementing the lean methodology through a network
of provider systems across the country in varying geographic
areas and across sites of care that offer a patient-centered
approach to improving quality, reducing medical errors, and
enhancing value to patients.

http://www.createhealthcarevalue.com/data/blog/ThedaCare%20amendment.pdf

Source: The Congressional Record- Dec. 15th

Mayo Clinic wants payment reform

2009-12-26T08:33:00.000-08:00

Insuring Resources Commentary:

It still baffles me how so many people, including Pres. Obama knows what health care reform should include and what models work best and yet they did very little to make it happen.

Mayo Clinic Supports Bill But Seeks More Action on How Care Is Paid For

By RON WINSLOW - Wall Street Journal

The Mayo Clinic, often cited by the Obama administration as a model for high-quality, cost-effective health care, generally supports key provisions of the legislation approved by the Senate, an official said Thursday, but he called for more aggressive steps to change how care in the U.S. is paid for.

"The concerns are whether the legislation will be strong enough to change the incentives in the system today, which are mostly around paying for volume" and not for "value" of care, said Jeffrey Korsmo, executive director of health policy center at the Rochester, Minn., clinic.

The dominant system of reimbursement in the health-care system, known as fee-for-service, pays doctors and hospitals for each test and procedure they perform or order, rewarding providers based on delivering more--rather than better--care, Mr. Korsmo said.

The Senate measure includes provisions for Medicare pilot programs to test the effect of bundling all of the care provided in such big ticket procedures as hip replacement surgery, where hospitals and doctors currently bill separately for their services. Paying a single "bundled" fee is intended to encourage doctors and hospitals to work together to provide more efficient care. Other pilots include treatment for, say, a year of care for a person with diabetes.

"These pilots need to go quickly beyond demonstration programs and become part of the way we pay for care," Mr. Korsmo said.

Led by Denis Cortese, its recently retired chief executive officer, the Mayo Clinic has taken an unusually activist stance in the health-overhaul debate, making arguments for expanding coverage, coordinating patient care and paying for better results rather than volume of care. The nonprofit clinic reported revenue of $7.22 billion in 2008, of which $6.14 billion came from medical services. In addition to its Rochester headquarters, it has operations in Jacksonville, Fla., and Scottsdale, Ariz.

Despite its reputation for treating patients with complex, big-ticket medical problems, the clinic is routinely included among the nation's most efficient health-care providers. One reason: Its doctors are all on salary so their incomes aren't based on the number of procedures they do. Another is the clinic's sophisticated electronic medical-record system, which helps improve coordination of care for its patients and reduces orders for duplicate tests.

That helps explain why President Barack Obama and a host of other political leaders and health-care experts extol Mayo as a model citizen in the health-care system.

That isn't to say Mayo officials and Democrats hammering out the health-care bill see eye-to-eye on all issues. The clinic opposes a government-run health plan, known as the public option, that is favored by many Democrats. That provision was cut from the Senate bill, but it is included in the House legislation and is one of several potentially thorny conflicts to be resolved as House and Senate negotiators seek to come up with a final, common version of the legislation.

The clinic also was against the proposal, raised and then scuttled in the Senate, to allow people aged 55 to 64 to buy into the federal Medicare plan for the elderly. "Medicare isn't the model we ought to be pursuing [to expand coverage]," Mr. Korsmo said. "It's been part of what's gotten us into the trouble we're in."

Mayo is also concerned about the potential for Medicare to impose across-the-board cuts in payments to health-care providers without differentiating for cost-effective doctors and hospitals. It worries that such Medicare cuts would punish the Mayo Clinic and other organizations known for delivering good care at reasonable prices.

Clinic leaders, however, do favor a mandate requiring people to purchase health coverage to make sure young and healthy people participate in the insurance system. And they like the idea of health-insurance exchanges, also a prominent feature of both the Senate and House bills, where consumers can shop for health plans.

"There is a role for government--it ought to create the exchanges and subsidize premiums where there is a financial need," Mr. Korsmo said.

Two other issues aren't getting sufficient attention in the current legislation, Mayo officials believe. Changes in medical malpractice policy are needed to encourage more open discussion of medical errors, Mr. Korsmo said. And with estimates that 40% of medical costs are the result of personal behavior such as smoking and diet habits, more attention needs to be focused on that problem, he added.

The Insurance Industry's Senate bill analysis

2009-12-22T06:59:00.000-08:00

Insuring Resources Commentary:
Sometimes it takes a practical analysis from an insider who cares about getting reform right to set the record straight. For those who read this blog routinely that is what I have tried to achive. You'll see my viewpoints are largely the same as those from AHIP. Yes I do a lot of consulting and authoring/editing of insurance textbooks for them but I also share with them a practical approach to health care reform as you'll see by reading below.

