Author Archive | John Barrett

Survey: More Employers Plan To Increase Health Care Costs for Workers

Almost two-thirds of large U.S. employers in 2011 plan to ask employees to pay for a larger portion of their health coverage to reduce an expected increase in costs, partly attributed to the federal health reform law, according to survey released on Tuesday by the National Business Group on Health, Bloomberg/San Francisco Chronicle reports (Young, Bloomberg/San Francisco Chronicle, 8/19).

The survey, which drew responses from 72 large employers with 3.7 million workers, was conducted in May and June.

Survey Findings

According to the survey, respondents said they expect their overall health benefit costs to increase by an average of 8.9% in 2011, compared with 7% in 2010 (Lillis, “Healthwatch,” The Hill, 8/18).

Provisions included in the recently enacted health reform law are expected to contribute an estimated one percentage point toward that total, according to Helen Darling, president of NBGH (Bloomberg/San Francisco Chronicle, 8/19).

The survey — titled “Large Employers’ 2011 Health Plan Design Changes” — found that among respondents:

  • 63% intend to make workers pay a higher percentage of their premium costs next year, up from 57% in 2010;
  • 46% plan to raise the maximum level of out-of-pocket costs that workers would pay;
  • 44% plan to raise deductible rates for in-network providers (Reichard, CQ HealthBeat, 8/18);
  • 61% plan to offer a consumer-directed health plan in 2011 (Murphy, AP/MSNBC, 8/18);
  • 53% are willing to revise the design of their employees’ health care plans, such as removing lifetime dollar limits on overall benefits and specific benefits, and eliminating provisions that exclude coverage for children with pre-existing medical conditions (CQ HealthBeat, 8/18);
  • 37% plan to change annual or lifetime limits on specific benefits, including dental, mental health and infertility benefits; and
  • 25% plan to raise copayments or co-insurance costs for prescription drug benefits at retail pharmacies, while 21% are planning to implement similar increases for mail-order pharmacy benefits (“Healthwatch,” The Hill, 8/18).

Implications of Findings

The survey likely will foster debate over the health reform law’s effect on health care costs (“Healthwatch,” The Hill, 8/18).

Some experts have said attributing the cost increases to the reform law could be disingenuous.

Health researcher Igor Volsky of the Center for American Progress suggested that employers could be using the overhaul as the reason for cost increases that they already were planning to implement (Bloomberg/San Francisco Chronicle, 8/19).

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California to Open New Health Insurance Program for Individuals with Preexisting Conditions in September

The Managed Risk Medical Insurance Board announced Thursday it plans to begin accepting applications this month and providing coverage to Californians next month in a new health insurance program for individuals with preexisting conditions – one of first major provisions of federal health reform to be implemented in the state.

Preexisting Condition Insurance Plan in California Monthly Premium Rates* Effective through December 31, 2011

Age Band Region 1 Region 2 Region 3 Region 4 Region 5 Region 6
<15 $145 $138 $140 $127 $142 $127
15-29 $199 $195 $201 $180 $200 $181
30–34 $286 $282 $292 $258 $288 $260
35–39 $319 $314 $325 $288 $321 $289
40–44 $337 $332 $344 $304 $339 $306
45–49 $369 $364 $377 $334 $371 $335
50–54 $494 $481 $499 $445 $495 $448
55–59 $627 $608 $624 $564 $625 $567
60–64 $796 $780 $802 $720 $799 $723
65-69 $891 $873 $899 $806 $895 $810
70-74 $939 $920 $947 $849 $943 $853
>74 $995 $975 $1,003 $899 $999 $904

* August 5, 2010

Region 1: Northern 31 counties

Region 2: Valley 14 counties

Region 3: Bay Area 6 counties

Region 4: South Coast 3 counties

Region 5: Los Angeles County Region

6: South 3 counties

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NEW HEALTH LAW MAY BRING PRICIER PREMIUMS

San Francisco Chronicle –

Aug. 9: Employers and consumers sorting through their health insurance options may see a bump in their rates next year to account for the potential impact of some of the early elements of the federal health overhaul law, according to some health experts.

Jeff Sher, an independent health insurance agent and consultant in San Francisco, said he’s anticipating employee coverage at mid-size companies to go up 13 percent to 15 percent. “Then we’re supposed to tack on several percentage points for health reform,” he said.

August is a key month for employers to start making decisions about their health benefits because most open-enrollment periods, during which employees select their health insurance plans, begin in the fall for coverage starting Jan. 1, 2011.

