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
Saturday, November 20, 2010
Tuesday, June 29, 2010
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.
---------------
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
--------------------------
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.
---------------
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
--------------------------
Thursday, June 10, 2010
PPACA puts niche health insurance market in jeopardy
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.
--- ---- ----
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.
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.
--- ---- ----
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.
Sunday, June 6, 2010
Understanding the Grandfather Rules
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
---------------- ------------------
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.
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
---------------- ------------------
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.
Wednesday, June 2, 2010
In Business Madison Magazine Details Small Business Decisions Under the PPACA
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
------------ -------------- -------------
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."
Sign up for the free IB Update — your weekly resource for local business news, analysis, voices and the names you need to know. Click here.
COMMENTS
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
------------ -------------- -------------
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."
Sign up for the free IB Update — your weekly resource for local business news, analysis, voices and the names you need to know. Click here.
COMMENTS
Sunday, May 30, 2010
Businesses find they may have unexpected costs as part of PPACA's reforms
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.
---------------- ------------------
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.
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.
---------------- ------------------
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.
Wednesday, May 26, 2010
Small Business Tax Credit- Let's look at the fine print
Insuring Resources Commentary:
I may rename this blog- "The Devil is in the details"
For months administration officials have said most small businesses will receive the tax credit and most will be helped in providing their employees health care.
Ok, let's take a closer look as the article below does.
The tax credit applies to businesses with 50 or less employees whose wages are less than $50,000 on average.
BUT, that credit drops off sharply once a company gets above 10 workers and $25,000 average annual wages. Hmmm.
Let's take a small financial services company I know of that's located near Milwaukee as an example. XYZ Financial Services (name has been changed) has 27 employees who havge average earnings of $46,000. Based on the article below XYZ gets virtually no help.
Currently the employees contribute $400 a month for family coverage and have a $5000 family annual deductible with coverage thereafter of 100%. Obviously, the PPO health plan they already have is fraught with poor benefits and incentives to quality, cost effective health care. Basically, if a family reaches their deductible they can run wild for the remainder of the year with 100% coverage, but before meeting their deductible they probably avoid seeing a dr as much as possible.
***(That "running wild" scenario also likely causes increased premiums when they renew their coverage the following year.) That in turn may cause the employer to increase the employee's premium contribution and/or annual deductible. Vicious, meet cycle. ***
So, basically there are no tax credits to aid XYZ in making better health insurance purchasing decisions and the owner may decide to pay the fine for not offering any health insurance and let his employees get it through the state's health insurance exchange.
----------------------
FACT CHECK: Health care small biz tax cut elusive
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/05/20/national/w000842D50.DTL&feed=rss.news_nation#ixzz0p3Fvvp2r
By RICARDO ALONSO-ZALDIVAR, Associated Press Writer
Thursday, May 20, 2010
Zach Hoffman was confident his small business would qualify for a new tax cut in President Barack Obama's health care overhaul law.
But when he ran the numbers, Hoffman discovered that his office furniture company wouldn't get any assistance with the $79,200 it pays annually in premiums for its 24 employees. "It leaves you with this feeling of a bait-and-switch," he said.
When the administration unveiled the small business tax credit earlier this week, officials touted its "broad eligibility" for companies with fewer than 25 workers and average annual wages under $50,000 that provide health coverage. Hoffman's workers earn an average of $35,000 a year, which makes it all the more difficult to understand why his company didn't qualify.
Lost in the fine print: The credit drops off sharply once a company gets above 10 workers and $25,000 average annual wages.
It's an example of how the early provisions of the health care law can create winners and losers among groups lawmakers intended to help — people with health problems, families with young adult children and small businesses. Because of the law's complexity, not everyone in a broadly similar situation will benefit.
Consider small businesses: "The idea here is to target the credits to a relatively low number of firms, those who are low-wage and really quite small," said economist Linda Blumberg of the Urban Institute public policy center. The smallest businesses are at greatest risk of losing coverage — assuming they can afford it in the first place, research shows.
On paper, the credit seems to be available to companies with fewer than 25 workers and average wages of $50,000. But in practice, a complicated formula that combines the two numbers works against companies that have more than 10 workers and $25,000 in average wages.