These points are valid, insurance premiums will increase because there is no comprehensive cost containment (comprehensive provider efficiency incentives) in the bill. What the bill does include is cost-shifting as Medicare reimbursement is reduced and high value health plans like mine are taxed. When this is enacted I'd hate to be a small business owner -- even those who get a subsidy will most definitely pay more than they do today.

Its really sad what an opportunity we are missing. Yes I called Sen. Feingold's office today, again, and he's voting in favor of your premium increase.

-------------------- --------------------
AHIP Statement On Senate Health Care Reform Legislation
America's Health Insurance Plans (AHIP)
Karen Ignagni
December 22, 2009

Karen Ignagni, President and CEO of America’s Health Insurance Plans (AHIP), released the following statement today on the Senate health care reform legislation:

“The debate before us today is not whether insurance market reforms are needed. In fact, health plans proposed and support a complete overhaul of insurance market rules and new consumer protections to ensure all Americans have guaranteed access to affordable, portable coverage. The critical policy questions are whether the current legislation can bend the cost curve and result in a sustainable system. While the bill makes important improvements in access and takes steps towards cost-containment, it lacks accountability to ensure that costs are brought under control. Moreover, this bill includes provisions that will increase costs for families and small businesses and disrupt the quality coverage on which millions of Americans rely today.”

Barriers to affordability:
A new $70 billion premium tax that will increase the cost of health care coverage for millions of Americans and fall primarily on small businesses and those who purchase coverage in the individual market.

More cost shifting to patients with private coverage as providers are forced to make up for hundreds of billions in reduced Medicare payments.

New market and rating rules that will increase premiums for individuals and small businesses with coverage today.

Disruptions for current policyholders:
New regulatory requirements and benefit mandates that go into effect beginning next year – before access provisions go into effect – that will cause major disruption for millions who have already enrolled in their plan for next year.

A new federal plan that would preclude many high-quality plans from participating and increase complexity in the exchanges.

Arbitrary caps on administrative costs that will undermine essential health care services, such as disease management and care coordination programs, investments in health information technology, programs to root out fraud and abuse in the health care system, and new administrative simplification requirements.

Major cuts in Medicare Advantage benefits beginning next year that will ultimately result in millions of seniors losing their current coverage.

“These issues need to be resolved if the country is to make health care coverage more affordable and put the system on a sustainable path. Health plans will continue to work to solve the problems that have been identified.”

Health Care Reform Almost a Reality... but

2009-12-21T04:57:00.000-08:00

Insuring Resources Commentary

So we are one big step closer to health care reform. But it includes special deals for key Senators in other states like Louisiana, Nebraska, etc.

So we're going to cut Medicare reimbursement. Hmmm.

To expand health insurance to 30 million more Americans we're going to set up non-profit health insurance exchanges. ----- Ok, that could be could good, as long as the health CARE portion is also non-profit because that will be more efficient. Does it include that?- doubt it.

I'll read the bill when its available and let you know what's in it as far as efficiency and lean processes. I assume we'll have voluntary, Medicare-only pilots again like in the original Reid/ Baucus bill.

Call me a cynic but this appears to be doomed to fail as far as reducing American's health care and health insurance costs.

----------------- ----------------------
Democrats’ health bill passes key Senate vote
Final outcome uncertain as measure must be harmonized with House bill

Senate Democrats won a crucial test vote on President Barack Obama's health care overhaul, putting them on track for passage before Christmas of the historic legislation to remake the nation's medical system and cover 30 million uninsured.

All 58 Democrats and the Senate's two independents held together early Monday against unanimous Republican opposition, providing the exact 60-40 margin needed to shut down a threatened GOP filibuster.

The vote came shortly after 1 a.m. with the nation's capital blanketed in snow, the unusual timing made necessary in order to get to a final vote by Christmas Eve presuming Republicans stretch out the debate as much as the rules allow. Despite the late hour and a harshly partisan atmosphere, Democrats' spirits were high.

"Today we are closer than we've ever been to making Sen. Ted Kennedy's dream of universal health insurance coverage a reality," Sen. Tom Harkin, D-Iowa, said ahead of the vote, alluding to the late Massachusetts senator who died of brain cancer in August.

"Vote your hopes, not your fears. Seize the moment," Harkin urged colleagues.

Kennedy's widow, Vicki, watched the vote from the visitor's gallery along with administration officials who have worked intensely on the issue. Senators cast their votes from their desks, a practice reserved for issues of particular importance.

Lieberman, Nelson won over
The outcome was preordained after Senate Majority Leader Harry Reid, D-Nev., wrangled his fractious caucus into line over the course of the past several months, culminating in a frenzy of last-minute deals and concessions to win over the final holdouts, independent Joe Lieberman of Connecticut and conservative Democrat Ben Nelson of Nebraska.

Obama's oft-stated goal of a bipartisan health bill was not met, despite the president's extensive courtship of moderate Sen. Olympia Snowe of Maine, the only Republican to support the bill in committee. Obama called Snowe to the White House for lengthy in-person meetings both before he left for climate talks in Copenhagen and after his return on Saturday. In the end Snowe said she was "extremely disappointed" in what she called a rushed process that left scant time for her to review, much less amend, the bill.