While most major pieces of the new health law don’t go into effect until 2014, some reforms affecting health insurance carriers take effect this year. These include provisions that require health plans to cover adult children

until age 26, extend coverage to children with pre-existing conditions, end maximum lifetime spending limits and end the practice of retroactively canceling a member’s coverage for any reason other than fraud.

Health policy watchers say it’s tough to know whether these reforms will have much impact on costs, which routinely outpace increases in wages and inflation. Any savings the new law could offer have not materialized yet, said Laurence Baker, professor of health research and policy at Stanford University. Meanwhile, there is uncertainty about whether changes such as covering children with pre-existing conditions or extending coverage to those under 26 will add costs to the overall health system.

“I can certainly see they (insurers) would look to the future and worry about how things would roll out and be more aggressive in the future about rates,” Baker said. A PricewaterhouseCoopers report released in June found that medical costs nationwide are expected to rise 9 percent next year. That projected increase for 2011 is actually slightly smaller than the 9.5 percent rise the consulting firm is seeing this year.

But Michael Thompson, a principal with PricewaterhouseCoopers, said the reforms going into effect this year will have little to no impact on employer health costs. “If anything, we think the trend will down this year,” he said, adding that the upsurge last year of people staying on their former employer’s health insurance plans due to federal government subsidies had a larger impact on rates.

Several health insurers declined to comment directly on the impact of health reform on their rates. Aetna said people who purchase coverage with additional benefits required under the new health law will have to pay more for those benefits.

California legislators this month will be considering a number of bills designed to curb increases in health rates, such as the 39 percent hike for individual members of Anthem Blue Cross that helped jump-start the national reform discussion earlier this year.

“Regulators need to be vigilant in this period before the health reform kicks in with regards to health insurers gaming the system,” said Anthony Wright, executive director of Health Access, a statewide advocacy group.

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Changing Stance, Administration Now Defends Insurance Mandate as a Tax

WASHINGTON — When Congress required most Americans to obtain health insurance or pay a penalty, Democrats denied that they were creating a new tax. But in court, the Obama administration and its allies now defend the requirement as an exercise of the government’s “power to lay and collect taxes.”

And that power, they say, is even more sweeping than the federal power to regulate interstate commerce.

Administration officials say the tax argument is a linchpin of their legal case in defense of the health care overhaul and its individual mandate, now being challenged in court by more than 20 states and several private organizations.

Under the legislation signed by President Obama in March, most Americans will have to maintain “minimum essential coverage” starting in 2014. Many people will be eligible for federal subsidies to help them pay premiums.

In a brief defending the law, the Justice Department says the requirement for people to carry insurance or pay the penalty is “a valid exercise” of Congress’s power to impose taxes.

Congress can use its taxing power “even for purposes that would exceed its powers under other provisions” of the Constitution, the department said. For more than a century, it added, the Supreme Court has held that Congress can tax activities that it could not reach by using its power to regulate commerce.

While Congress was working on the health care legislation, Mr. Obama refused to accept the argument that a mandate to buy insurance, enforced by financial penalties, was equivalent to a tax.

“For us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase,” the president said last September, in a spirited exchange with George Stephanopoulos on the ABC News program “This Week.”

When Mr. Stephanopoulos said the penalty appeared to fit the dictionary definition of a tax, Mr. Obama replied, “I absolutely reject that notion.”

Congress anticipated a constitutional challenge to the individual mandate. Accordingly, the law includes 10 detailed findings meant to show that the mandate regulates commercial activity important to the nation’s economy. Nowhere does Congress cite its taxing power as a source of authority.

Under the Constitution, Congress can exercise its taxing power to provide for the “general welfare.” It is for Congress, not courts, to decide which taxes are “conducive to the general welfare,” the Supreme Court said 73 years ago in upholding the Social Security Act.

Dan Pfeiffer, the White House communications director, described the tax power as an alternative source of authority.

“The Commerce Clause supplies sufficient authority for the shared-responsibility requirements in the new health reform law,” Mr. Pfeiffer said. “To the extent that there is any question of additional authority — and we don’t believe there is — it would be available through the General Welfare Clause.”

The law describes the levy on the uninsured as a “penalty” rather than a tax. The Justice Department brushes aside the distinction, saying “the statutory label” does not matter. The constitutionality of a tax law depends on “its practical operation,” not the precise form of words used to describe it, the department says, citing a long line of Supreme Court cases.