"You can get zero even if you are not hitting the max on both pieces," said Blumberg. Being close to the upper limit on either of the two measures significantly reduces the credit, she explained.
Hoffman used an online calculator to figure his company's eligibility. At least four are available, including one from the House Energy and Commerce Committee, which helped write the legislation. All produced the same result.
"I think (the administration's) intentions are good, but the numbers and applications don't come out to what they intend," said Hoffman, part owner of Wiley Office Furniture, a third-generation family business in Springfield, Ill.
The Treasury Department, which administers the new credit, did not dispute the calculations.
"The small-business tax credit was designed to provide the greatest benefit to employers that currently have the hardest time providing health insurance for their workers — small, low-wage firms," said Michael Mundaca, assistant secretary for tax policy. "Small employers face higher premiums and higher administrative costs than large firms and in many cases cannot afford to provide coverage."
Small business owners are a pivotal constituency in the fall congressional elections, and Democrats are battling to win them over. Major benefits of the health care law — competitive insurance markets, more stable premiums and a ban on denying coverage to those in poor health — don't take effect until 2014. But the health care credit is available this year.
It can be a boon for smaller companies paying lower wages. Betsy Burton, owner of The King's English Bookshop in Salt Lake City, estimates that she will get a credit of roughly $21,000 against premiums of about $67,800. She has 11 full-time equivalent employees averaging $26,100.
"What it means is that I can afford to carry this insurance and insure people's families," said Burton. "I was afraid that we were fast approaching a time when I would have to choose between insuring my employees and closing my doors."
Burton believes offering health insurance is the right thing for an employer to do — and makes good business sense because it helps her retain valued employees. Except at the beginning, she has provided coverage for most of the 33 years the bookstore has been in business.
Hoffman, the furniture store owner whose business missed out, says he understands that lawmakers had a limited amount of money for the health care legislation. But his company's premiums rose 15 percent this year, and it's a struggle to keep paying.
To get the most out of the new federal credit, Hoffman said he'd have to cut his work force to 10 employees and slash their wages.
"That seems like a strange outcome, given we've got 10 percent unemployment," he said
I may rename this blog- "The Devil is in the details"
For months administration officials have said most small businesses will receive the tax credit and most will be helped in providing their employees health care.
Ok, let's take a closer look as the article below does.
The tax credit applies to businesses with 50 or less employees whose wages are less than $50,000 on average.
BUT, that credit drops off sharply once a company gets above 10 workers and $25,000 average annual wages. Hmmm.
Let's take a small financial services company I know of that's located near Milwaukee as an example. XYZ Financial Services (name has been changed) has 27 employees who havge average earnings of $46,000. Based on the article below XYZ gets virtually no help.
Currently the employees contribute $400 a month for family coverage and have a $5000 family annual deductible with coverage thereafter of 100%. Obviously, the PPO health plan they already have is fraught with poor benefits and incentives to quality, cost effective health care. Basically, if a family reaches their deductible they can run wild for the remainder of the year with 100% coverage, but before meeting their deductible they probably avoid seeing a dr as much as possible.
***(That "running wild" scenario also likely causes increased premiums when they renew their coverage the following year.) That in turn may cause the employer to increase the employee's premium contribution and/or annual deductible. Vicious, meet cycle. ***
So, basically there are no tax credits to aid XYZ in making better health insurance purchasing decisions and the owner may decide to pay the fine for not offering any health insurance and let his employees get it through the state's health insurance exchange.
----------------------
FACT CHECK: Health care small biz tax cut elusive
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/05/20/national/w000842D50.DTL&feed=rss.news_nation#ixzz0p3Fvvp2r
By RICARDO ALONSO-ZALDIVAR, Associated Press Writer
Thursday, May 20, 2010
Zach Hoffman was confident his small business would qualify for a new tax cut in President Barack Obama's health care overhaul law.
But when he ran the numbers, Hoffman discovered that his office furniture company wouldn't get any assistance with the $79,200 it pays annually in premiums for its 24 employees. "It leaves you with this feeling of a bait-and-switch," he said.