Even so, the vote represented a major victory for Democrats and Obama, who's now clearly in reach of passing legislation extending health coverage to nearly all Americans, a goal that's eluded a succession of past presidents. The legislation would make health insurance mandatory for the first time for nearly everyone, provide subsidies to help lower-income people buy it, and induce employers to provide it with tax breaks for small businesses and penalties for larger ones.

Click for related content
Winners and losers in the Senate bill
NYT analysis: Obama accepts 'pyrrhic victories'

Two more procedural votes await the Senate, each requiring 60 votes, the first of these set for Tuesday morning. Final passage of the bill requires a simple majority, and that vote could come as late as 7 p.m. on Thursday, Christmas Eve, or the day before if Republicans agree.

Although Democrats are expected to prevail in the votes over the next several days, the final outcome remains unpredictable, because the Senate measure must be harmonized with the health care bill passed by the House in November before final legislation can be sent to Obama's desk.

There are significant differences between the two measures, including stricter abortion language in the House bill, a new government-run insurance plan in the House bill that's missing from the Senate version, and a tax on high-value insurance plans embraced by the Senate but strongly opposed by many House Democrats.

After Monday's vote a number of Senate Democrats warned that the legislation could not change much and expect to maintain support from 60 senators. House Democrats are sure to want to alter it but may have to swallow it mostly whole.

"It took a lot of work to bring this 60 together and this 60 is delicately balanced," Lieberman said.

‘Day of accounting’
Republicans are determined to give Democrats no help, eager to deny Obama a political victory and speculating openly that the health care issue will hurt Democrats in the 2010 midterm elections.

At their core the bills passed by the House and pending in the Senate are similar. Each costs around $1 trillion over 10 years and is paid for by a combination of tax and fee increases and cuts in projected Medicare spending. Each sets up new insurance marketplaces called exchanges where uninsured or self-employed people and small businesses can compare prices and plans designed to meet some basic requirements. Unpopular insurance practices such as denying people coverage based on pre-existing conditions would be banned, and young adults could retain coverage longer under their parents' insurance plans — through age 25 in the Senate bill and through age 26 in the House version.

Reid cut numerous last-minute deals to get the votes he needed and powerful Democrats also inserted home-state provisions in a 383-page package of amendments Reid filed this weekend to the 2,074-page bill.

Among other items, Senate Finance Committee Chairman Max Baucus, D-Mont., included a provision allowing residents of the town of Libby, Mont., who are suffering asbestos-related illnesses from a mining operation to get Medicare benefits. Nelson won a list of benefits for Nebraska including a commitment for the federal government to pick up the full tab of an expansion of Medicaid. And Sen. Christopher Dodd, D-Conn., who faces a difficult re-election, inserted a $100 million item for construction of a university hospital that his spokesman said he hopes to claim for the University of Connecticut.

The End Game and Lasting Disappointment

2009-12-15T06:46:00.000-08:00

Insuring Resources Opinion:

So how did the Obama Administration get here? Here's where we're at and my answers on how bipartisan support could have been achieved:

1) Virtually no discussion on reigning in health care costs has occurred.
This should have been discussion point #1 daily by every liberal and THE basis for all proposals. The Conservatives can't argue against this. Obama and the liberals gave up on this argument in the Spring. This is the greatest disappointment because it encompasses the greatest promise of true reform.... provider incentives to get lean and efficient. What we have now in the bill is a weak voluntary, Medicare only pilot that provides provider incentives of a 1% higher reimbursement to increase efficiency. I bet the paperwork required eats up more than the 1%.

2) Improper focus on the public option. Yes, it could be included for individuals and small busineeses under ten employees as competition for private insurers. There could be language added to make it impossible to expand it into a single payer system by capping enrollment at 20-30 million members or similar mechanisms until whatever year is chosen (2100?).

3) Individual mandate to purchase coverage through an Exchange... The Senate Bill does have this. This provision eliminates the concept of adverse selection-- i.e. people waiting to purchase coverage until they're ill. The industry needs the individual mandate to streamline medical adversity.

4) Eliminate pre-x conditions. What a hollow victory if none of the rest happens but these last two items.

5) Employer mandate- yeah they botched this one, it doesn't exist except in the house bill which has been dead since the day it was passed. The penalty was miniscule compared to the cost of group insurance.

6) Medicare buy-in... Yep that one appears to be dead too thanks to Sen. Lieberman-- for once I agree with him. So the current compromise expands Medicare (expect this to be pulled from the compromise package soon) for 55 and up when the program already doesn't reimburse doctors enough and is responsible for huge cost-shifting on to the private employer-sponsored coverage side?? Dumb idea unless we somehow raise Medicare reimbursement by 15-20%. Oops, the bill actually cuts some Medicare reimbursement.