Moreover, the department says the penalty is a tax because it will raise substantial revenue: $4 billion a year by 2017, according to the Congressional Budget Office.

In addition, the department notes, the penalty is imposed and collected under the Internal Revenue Code, and people must report it on their tax returns “as an addition to income tax liability.”

Because the penalty is a tax, the department says, no one can challenge it in court before paying it and seeking a refund.

Jack M. Balkin, a professor at Yale Law School who supports the new law, said, “The tax argument is the strongest argument for upholding” the individual-coverage requirement.

Mr. Obama “has not been honest with the American people about the nature of this bill,” Mr. Balkin said last month at a meeting of the American Constitution Society, a progressive legal organization. “This bill is a tax. Because it’s a tax, it’s completely constitutional.”

Mr. Balkin and other law professors pressed that argument in a friend-of-the-court brief filed in one of the pending cases.

Opponents contend that the “minimum coverage provision” is unconstitutional because it exceeds Congress’s power to regulate commerce.

“This is the first time that Congress has ever ordered Americans to use their own money to purchase a particular good or service,” said Senator Orrin G. Hatch, Republican of Utah.

In their lawsuit, Florida and other states say: “Congress is attempting to regulate and penalize Americans for choosing not to engage in economic activity. If Congress can do this much, there will be virtually no sphere of private decision-making beyond the reach of federal power.”

In reply, the administration and its allies say that a person who goes without insurance is simply choosing to pay for health care out of pocket at a later date. In the aggregate, they say, these decisions have a substantial effect on the interstate market for health care and health insurance.

In its legal briefs, the Obama administration points to a famous New Deal case, Wickard v. Filburn, in which the Supreme Court upheld a penalty imposed on an Ohio farmer who had grown a small amount of wheat, in excess of his production quota, purely for his own use.

The wheat grown by Roscoe Filburn “may be trivial by itself,” the court said, but when combined with the output of other small farmers, it significantly affected interstate commerce and could therefore be regulated by the government as part of a broad scheme regulating interstate commerce.

Sources-
http://www.sideeffectsofxarelto.org/current-xarelto-lawsuits/

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Firms cancel health coverage With cost rising, small companies turning to state

The relentlessly rising cost of health insurance is prompting some small Massachusetts companies to drop coverage for their workers and encourage them to sign up for state-subsidized care instead, a trend that, some analysts say, could eventually weigh heavily on the state’s already-stressed budget.

Since April 1, the date many insurance contracts are renewed for small businesses, the owners of about 90 small companies terminated their insurance plans with Braintree-based broker Jeff Rich and indicated in a follow-up survey that they were relying on publicly-funded insurance for their employees.

In Sandwich, business consultant Bill Fields said he has been hired by small businesses to enroll about 400 workers in state-subsidized care since April, because the company owners said they could no longer afford to provide coverage. Fields said that is by far the largest number he has handled in such a short time.

“They are giving up out of frustration,’’ Fields said of the employers. “Most of them are very compassionate but they simply can’t afford health insurance any more.’’

Precisely how many small businesses have recently given up offering insurance is hard to pinpoint. The Office of Labor and Workforce Development said the most recent quarterly insurance data collected from small companies has not been compiled.

State officials said they have not seen convincing evidence that there is a trend. There has not been an unusually large spike in enrollment in Commonwealth Care, the subsidized insurance program, according to spokesman Richard Powers. And in any case, Dr. JudyAnn Bigby, secretary of health and human services, said the administration budgeted for higher health care spending because it anticipated that there would be growing numbers of long-term unemployed residents who would be signing up for coverage.

The Massachusetts Division of Health Care Finance and Policy annually surveys employers and found no significant drop in coverage as of the end of 2009, when more than three-quarters of companies offered health insurance.

But insurance brokers say the pace of terminations has picked up considerably since then among small companies, of which there are thousands in Massachusetts. Many of these companies — restaurants, day-care centers, hair salons, and retail shops — typically pay such low wages that their workers qualify for state-subsidized health insurance when their employers drop their plans.

“Those employers are trying to keep their doors open, and to the extent they can cut expenses, they will cut health insurance because they know their people can go to Commonwealth Care,’’ said Mark Gaunya, president of the Massachusetts Association of Health Underwriters, a trade group representing more than 1,000 brokers and other insurance professionals.