When the administration unveiled the small business tax credit earlier this week, officials touted its "broad eligibility" for companies with fewer than 25 workers and average annual wages under $50,000 that provide health coverage. Hoffman's workers earn an average of $35,000 a year, which makes it all the more difficult to understand why his company didn't qualify.
Lost in the fine print: The credit drops off sharply once a company gets above 10 workers and $25,000 average annual wages.
It's an example of how the early provisions of the health care law can create winners and losers among groups lawmakers intended to help — people with health problems, families with young adult children and small businesses. Because of the law's complexity, not everyone in a broadly similar situation will benefit.
Consider small businesses: "The idea here is to target the credits to a relatively low number of firms, those who are low-wage and really quite small," said economist Linda Blumberg of the Urban Institute public policy center. The smallest businesses are at greatest risk of losing coverage — assuming they can afford it in the first place, research shows.
On paper, the credit seems to be available to companies with fewer than 25 workers and average wages of $50,000. But in practice, a complicated formula that combines the two numbers works against companies that have more than 10 workers and $25,000 in average wages.
"You can get zero even if you are not hitting the max on both pieces," said Blumberg. Being close to the upper limit on either of the two measures significantly reduces the credit, she explained.
Hoffman used an online calculator to figure his company's eligibility. At least four are available, including one from the House Energy and Commerce Committee, which helped write the legislation. All produced the same result.
"I think (the administration's) intentions are good, but the numbers and applications don't come out to what they intend," said Hoffman, part owner of Wiley Office Furniture, a third-generation family business in Springfield, Ill.
The Treasury Department, which administers the new credit, did not dispute the calculations.
"The small-business tax credit was designed to provide the greatest benefit to employers that currently have the hardest time providing health insurance for their workers — small, low-wage firms," said Michael Mundaca, assistant secretary for tax policy. "Small employers face higher premiums and higher administrative costs than large firms and in many cases cannot afford to provide coverage."
Small business owners are a pivotal constituency in the fall congressional elections, and Democrats are battling to win them over. Major benefits of the health care law — competitive insurance markets, more stable premiums and a ban on denying coverage to those in poor health — don't take effect until 2014. But the health care credit is available this year.
It can be a boon for smaller companies paying lower wages. Betsy Burton, owner of The King's English Bookshop in Salt Lake City, estimates that she will get a credit of roughly $21,000 against premiums of about $67,800. She has 11 full-time equivalent employees averaging $26,100.
"What it means is that I can afford to carry this insurance and insure people's families," said Burton. "I was afraid that we were fast approaching a time when I would have to choose between insuring my employees and closing my doors."
Burton believes offering health insurance is the right thing for an employer to do — and makes good business sense because it helps her retain valued employees. Except at the beginning, she has provided coverage for most of the 33 years the bookstore has been in business.
Hoffman, the furniture store owner whose business missed out, says he understands that lawmakers had a limited amount of money for the health care legislation. But his company's premiums rose 15 percent this year, and it's a struggle to keep paying.
To get the most out of the new federal credit, Hoffman said he'd have to cut his work force to 10 employees and slash their wages.
"That seems like a strange outcome, given we've got 10 percent unemployment," he said
Monday, May 24, 2010
Pricing Transparency Gaining Interest
Insuring Resources Commentary:
With some bipartisan support on these pending bills it'd be great to see something happen on transparency. See the article below.
Also, Rep. Steve Kagen (Appleton) is the author of one of the bills. Appleton happens to be the home of ThedaCare - a leader in lean strategies and health care transparency. (www.createhealthcarevalue.org)
As Rep. Barton states below, the PPACA does fall short of the implementing the transparency we need going forward. This is a great companion bill in that regard to get the amount of transparency America needs to truly provide physicians and hospitals the cost incentives we need.
------- ------- -------
Pricing transparency gaining renewed interest
By Matthew DoBias of Modern Physician Magazine
Posted: May 24, 2010
Led by a physician lawmaker, members of Congress on both sides of the aisle have shown renewed interest in mandating a boost in healthcare pricing transparency, including charges for physician services.