My solution:We should have a Health Insurance Exchange with regional / private sector insurance contracts administered by the feds with efficiency mandates based on CURRENT best practices that exist in Wisconsin and numerous other places. See (www.healthcarevalueleaders.org) Start with an initial five year competitive contract period for health plans to implement Efficiencies. From then on we should have revolving Three year COMPETITIVE contracts with efficiency teeth. If health plans fail on efficiency in the first two years, the contract ends after the third year and its opened to competition again, except that insurer or health plan is barred for say, 10 years. Period.

Mandate employer coverage for businesses with 10 + employees. Provide graduated subsidies for businesses with 10-49 employees. For businesses with 9 or fewer employees they can access coverage through the Health Insurance Exchange where individuals are mandated to get coverage or pay a graduated penalty based on income. If there is a public plan option it should be housed within the regional HIEs as an option for coverage.

Premiums will be less because of the power of large purchasing pools spreading the risk and the mandated coverage of individuals means they're in the pool also. And all providers must meet efficiency standards to get preferred reimbursement rates above current Medicare levels. Keep the paperwork easy and give them enough incentive to make it worthwhile- 5% let's say as a guess but whatever the Actuaries come up with. Oh and add bonuses for quality health outcomes achieved by the top 10% of insurers. But the bonuses don't go to the CEOs. They should be split evenly between the insurers and the member employers and individual insureds.

Final Analysis- But none of that above will happen. Its hard to say what the final product will look like... I'm scared to fathom it at this point. We'll probably cut the uninsured from about 47 million to 25 million or so and costs will go up because of it for the INSURED because there are no legitimate cost restraints anywhere. Add 20+ million insured persons with no health care cost restraints/ efficiency standards in place.

You ain't seen premium increases like those to come folks.

Senate Dems Compromise- public plan is out

2009-12-08T21:21:00.000-08:00

Insuring Resources Commentary

The Senate Dems reached a compromise today (the details of which I predicted three months ago on this blog). I said back then that the final bill would not have a gov't run public plan but instead would use private plans heavily regulated by the Feds much like Medicare Advantage.

In addition the Senate Bill now includes a Medicare buy-in program for persons age 55 and up to buy in to Medicare early. This particularly helps early retirees.

The bill also requires insurance companies to spend at least 90 percent of their premium income providing benefits. By the way, according to the Wisconsin Association of Health Plans (WAHP) their 16 member health plans pay out 91% of premium in benefits. I've long touted those companies (Dean, GHC, Gunderson and others) as models on which to build the foundation of health care reform. Perhaps this is the stick that incents plans to base reimbursement on quality outcomes and efficiency.

From WAHP's website: "In 2007, the Association-member health plans participating in the commercial health insurance market in Wisconsin paid out approximately 91 cents in health care services for every $1 of insurance premium taken in. They spent less than 10 cents on administration, and profits remained among the lowest in health care: less than 2 cents for every $1 in premium."
http://www.wihealthplans.org/inner.iml?mdl=about_us.mdl

So what does Sen. Feingold think about this compromise (copied from below). "I do not support proposals that would replace the public option in the bill with a purely private approach. We need to have some competition for the insurance industry to keep rates down and save taxpayer dollars," Feingold said.

Competition may reduce premiums 1-2% while waste reduction, payment reform and quality incentives could have ten times the impact.

Time for my FIFTH phone call to his office staff.

---------------------------------------------

Dems reach deal to drop gov't-run plan
Dec. 8, 2009

After days of secret talks, Senate Democrats tentatively agreed Tuesday night to drop a full-blown government-run insurance option from sweeping health care legislation, several officials said, a concession to party moderates whose votes are critical to passage of President Barack Obama's top domestic priority.

In its place, officials said Democrats had tentatively settled on a private insurance arrangement to be supervised by the federal agency that oversees the system through which lawmakers purchase coverage, with the possibility of greater government involvement if needed to ensure consumers of sufficient choices in coverage.

Additionally, the emerging agreement calls for Medicare to be opened to uninsured Americans beginning at age 55, a significant expansion of the large government health care program that currently serves the 65-and-over population.

At a hastily called evening news conference in the Capitol, Majority Leader Harry Reid, D-Nev., declined to provide details of what he described as a "broad agreement" between liberals and moderates on an issue that has plagued Democrats' efforts to pass health care legislation from the outset.

With it, he added with a smile, the end is in sight for passage of the legislation that Congress has labored over for months.

The officials who described the details of the closed-door negotiations did so on condition of anonymity, saying they were not authorized to discuss them publicly. Several officials stressed that so far, Democrats had technically agreed only on submitting proposals to the Congressional Budget Office for their impact on the bill's cost and other analysis.

At its core, the legislation would expand health care to millions who lack it, ban insurance companies from denying coverage on the basis of pre-existing medical conditions and rein in the rise of health care spending nationally.