The issue is coming to a head as the Patrick administration battles insurers over swiftly escalating rates they have been charging small employers. In February, the governor filed sweeping legislation that proposes to give the Division of Insurance the power to essentially cap health care price increases. That proposal is still pending.

And on April 1, exercising authority the administration had never before used, the division denied 235 of 274 increases proposed by insurers for plans covering individuals and small businesses — base premiums would have increased as much as 32 percent. On July 1, it again held 137 proposed increases to 2009 rates.

The sides have been locked in negotiations for months, with the Patrick administration recently reaching agreement with two insurance carriers on lower rates.

“The Patrick-Murray Administration has taken decisive action to provide small businesses and working families with immediate relief from skyrocketing health insurance premiums,’’ the governor’s press secretary, Juan Martinez, said in a statement. He declined to directly address whether small businesses are increasingly dropping health coverage and directing their workers to subsidized care.

But analysts said the burden of double-digit insurance increases shouldered by small businesses over the last several years is likely to become more of a public problem.

“The more the employer insurance system unravels, the higher the cost is going to be for the state in providing subsidies to low income workers,’’ said Larry Levitt, vice president of the Kaiser Family Foundation, a California-based think tank. “From a state finance perspective, stabilizing employer insurance is definitely important.’’

The state’s landmark 2006 health insurance overhaul included regulations designed to discourage low-wage employees from opting for state health insurance over their companies’ often more pricey coverage. It denied eligibility to any one whose employer had offered him or her coverage in the past six months and paid at least 33 percent toward the individual’s plan.

Most health care advocates and brokers had widely interpreted that to include even workers whose companies had dropped coverage. But recently, some companies that have terminated their group plans have tested those waters and found that their employees were accepted for state-subsidized coverage.

Additionally, company owners say, it has become far cheaper to pay the state penalty for not covering their workers — roughly $295 annually per employee — than to pay thousands more in premiums.

In New Bedford, the Early Learning Child Care center is now paying $1,500 quarterly in fines to the state, instead of the $30,000 it contributed quarterly toward 13 workers’ health insurance premiums. When Executive Director Judy Knox terminated the company’s health plan late last year, she asked Fields, the consultant, to help 10 of those workers enroll in Commonwealth Care. The other three went on spouses’ plans or were eligible for Medicare.

“We had had, in the three previous years, between 17 and 18 percent increases every year,’’ Knox said. “I was so worried about the staff and their coverage, but for most of them, Commonwealth Care seems to be working out very well.’’ The state program covers people with incomes up to 300 percent of the federal poverty level.

Come 2014, when the bulk of the federal health care law goes into effect, the penalties for small companies that do not provide health insurance coverage will be less onerous than those in Massachusetts. That could tempt more small companies to opt out nationally, sending more workers to the public rolls — if health care costs can’t be restrained, some analysts said.

“Struggling business don’t necessarily feel the need to offer coverage to attract workers,’’ said Kaiser’s Levitt.

Massachusetts has not decided whether to adopt the federal rules for small businesses.

The federal law does not impose any penalty on companies with fewer than 50 employees that do not offer coverage, whereas in Massachusetts, employers with more than the equivalent of 11 full-time employees face fines for not offering a health plan and contributing at least 20 percent toward that coverage. But for companies with more than 50 workers, the federal law comes down a lot harder than does the state law.

© Copyright 2010 Globe Newspaper Company.
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ObamaCare’s Future Foretold

By Robert Samuelson

WASHINGTON — If you want a preview of President Obama’s health care “reform,” take a look at Massachusetts. In 2006, it enacted a “reform” that became a model for Obama. What’s happened since isn’t encouraging. The state did the easy part: expanding state-subsidized insurance coverage. It evaded the hard part: controlling costs and ensuring that spending improves people’s health. Unfortunately, Obama has done the same.

Like Obama, Massachusetts requires most individuals to have health insurance (the “individual mandate”). To aid middle-class families too well-off to qualify for Medicaid — government insurance for the poor — the state subsidizes insurance for people up to three times the federal poverty line (about $66,000 in 2008 for a family of four). Together, the mandate and subsidies have raised insurance coverage from 87.5 percent of the non-elderly population in 2006 to 95.2 percent in the fall of 2009, report Sharon Long and Karen Stockley of the Urban Institute.