But one key player, the chairman of the Energy and Commerce Committee's Health Subcommittee, Rep. Frank Pallone (D-N.J.), is skeptical that three bills that came before that committee this month will make it into law this year given Congress' calendar is backlogged as a result of the lengthy healthcare reform fight.
One bill, introduced by physician Rep. Steve Kagen, M.D., (D-Wis.), would require doctors, hospitals, nurses, pharmacies and a number of manufacturers and vendors to openly disclose prices. Failure to do so would result in a financial penalty. Kagen says the current system is “upside down,” adding that it allows for those with no insurance to be charged the full amount while it gives the insured steep discounts.
“Some will argue that showing everyone all of the prices is too complex, for there are tens of thousands of prices at any given hospitals,” Kagen says. “But today's technology allows all of us to go online on the Internet and search for items to purchase and find exactly what we want to buy within milliseconds.”
Another bill, sponsored by Rep. Joe Barton (R-Texas) but backed by several Democrats, requires public and private health plans to make known what services they cover, any restrictions in that coverage and the cost-sharing requirements that are also involved. Two years out, it would require hospitals and ambulatory surgical centers to publicly disclose the charges for services they typically perform. A third bill requires a higher level of Medicaid transparency.
Taken together, the bills attempt to give individuals the important information they need to choose where to go for care and how much they can expect to pay once they get there.
Barton acknowledges that the new reform law contains provisions that would inch toward a more transparent system, but he says they fall short.
Under the law, hospitals during the next six months are required to disclose annually a list of their standard charges for items and services, including Medicare DRGs.
Critics contend, however, that “standard” charges are too vague. Steven Summer, president and CEO of the Colorado Hospital Association, says the healthcare system in its current form makes it difficult to post accurate and meaningful pricing information.
“We firmly believe that everyone needs to have access to consumer-friendly pricing language,” Summer told the congressional subcommittee.
Colorado hospitals annually publish some financial data, which compares charges vs. the average length of stay for common medical treatments and surgical procedures.
While many lawmakers agree that price transparency is needed, political realities could squelch any momentum the bills may have. Democratic leaders in the House have deliberately planned a lighter workload heading into the November elections.
“Members have been asking to have hearings and move on legislation for a long time, so I'm more concerned at this point about having hearings and moving legislation that has been held up,” Pallone says. “And that's what I'm getting from members.”
With some bipartisan support on these pending bills it'd be great to see something happen on transparency. See the article below.
Also, Rep. Steve Kagen (Appleton) is the author of one of the bills. Appleton happens to be the home of ThedaCare - a leader in lean strategies and health care transparency. (www.createhealthcarevalue.org)
As Rep. Barton states below, the PPACA does fall short of the implementing the transparency we need going forward. This is a great companion bill in that regard to get the amount of transparency America needs to truly provide physicians and hospitals the cost incentives we need.
------- ------- -------
Pricing transparency gaining renewed interest
By Matthew DoBias of Modern Physician Magazine
Posted: May 24, 2010
Led by a physician lawmaker, members of Congress on both sides of the aisle have shown renewed interest in mandating a boost in healthcare pricing transparency, including charges for physician services.
But one key player, the chairman of the Energy and Commerce Committee's Health Subcommittee, Rep. Frank Pallone (D-N.J.), is skeptical that three bills that came before that committee this month will make it into law this year given Congress' calendar is backlogged as a result of the lengthy healthcare reform fight.
One bill, introduced by physician Rep. Steve Kagen, M.D., (D-Wis.), would require doctors, hospitals, nurses, pharmacies and a number of manufacturers and vendors to openly disclose prices. Failure to do so would result in a financial penalty. Kagen says the current system is “upside down,” adding that it allows for those with no insurance to be charged the full amount while it gives the insured steep discounts.
“Some will argue that showing everyone all of the prices is too complex, for there are tens of thousands of prices at any given hospitals,” Kagen says. “But today's technology allows all of us to go online on the Internet and search for items to purchase and find exactly what we want to buy within milliseconds.”