The developments followed a vote on the Senate floor earlier in the day in which abortion opponents failed to inject tougher restrictions into sweeping health care bill, and Democratic leaders labored to make sure fallout from the issue didn't hamper the drive to enact legislation. The vote was 54-45.

Taken together, the day's developments underscored the complexity that confronts the administration and Reid as they seek the 60 votes needed to overcome Republican opposition and pass a bill by Christmas. Despite their reluctance, some senators had talked openly and in detail earlier in the day about the progress of the negotiations.

The provision in the legislation to be dropped under the emerging agreement provides for a government-run insurance option to be available to consumers, with individual states permitted to drop out. Liberals have long sought such as arrangement, as a means of forcing competition on insurance companies.

One participant in the talks, Sen. Tom Harkin, D-Iowa, referring to a deal among the negotiators, told reporters he didn't like it, but added, "I'm going to support it to the hilt" in hopes of securing passage of the health care bill.

Another senator involved, Sen. Russ Feingold, D-Wis., issued a statement saying, "I do not support proposals that would replace the public option in the bill with a purely private approach. We need to have some competition for the insurance industry to keep rates down and save taxpayer dollars." But he did not rule out voting for the measure.

The White House quickly applauded the developments. "Senators are making great progress and we're pleased that they're working together to find common ground toward options that increase choice and competition," said a spokesman, Reid Cherlin.

In his comments to reporters, Reid said the emerging compromise "includes a public option and will help ensure the American people win in two ways: one, insurance companies will face more competition, and two, the American people will have more choices."

It wasn't clear what he meant by a "public option," the Medicare expansion or a fallback in case private insurance companies declined to participate in the nationwide plan envisioned to be overseen by the Office of Personnel Management. One possibility was for the agency to set up a government-run plan, either national in scope or on a state-by-state basis.

Under the tentative agreement, liberals lost their bid to expand Medicaid, the federal-state program that provides health care for the poor, elderly and disabled. But they prevailed on the Medicare expansion, and the negotiators appeared ready to maintain a separate health care program for children until 2013, two years longer than the bill currently calls for, according to officials familiar with the details.

Additionally, there was consensus support for a requirement long backed by Sen. Jay Rockefeller, D-W.Va., and other liberals for insurance companies to spend at least 90 percent of their premium income providing benefits, a step that supporters argue effectively limits their spending on advertising, salaries, promotional efforts and profits.

Reaction from Insurance Industry to Current Bills

2009-12-07T06:46:00.000-08:00

Insuring Resources Commentary:

Readers know I do not push the health insurance industry's agenda except when they are correct on an issue. In Wisconsin, we're very lucky to have several health insurance plans who focus on quality outcomes and effcient care -- Group Health Coop, Gunderson Lutheran, ThedaCare, Dean Health Plan and others. These plans have very low administrative costs and are very efficient in the care they provide. They have assessed the waste in their systems and make every attempt to extract it. The rest of the nation is not so lucky.

This is why AHIP is right and I said these same things that AHIP mentions in this space months ago. Voluntary pilot waste reduction programs do not go far enough, We need fundamental health CARE and PAYMENT reform.

Insurance reforms like eliminating pre-x conditions are vital to improving access and insurance for as many American;s as we can. A public plan option for those shut out of the system and for the smallest of employers would be great.

But, all the insurance reforms will matter very little if we do not CHANGE the WAY WE PAY for HEALTH CARE. In fact if health care reform does not change the financing of health care, insurance premiums will go up with 30-40 million more people seeking more care and Medicare will be in danger.

AHIP is right and the data from Mercer on health plans avoiding the tax that will help finance the expansion sends up a huge warning flag.

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Health insurers push back as debate heats up

Reuters) - The health insurance industry on Thursday struck back at provisions in Congress' healthcare proposals that it said would do little to curb the nation's spiraling costs or provide people more affordable coverage.

U.S. | Healthcare Reform

Congress is tip-toeing toward incremental healthcare reform that does not address what insurance companies see as the major issue -- containing costs, America's Health Insurance Plans president Karen Ignagni said in a speech in Detroit on Wednesday.

"The bills before Congress settle for timid pilot programs, rather than requiring major changes; creating incentives that apply only to Medicare, rather than across the board; and establishing a new oversight body, but severely limiting its scope of review," Ignagni, a top lobbyist for the health insurance industry, told the Detroit Economic Club.

The group represents 1300 insurers such as Aetna Inc, Cigna Corp, UnitedHealth Group Inc, among others.

Her comments come as the Democrats try to make good on President
Barack Obama's goal of expanding health insurance coverage to tens of millions of more Americans without adding to the nation's deficit. The Senate is debating an $849 billion bill that, if passed, must be merged with the House of Representatives' $1 trillion bill passed last month.

Ignagni visited Michigan, the state with the highest unemployment rate, as part of a national outreach to convince Americans of the need for lower medical costs.