People have more access to treatment, though changes are small. In 2006, 87 percent of the non-elderly had a “usual source of care,” presumably a doctor or clinic, note Long and Stockley in the journal Health Affairs. By 2009, that was 89.9 percent. In 2006, 70.9 percent received “preventive care”; in 2009, that was 77.7 percent. Out-of-pocket costs were less burdensome.

But much didn’t change. Emergency rooms remain as crowded as ever; about a third of the non-elderly go at least once a year, and half their visits involve “non-emergency conditions.” As for improvements in health, most probably lie in the future. “Many of the uninsured were young and healthy,” writes Long. Their “expected gains in health status” would be mostly long-term. Finally — and most important — health costs continue to soar.

Aside from squeezing take-home pay (employers provide almost 70 percent of insurance), higher costs have automatically shifted government priorities toward health care and away from everything else — schools, police, roads, prisons, lower taxes. In 1990, health spending represented about 16 percent of the state budget, says the Massachusetts Taxpayers Foundation. By 2000, health’s share was 22 percent. In 2010, it’s 35 percent. About 90 percent of the health spending is Medicaid.

State leaders have proven powerless to control these costs. Facing a tough re-election campaign, Gov. Deval Patrick effectively ordered his insurance commissioner to reject premium increases for small employers (50 workers or less) and individuals — an unprecedented step. Commissioner Joseph Murphy then disallowed premium increases ranging from 7 percent to 34 percent. The insurers appealed; hearing examiners ruled Murphy’s action illegal. Murphy has now settled with one insurer allowing premium increases, he says, of 7 percent to 11 percent. More settlements are expected.

Attacking unpopular insurance companies is easy — and ultimately ineffectual. The trouble is that they’re mostly middlemen. They collect premiums and pay providers: doctors, hospitals, clinics. Limiting premiums without controlling the costs of providers will ultimately cause insurer bankruptcies, which would then threaten providers because they won’t be fully reimbursed. The state might regulate hospitals’ and doctors’ fees directly; but in the past, providers have often offset lower rates by performing more tests and procedures.

A year ago, a state commission urged another approach: Scrap the present “fee-for-service” system. The commission argued that fee-for-service — which ties reimbursement to individual services — rewards quantity over quality and discourages coordinated care among doctors and hospitals. The commission recommended a “global payments” system to force hospitals, doctors and clinics to create networks (“accountable care organizations”). These would receive flat per-patient payments to promote effective — not just expensive — care. Payments would be “risk adjusted”; sicker patients would justify higher payments.

But the commission offered no blueprint, and efforts to craft consensus among providers, consumer groups and insurers have failed. State Senate President Therese Murray, an advocate of payment change, has given up for this year. “Nobody is in agreement on anything,” she told The Boston Globe.

All this anticipates Obamacare. Even if its modest measures to restrain costs succeed — which seems unlikely — the effect on overall spending would be slight. The system’s fundamental incentives won’t change. The lesson from Massachusetts is that genuine cost control is avoided because it’s so politically difficult. It means curbing the incomes of doctors, hospitals and other providers. They object. To encourage “accountable care organizations” would limit consumer choice of doctors and hospitals. That’s unpopular. Spending restrictions, whether imposed by regulation or “global payments,” raise the specter of essential care denied. Also unpopular.

Obama dodged the tough issues in favor of grandstanding. Imitating Patrick, he’s already denouncing insurers’ rates, as if that would solve the spending problem. What’s occurring in Massachusetts is the plausible future: Unchecked health spending determines government priorities and inflates budget deficits and taxes, with small health gains. And they call this “reform”?

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Six Months to Go Until The Largest Tax Hikes in History

From Ryan Ellis

In just six months, the largest tax hikes in the history of America will take effect.  They will hit families and small businesses in three great waves on January 1, 2011:

First Wave: Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families.  These will all expire on January 1, 2011:

Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed).  The lowest rate will rise from 10 to 15 percent.  All the rates in between will also rise.  Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.  The full list of marginal rate hikes is below:

– The 10% bracket rises to an expanded 15%
– The 25% bracket rises to 28%
– The 28% bracket rises to 31%
– The 33% bracket rises to 36%
– The 35% bracket rises to 39.6%

Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income.  The child tax credit will be cut in half from $1000 to $500 per child.  The standard deduction will no longer be doubled for married couples relative to the single level.  The dependent care and adoption tax credits will be cut.

The return of the Death Tax. This year, there is no death tax.  For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million.  A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.

Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011.  The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.  These rates will rise another 3.8 percent in 2013.