Another bill, sponsored by Rep. Joe Barton (R-Texas) but backed by several Democrats, requires public and private health plans to make known what services they cover, any restrictions in that coverage and the cost-sharing requirements that are also involved. Two years out, it would require hospitals and ambulatory surgical centers to publicly disclose the charges for services they typically perform. A third bill requires a higher level of Medicaid transparency.
Taken together, the bills attempt to give individuals the important information they need to choose where to go for care and how much they can expect to pay once they get there.
Barton acknowledges that the new reform law contains provisions that would inch toward a more transparent system, but he says they fall short.
Under the law, hospitals during the next six months are required to disclose annually a list of their standard charges for items and services, including Medicare DRGs.
Critics contend, however, that “standard” charges are too vague. Steven Summer, president and CEO of the Colorado Hospital Association, says the healthcare system in its current form makes it difficult to post accurate and meaningful pricing information.
“We firmly believe that everyone needs to have access to consumer-friendly pricing language,” Summer told the congressional subcommittee.
Colorado hospitals annually publish some financial data, which compares charges vs. the average length of stay for common medical treatments and surgical procedures.
While many lawmakers agree that price transparency is needed, political realities could squelch any momentum the bills may have. Democratic leaders in the House have deliberately planned a lighter workload heading into the November elections.
“Members have been asking to have hearings and move on legislation for a long time, so I'm more concerned at this point about having hearings and moving legislation that has been held up,” Pallone says. “And that's what I'm getting from members.”
Sunday, May 23, 2010
5 Points for Families to Consider Before Taking Advantage of New Age Extension
Insuring Resources Commentary:
I've highlighted a few key portions below as this provision does NOT apply toi evry young adult- only those who are unmarried and do not currently have access to employer provided health insurance.
Also, Wisconsin passed a law allowing dependent adult coverage up to age 27, one year longer than under the PPACA. However, the Wisconsin law only applies to about 27% of the Wisconsin health insurance market, according to Wisconsin's OCI. It does not apply to self-funded employer plans or individual plans.
------------ -------------- --------------
Health Care Reform and Young Adults: 5 Points for Families to Consider Before Taking Advantage of New Age Extension
SAN JOSE, CA; May 18, 2010
It would seem that the enactment of the Patient Protection and Affordable Care Act, which extends the time young adults can stay on their parents' health insurance to age 26, would cause many young adults to automatically jump on to their parents' plans. The Foundation for Health Coverage Education (FHCE) www.CoverageForAll.org, a non-profit that specializes in national health coverage information for the uninsured, urges caution.
"All participants should first review the qualifications and overall impact on their insurance policy before they make the move," advises Ankeny Minoux, FHCE president.
Beginning September 23, 2010, the new law will assist a large number of young adults who are currently uninsured. However, the new regulations are unclear about eligibility requirements and the extension's impact on the potential participant and his/her family's policy. "If you or your young adult children are currently uninsured, the place to start is by educating yourself about your potential options, based on your personal circumstances," said Minoux. To this end, the FHCE has put together the following five points to consider:
1. Not all states are alike. The first step is to learn about the rules that apply to your state. The new federal law establishes a minimum level of dependent coverage up to a young adult's 26th birthday. If your state law requires more coverage than the federal law, it's likely that the state law will still apply. Alabama, Alaska, Arizona, Arkansas, California, Washington D.C., Hawaii, Michigan, Mississippi, North Carolina, and Vermont currently have no state laws that require insurance companies to extend dependent coverage to young adults. As a result, most insurance for dependents ends at age 19 or upon graduation from college. Residents in these states will likely see the most direct gain from this dependent coverage expansion. The other 39 states have some form of dependent coverage expansion, but many are restricted to specific populations, such as disabled young adults or full-time students. Among states that already have coverage expansions, only 7 states (Connecticut, Florida, Illinois, New Hampshire, New Jersey, New York, and Utah) already extend dependent coverage to non-students up to age 26 or older in both individual and group market plans.