Michigan, also home to the ailing U.S. auto industry, has more than 1 million people without healthcare insurance, or nearly 12 percent of its population, according to a Kaiser Family Foundation report. Nationally, about 46 million people, or about 15 percent, are uninsured in the United States where most working-age people get coverage through their employer.

True reform to cut healthcare costs has been sidetracked this year by too much emphasis on whether congressional bills will include a "public option," Ignagni said, echoing concerns heard from many others who both support and oppose the bill.

"Indeed, as far as cost containment is concerned, it's as though the house is on fire and the strategy is to rush to the scene with an eight-ounce glass of water," she said.

Democrats and other supporters acknowledge there are some areas that could be strengthened but argue the reform plans are a good first step toward reining in the nation's $2.5 trillion healthcare sector that is growing at a rate far surpassing inflation.

The Obama administration separately on Thursday blasted an industry analysis that said the Senate bill would raise health insurance premiums for individuals and small groups that try to buy policies.

The report, released by insurance network Blue Cross Blue Shield Association, said the bill will drive more sick people who need costly treatment into the system while not enticing younger, healthier customers into the insurance pool. It will also raise costs by requiring insurers to provide more minimum benefits, it said.

Whitehouse spokesman Dan Pfeiffer, in a blog posting on the White House's website, said the study did not take a number of the bill's provisions into account, including subsidies to help people afford insurance policies as well as protections included for people to keep their current insurance plan.

"We're closer than ever before to passing meaningful health insurance reform," Pfeiffer wrote. "And you can bet as we continue to make progress, the insurance industry will continue to try and distract and misinform because they know their very profitable status quo is in grave danger."

In a separate study on Thursday, employee benefit manager Mercer said nearly two-thirds of companies would trim the health benefits they offer if final legislation includes a tax on more generous, so-called "Cadillac" health insurance plans.

Mercer, a Marsh & McLennan Companies Inc company that serves many Fortune 500 companies, surveyed 465 employers of all sizes, with 63 percent saying they would reduce benefits to avoid the tax.

Dear Orszag: Please come to Wisconsin

2009-12-03T07:18:00.000-08:00

Insuring Resources Commentary:
Perhaps Peter Orszag should take a visit to Wisconsin and witness what is happening daily at ThedaCare, Gunderson Lutheran, Group Health Coop and others. If 20 some health plans are already doing it why is it sooo hard that it will take 20+ years for others to catch on.

Visit www.createhealthcarevalue.com
or
http://www.healthcarevalueleaders.org/

Orszag knows these exist so why is his head in the sand?

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Orszag: Health Care Efficiencies May Take Decades Associated Press
Charles Babington

December 03, 2009

The White House budget director said Wednesday that it may take decades for America to have an efficient health care system even if Congress passes a major overhaul this year.

"It will be years to decades" before the nation has a properly working health care system that rewards quality over quantity, Peter Orszag told reporters. He said improving the quality of health care "is more like a lifelong nutrition or diet, not studying for an exam," but he added that continuous progress is a crucial goal.

Orszag is one of President Barack Obama's top aides in urging Congress to overhaul the U.S. health care system in the coming weeks. He acknowledged that many key elements of the pending House and Senate bills would not take effect for several years, but he urged Americans to embrace a gradual process.

The House-passed bill would bar insurance companies from denying coverage to sick people starting in 2013. A bill being debated in the Senate would do so in 2014.

The bills would create new government subsidies for buying insurance starting in 2014. Fines for individuals who refuse to buy insurance would begin in 2014, and increase in later years. Other provisions, such as subsidizing long-term care, also would be years away.

Orszag noted that some improvements to the health care system are already in the works. The economic stimulus bill enacted early this year included money to modernize medical record-keeping and to identify the most effective ways to address various medical needs. Both efforts should lead to better care, he said.

Orszag said the nation must move away from its long tradition of fee-for-service health care that tends to reward the number of procedures performed rather than the quality of care. The pending legislation includes pilot projects meant to reduce the number of patients who are quickly readmitted to hospitals, and to restructure payments to hospitals to discourage unnecessary procedures.

Orszag said limits on medical malpractice awards -- which many Republicans favor, but are not in the bills -- would do little to reduce health care costs.

Senate, House Democratic Health Bills Compared

2009-11-19T19:29:00.000-08:00

Stay tuned for Insuring Resources Commentary soon.

.... in the meantime see an analysis below courtesy of the Associated Press

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Senate, House Democratic Health Bills ComparedAssociated Press
November 19, 2009
A comparison of the health care bills before Congress:
The Senate Democratic bill (Patient Protection and Affordable Care Act):

WHO'S COVERED: About 94 percent of legal residents under age 65 -- compared with 83 percent now. Government subsidies to help buy coverage start in 2014. Illegal immigrants would not receive assistance.

COST: Coverage provisions cost $849 billion over 10 years.