Second Wave: Obamacare

There are over twenty new or higher taxes in Obamacare.  Several will first go into effect on January 1, 2011.  They include:

The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

The “Special Needs Kids Tax” This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit).  There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.  There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education.  Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year.  Under tax rules, FSA dollars can be used to pay for this type of special needs education.

The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

Third Wave: The Alternative Minimum Tax and Employer Tax Hikes

When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired.  The major items include:

The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million.  These families will have to calculate their tax burdens twice, and pay taxes at the higher level.  The AMT was created in 1969 to ensnare a handful of taxpayers.

Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000.  This will be cut all the way down to $25,000.  Larger businesses can expense half of their purchases of equipment.  In January of 2011, all of it will have to be “depreciated.”

Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place.  The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others.  Combining high marginal tax rates with the loss of this tax relief will cost jobs.

Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available.  Tax credits for education will be limited.  Teachers will no longer be able to deduct classroom expenses.  Coverdell Education Savings Accounts will be cut.  Employer-provided educational assistance is curtailed.  The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA.  This contribution also counts toward an annual “required minimum distribution.”  This ability will no longer be there.

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Costs Soaring After Bay State Health Change

By SALLY C. PIPES

Anyone wanting a preview of Obama-Care need just focus on Massachusetts, the state that provided the blueprint for Obama’s plan. It makes a great case for making haste in repealing ObamaCare.

In Massachusetts, health care prices are out of control, emergency rooms are overcrowded, the government is at war with itself and private insurers are running in the red, refusing to enter critical markets on the government’s unrealistic terms.

The party line now is that the Bay State’s reform was not about cost control but rather expanding access to care. The program’s backers claim that the price spiral they find themselves in was expected, anticipated, even if they didn’t actually have a plan for it.

That’s a revisionist’s tale. In early 2006, the plan’s backers — led by then Republican Gov. Mitt Romney — adamantly asserted that his plan would in fact control costs, provide universal coverage and improve the quality of care. (If this sounds familiar, it’s because Obama’s team borrowed the marketing scripts.)

Disinterested outsiders predicted that both prices and total costs would most likely increase under the government-dominated system, since massive new demand, reimbursed at the lowest prices, would be forced on a fixed supply. They were shouted down by insiders vested in getting the reform passed.

Guess who was right?

Two data points are harbingers of collapse. First, an academic study “The Effect of Massachusetts’ Health Reform on Employer-Sponsored Insurance Premiums” by professors John F. Cogan, R. Glenn Hubbard and Daniel Kessler, confirmed the prediction.

Massachusetts’ reform not only did not decrease prices and spending, as promised, but prices are increasing at rates greater than national trend lines and greater than rates in the Bay State prior to reform.

Three years prior to reform, insurance premiums for employers were increasing 3.7% more slowly in Massachusetts than in the rest of the country.  Today, the opposite is true.  Prices in Massachusetts are increasing 5.7% more than in other states. In Boston, prices for employer-provided family plans are increasing 8.2% faster than in other large metropolitan areas.

“Because the plan’s main components are the same as those of the new health reform law,” the study’s authors note, “the effects of the plan provide a window onto the country’s future.”

Post-reform, prices are up, more people have insurance, and more people are headed to the emergency room.  If this sounds odd, it should. Among former Gov. Romney’s favorite arguments for reform was that it would shift dollars from inefficient emergency room care to the more efficient venue of the primary care doctor.

The Obama administration passed its reform on the backs of health insurers — couching the reform as health insurance reform rather than the actual remaking of health care delivery.

In this election year, Gov. Deval Patrick’s administration has torn this page from Obama’s playbook. He demanded the right to approve insurance prices in February and then had his bureaucrats deny necessary increases in April. Prior to reform, rates had to be actuarially sound. Post-reform, it’s more important that they be politically sound.

Those in his own bureaucracy charged with making sure that insurers can pay their bills called this a “train wreck” and put three insurers under solvency watch. The Patrick administration stood resolute in its election-year pandering. “It’s unacceptable for consumers to be treated this way and it will not be tolerated,” thundered Massachusetts Insurance Commissioner Patrick Murphy, in April.

Last week, the administration’s own hearing officers sided with the first insurance company whose case made it through the process. The increased rates, it determined, were fair and necessary.

The Patrick administration’s political folks, like Romney’s before, will not be swayed by inconvenient facts. Insurance commissioner Murphy “strongly disagrees” with his own hearing officers’ ruling.