2. Working young adults may not be able to participate. Tapping into the family's insurance policy could save everyone money, but the House's Reconciliation Bill states that until 2014, for already existing health plans, insurance companies are only required to provide insurance to dependents if the dependents do not have access to insurance on their own employer-sponsored plans. Insurance companies are thus not required to allow participants to make that switch, although some may choose to allow it. The first step should be consulting all involved insurance parties to learn about their specific regulations.
3. Consider the impact on your family's tax return. For young adults who are not listed as dependents on their parents' tax return, the law raises additional questions regarding eligibility of uninsured independent young adults. This question has not yet been answered by the law, and it will likely be determined by how the regulations define the term "dependent."
4. Out-of-state coverage may mean out-of-state care. While the conditions of enrolling a young adult on the family policy may result in a cost savings for everyone, it might not be practical if the young adult is an extensive distance from the family and does not have access to providers that accept the insurance in his/her state of residence. For example, a local HMO may have a closed network of providers within a limited geographic area. This review of local providers should be an important step in making the decision.
5. Consider enrollment periods. While the new provision goes into effect September 23, 2010, the law doesn't state that insurers must change their enrollment periods in order to accommodate these adult children who have previously aged out of their parents' plan. The good news is that a number of insurers, including WellPoint, Cigna, Aetna, United HealthCare, Humana, Kaiser Permanente, and BlueCross and BlueShield plans, have announced they will allow young adults up to age 26 to join their parents' plan now, well ahead of government fall deadline.
I've highlighted a few key portions below as this provision does NOT apply toi evry young adult- only those who are unmarried and do not currently have access to employer provided health insurance.
Also, Wisconsin passed a law allowing dependent adult coverage up to age 27, one year longer than under the PPACA. However, the Wisconsin law only applies to about 27% of the Wisconsin health insurance market, according to Wisconsin's OCI. It does not apply to self-funded employer plans or individual plans.
------------ -------------- --------------
Health Care Reform and Young Adults: 5 Points for Families to Consider Before Taking Advantage of New Age Extension
SAN JOSE, CA; May 18, 2010
It would seem that the enactment of the Patient Protection and Affordable Care Act, which extends the time young adults can stay on their parents' health insurance to age 26, would cause many young adults to automatically jump on to their parents' plans. The Foundation for Health Coverage Education (FHCE) www.CoverageForAll.org, a non-profit that specializes in national health coverage information for the uninsured, urges caution.
"All participants should first review the qualifications and overall impact on their insurance policy before they make the move," advises Ankeny Minoux, FHCE president.
Beginning September 23, 2010, the new law will assist a large number of young adults who are currently uninsured. However, the new regulations are unclear about eligibility requirements and the extension's impact on the potential participant and his/her family's policy. "If you or your young adult children are currently uninsured, the place to start is by educating yourself about your potential options, based on your personal circumstances," said Minoux. To this end, the FHCE has put together the following five points to consider:
1. Not all states are alike. The first step is to learn about the rules that apply to your state. The new federal law establishes a minimum level of dependent coverage up to a young adult's 26th birthday. If your state law requires more coverage than the federal law, it's likely that the state law will still apply. Alabama, Alaska, Arizona, Arkansas, California, Washington D.C., Hawaii, Michigan, Mississippi, North Carolina, and Vermont currently have no state laws that require insurance companies to extend dependent coverage to young adults. As a result, most insurance for dependents ends at age 19 or upon graduation from college. Residents in these states will likely see the most direct gain from this dependent coverage expansion. The other 39 states have some form of dependent coverage expansion, but many are restricted to specific populations, such as disabled young adults or full-time students. Among states that already have coverage expansions, only 7 states (Connecticut, Florida, Illinois, New Hampshire, New Jersey, New York, and Utah) already extend dependent coverage to non-students up to age 26 or older in both individual and group market plans.
2. Working young adults may not be able to participate. Tapping into the family's insurance policy could save everyone money, but the House's Reconciliation Bill states that until 2014, for already existing health plans, insurance companies are only required to provide insurance to dependents if the dependents do not have access to insurance on their own employer-sponsored plans. Insurance companies are thus not required to allow participants to make that switch, although some may choose to allow it. The first step should be consulting all involved insurance parties to learn about their specific regulations.