HOW IT'S PAID FOR: Fees on insurance companies, drugmakers, medical device manufacturers. Medicare payroll tax increased to 1.95 percent on income over $200,000a year for individuals; $250,000 for couples. New 5 percent tax on elective cosmetic surgery. Cuts to Medicare and Medicaid. Excise tax on insurance companies, keyed to premiums paid on health care plans costing more than $8,500 annually for individuals and $23,000 for families. Fees on employers whose workers receive government subsidies to help them pay premiums. Fines on people who fail to purchase coverage.

REQUIREMENTS FOR INDIVIDUALS: Almost everyone must get coverage through an employer, on their own or through a government plan. Exemptions for economic hardship. Those who are obligated to buy coverage and refuse to do so would pay a fine starting at $95 in 2014 and rising to $750.

REQUIREMENTS FOR EMPLOYERS: Not required to offer coverage, but medium and large companies would pay a fee if the government ends up subsidizing employees' coverage.
SUBSIDIES: Tax credits for individuals and families likely making up to 400 percent of the federal poverty level, which computes to $88,200 for a family of four. Tax credits for small employers.

BENEFITS PACKAGE: All plans sold to individuals and small businesses would have to cover basic benefits. The government would set four levels of coverage: The least generous would pay an estimated 60 percent of health care costs per year; the most generous would cover an estimated 90 percent.

INSURANCE INDUSTRY RESTRICTIONS: Starting in 2014: no denial of coverage based on pre-existing conditions. No higher premiums allowed for pre-existing conditions or gender. Limits on higher premiums based on age and family size. Starting upon enactment of legislation: children up to age 26 can stay on parents insurance; no lifetime limits on coverage.

GOVERNMENT-RUN PLAN: A new federal insurance plan would be offered to compete against private carriers. The government would negotiate -- not dictate -- payment rates for medical providers. Unlike the House bill, states could opt out of the plan. It's not clear the proposal commands enough votes to survive, and it could be replaced by a standby system pushed by moderates that would not go into effect until it was clear individual states were experiencing a lack of competition among private companies.

HOW YOU CHOOSE YOUR HEALTH INSURANCE: Self-employed people, uninsured individuals and small businesses could pick a plan offered through new state-based purchasing pools. Employees would be generally encouraged to keep their work-provided coverage.

DRUGS: Grants 12 years of market protection to high-tech drugs used to combat cancer, Parkinson's and other deadly diseases. Drug companies contribute $80 billion over 10 years with the majority of the money used to limit the prescription coverage gap in Medicare.

CHANGES TO MEDICAID: Income eligibility levels likely to be standardized to 133 percent of poverty, which is $29,327 a year for a family of four, for all parents, children and pregnant women. Federal government would pick up the full cost of the expansion during the first three years. States could negotiate with insurers to arrange coverage for people with incomes slightly higher than the cutoff for Medicaid.

LONG-TERM CARE: New voluntary long-term care insurance program would provide a basic benefit designed to help seniors and disabled people avoid going into nursing homes.

ANTITRUST: Amendment expected to be offered on the Senate floor to strip the health insurance industry of its antitrust exemption.
____
The House bill (Affordable Health Care for America Act):

WHO'S COVERED: About 96 percent of legal residents under age 65 -- compared with 83 percent now. Government subsidies to help buy coverage start in 2013. About one-third of the remaining 18 million people under age 65 left uninsured would be illegal immigrants.

COST: The Congressional Budget Office says the bill's cost of expanding insurance coverage over 10 years is $1.055 trillion. The net cost is $894 billion, factoring in penalties on individuals and employers who don't comply with new requirements. That's under President Barack Obama's $900 billion goal. However, those figures leave out a variety of new costs in the bill, including increased prescription drug coverage for seniors under Medicare, so the measure may be around $1.2 trillion.

HOW IT'S PAID FOR: $460 billion over the next decade from new income taxes on single people making more than $500,000 a year and couples making more than $1 million. The original House bill taxed individuals making $280,000 a year and couples making more than $350,000, but the threshold was increased in response to lawmakers' concerns that the taxes would hit too many people and small businesses.
There are also more than $400 billion in cuts to Medicare and Medicaid; a new $20 billion fee on medical device makers; $13 billion from limiting contributions to flexible spending accounts; sizable penalties paid by individuals and employers who don't obtain coverage; and a mix of other corporate taxes and fees.

REQUIREMENTS FOR INDIVIDUALS: Individuals must have insurance, enforced through a tax penalty of 2.5 percent of income. People can apply for hardship waivers if coverage is unaffordable.

REQUIREMENTS FOR EMPLOYERS: Employers must provide insurance to their employees or pay a penalty of 8 percent of payroll. Companies with payrolls under $500,000 annually are exempt -- a change from the original $250,000 level to accommodate concerns of moderate Democrats -- and the penalty is phased in for companies with
payrolls between $500,000 and $750,000.

Small businesses -- those with 10 or fewer workers -- get tax credits to help them provide coverage.

SUBSIDIES: Individuals and families with annual income up to 400 percent of poverty level, or $88,000 for a family of four, would get sliding-scale subsidies to help them buy coverage. The subsidies would begin in 2013.

HOW YOU CHOOSE YOUR HEALTH INSURANCE: Beginning in 2013 through a new Health Insurance Exchange open to individuals and, initially, small employers. It could be expanded to large employers over time. States could opt to operate their own exchanges in place of the national exchange if they follow federal rules.

BENEFITS PACKAGE: A committee would recommend a so-called essential benefits package including preventive services. Out-of pocket costs would be capped. The new benefit package would be the basic benefit package offered in the exchange.

INSURANCE INDUSTRY RESTRICTIONS: Starting in 2013, no denial of coverage based on pre-existing conditions. No higher premiums allowed for pre-existing conditions or gender. Limits on higher premiums based on age.

GOVERNMENT-RUN PLAN: A new public plan available through the insurance exchanges would be set up and run by the secretary of Health and Human Services. Democrats originally designed the plan to pay Medicare rates plus 5 percent to doctors. But the final version -- preferred by moderate lawmakers -- would let the HHS secretary negotiate rates with providers.

CHANGES TO MEDICAID: The federal-state insurance program for the poor would be expanded to cover all individuals under age 65 with incomes up to 150 percent of the federal poverty level, which is $33,075 per year for a family of four. The federal government would pick up the full cost of the expansion in 2013 and 2014; thereafter the federal government would pay 91 percent and states would pay 9 percent.

DRUGS: Grants 12 years of market protection to high-tech drugs used to combat cancer, Parkinson's and other deadly diseases. Phases out the gap in Medicare prescription drug coverage by 2019. Requires the HHS secretary to negotiate drug prices on behalf of Medicare beneficiaries.

LONG-TERM CARE: New voluntary long-term care insurance program would provide a basic benefit designed to help seniors and disabled people avoid going into nursing homes.

ANTITRUST: Would strip the health insurance industry of a long-standing exemption from antitrust laws covering market allocation, price-fixing and bid rigging. The bill also would give the Federal Trade Commission authority to look into the health insurance industry at its own initiative.

WI Firms Pay 22% More for Health Insurance- with Soultions Offered by Insuring Resources

2009-11-18T06:54:00.000-08:00

Insuring Resources Commentary:

Wisconsin business is at a huge disadvantage in the national marketplace because we pay so much more for health insurance, according to new research by Mercer. Part of the reason, I believe, is because Wisconsin health care providers get paid less on average for treating people on Medicare so the costs are shifted on to the private sector side.

Now if health care reform includes a public plan option that covers small businesses and uses Medicare reimbursement rates the situation will get much worse for Wisconsin businesses.

Solution:
Health care reform must
1. level the Medicare reimbursement to bring Wisconsin up where it should be. Wisconsin providers are paid much less by Medicare than the national average.

2.if we have a public plan option that includes coverage for small businesses it must not use Medicare reimbursement rates UNLESS, Medicare can finally start to negotiate rates with providers. Right now, Medicare reimbursement rates are set by the feds, NOT negotiated in the marketplace. With the purchasing power of the federal government insuring tens of millions of people on Medicare this should be a no-brainer.

3. In addition, as I've said all along, providers need reimbursement incentives to make their care more efficient and reduce the waste. The Senate bill includes pilots for this but that doesn't go far enough, we need these efficiency incentives to be standard across the entire system.

4. And finally, Wisconsin cannot be penalized for having a higher rate of insured persons. There are incentives in the House bill that gives grant money to states with higher uninsured pct.s to help them along. This actually hurts states like Wisconsin that have been proactive. For instance- Wisconsin covers childless adults through BadgerCare up to 200% of FPL. Louisiana covers them up to 26% of FPL!!! If the House reform language passes Lousiana gets extra money to bring their insured numbers up to 150% while Wisconsin already surpasses that. By the way-- thanks to Wisconsin DHS Secretary Karen Timberlake for providing the Louisiana stat at a health care forum I attended in Madison yesterday.

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State firms pay 22% more for health insurance than U.S., survey shows By Rick Romell of the Journal Sentinel

Posted: Nov. 18, 2009 10:14 a.m.

Wisconsinites continue to pay more for health insurance than Americans generally, and the costs here have increased more rapidly, a new survey by benefits consulting firm Mercer shows.

Wisconsin companies and their employees paid an average of $10,888 per worker for health insurance in 2009 - nearly 22% above the national average of $8,945, Mercer found.

And the cost gap between Wisconsin and the rest of the country widened. Nationally, the cost of health benefits for active employees rose 5.5% for the year, the smallest annual increase in a decade. In Wisconsin, costs increased by 6.8%.

Mercer's findings are based on a late-summer survey of more than 2,900 employers with at least 10 employees each. Eighty-eight Wisconsin employers were surveyed.