3. Consider the impact on your family's tax return. For young adults who are not listed as dependents on their parents' tax return, the law raises additional questions regarding eligibility of uninsured independent young adults. This question has not yet been answered by the law, and it will likely be determined by how the regulations define the term "dependent."
4. Out-of-state coverage may mean out-of-state care. While the conditions of enrolling a young adult on the family policy may result in a cost savings for everyone, it might not be practical if the young adult is an extensive distance from the family and does not have access to providers that accept the insurance in his/her state of residence. For example, a local HMO may have a closed network of providers within a limited geographic area. This review of local providers should be an important step in making the decision.
5. Consider enrollment periods. While the new provision goes into effect September 23, 2010, the law doesn't state that insurers must change their enrollment periods in order to accommodate these adult children who have previously aged out of their parents' plan. The good news is that a number of insurers, including WellPoint, Cigna, Aetna, United HealthCare, Humana, Kaiser Permanente, and BlueCross and BlueShield plans, have announced they will allow young adults up to age 26 to join their parents' plan now, well ahead of government fall deadline.
Saturday, May 22, 2010
Mercer Survey: Employers See Small Premium Hikes in 2011
Insuring Resources Comnmentary:
Premium increases over the last decade or so have averaged 8% so this appears to be very good news for many employers. We'll see what the projections look like later this year.
------------------------
Survey: Employers see small health care hikes in 2011
(AP) – May 20, 2010
NEW YORK — More than 40 percent of employers surveyed by the consulting firm Mercer expect health care reform to raise health care costs by a modest 2 percent or less next year.
A quarter of those surveyed believe reform will add at least 3 percent to their projected costs for 2011, while 3 percent of the employers expect no increase.
Benefit plans may see additional costs next year due to provisions in the reform law that ban lifetime maximums for benefits and extend coverage of young adult dependents on parental plans to age 26.
Mercer said Thursday the actual impact will vary widely by company, depending in part on the employees it covers. For instance, it may be fairly small for a company with a young employee population that has few dependents who would qualify for that coverage extension.
About 71 percent of large employers have a lifetime maximum for benefits while 29 percent don't, said Beth Umland, Mercer's research director for health and benefits. Those that don't won't need to make an adjustment for next year.
Average health benefit costs per employee have risen about 6 percent each year for the past five years, Mercer said. Any increases from reform will be in addition to that.
"They have to work hard to keep it at 6 but throw on another two points, it will be interesting to see how they chip away at that," Umland said.
Companies often raise co-insurance, deductibles or other employee contributions to tame their cost increases.
A total of 791 employers responded to Mercer's online survey. They represented several industries including retail, manufacturing, health care and financial services.
Premium increases over the last decade or so have averaged 8% so this appears to be very good news for many employers. We'll see what the projections look like later this year.
------------------------
Survey: Employers see small health care hikes in 2011
(AP) – May 20, 2010
NEW YORK — More than 40 percent of employers surveyed by the consulting firm Mercer expect health care reform to raise health care costs by a modest 2 percent or less next year.
A quarter of those surveyed believe reform will add at least 3 percent to their projected costs for 2011, while 3 percent of the employers expect no increase.
Benefit plans may see additional costs next year due to provisions in the reform law that ban lifetime maximums for benefits and extend coverage of young adult dependents on parental plans to age 26.
Mercer said Thursday the actual impact will vary widely by company, depending in part on the employees it covers. For instance, it may be fairly small for a company with a young employee population that has few dependents who would qualify for that coverage extension.
About 71 percent of large employers have a lifetime maximum for benefits while 29 percent don't, said Beth Umland, Mercer's research director for health and benefits. Those that don't won't need to make an adjustment for next year.
Average health benefit costs per employee have risen about 6 percent each year for the past five years, Mercer said. Any increases from reform will be in addition to that.
"They have to work hard to keep it at 6 but throw on another two points, it will be interesting to see how they chip away at that," Umland said.
Companies often raise co-insurance, deductibles or other employee contributions to tame their cost increases.
A total of 791 employers responded to Mercer's online survey. They represented several industries including retail, manufacturing, health care and financial services.
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