Is it any wonder then that the state’s bureaucracy responsible for managing its health care cannot entice any of the state’s major insurance carriers to offer plans to small businesses?  Carriers representing 90% of the state’s insurance market share are refusing to offer plans to small business through the state’s Connector.

“Given the rate cap that the administration has imposed on the health plans, none of them is in a position to enter into any new endeavors with the state at this time,” explains Eric Linzer, a spokesperson for the industry association.  State officials have responded by sending letters to insurance carriers threatening legal action.

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Health overhaul may mean longer ER waits, crowding

By CARLA K. JOHNSON, AP Medical Writer

CHICAGO – Emergency rooms, the only choice for patients who can’t find care elsewhere, may grow even more crowded with longer wait times under the nation’s new health law.

That might come as a surprise to those who thought getting 32 million more people covered by health insurance would ease ER crowding. It would seem these patients would be able to get routine health care by visiting a doctor’s office, as most of the insured do.

But it’s not that simple. Consider:

_There’s already a shortage of front-line family physicians in some places and experts think that will get worse.

_People without insurance aren’t the ones filling up the nation’s emergency rooms. Far from it. The uninsured are no more likely to use ERs than people with private insurance, perhaps because they’re wary of huge bills.

_The biggest users of emergency rooms by far are Medicaid recipients. And the new health insurance law will increase their ranks by about 16 million. Medicaid is the state and federal program for low-income families and the disabled. And many family doctors limit the number of Medicaid patients they take because of low government reimbursements.

_ERs are already crowded and hospitals are just now finding solutions.

Rand Corp. researcher Dr. Arthur L. Kellermann predicts this from the new law: “More people will have coverage and will be less afraid to go to the emergency department if they’re sick or hurt and have nowhere else to go…. We just don’t have other places in the system for these folks to go.”

Kellermann and other experts point to Massachusetts, the model for federal health overhaul where a 2006 law requires insurance for almost everyone. Reports from the state find ER visits continuing to rise since the law passed — contrary to hopes of its backers who reasoned that expanding coverage would give many people access to doctors offices.

Massachusetts reported a 7 percent increase in ER visits between 2005 and 2007. A more recent estimate drawn from Boston area hospitals showed an ER visit increase of 4 percent from 2006 to 2008 — not dramatic, but still a bit ahead of national trends.

“Just because we’ve insured people doesn’t mean they now have access,” said Dr. Elijah Berg, a Boston area ER doctor. “They’re coming to the emergency department because they don’t have access to alternatives.”

Crowding and long waits have plagued U.S. emergency departments for years. A 2009 report by the Government Accountability Office, Congress’ investigative arm, found ER patients who should have been seen immediately waited nearly a half-hour.

“We’re starting out with crowded conditions and anticipating things will only get worse,” said American College of Emergency Physicians president Dr. Angela Gardner.

Federal stimulus money and the new health law address the primary care shortage with training for 16,000 more providers, said Health and Human Services Department spokeswoman Jessica Santillo.

But many experts say solving ER crowding is more complicated.

What’s causing crowding? Imagine an emergency department with a front door and a back door.

There’s crowding at both ends.

At the front door, ERs are strained by an aging population and more people with chronic illnesses like diabetes. Many ERs closed during the 1990s, leaving fewer to handle the load. The American Hospital Association’s annual survey shows a 10 percent decline in emergency departments from 1991 to 2008. Meanwhile, emergency visits rose dramatically.

At the back door, ER patients ready to be admitted — in hospital lingo, ready to “go upstairs” — must compete for beds with patients scheduled for elective surgeries, which bring in more money. “If you’ve got 10 ER patients and 10 elective surgeries,” Kellermann asked rhetorically, “which are you going to give the beds to?”

That’s why easing crowding will take more than just access to primary care. It also will take hospitals that run more efficiently, moving patients through the system and getting ER patients upstairs more quickly, Kellermann said.

Ideas that work include bedside admitting, where a staffer takes a patient’s insurance information as treatment starts.

That and other strategies are being tried at St. Francis Hospital and Health Centers in Indianapolis. There, the performance of nurse managers is measured by how long admitted patients wait in the emergency department for a bed upstairs.

And to stave off inappropriate ER visits, the hospitals have opened after-hours clinics staffed by primary care doctors to handle patients who can’t leave work to see a doctor, said Indianapolis hospital executive Keith Jewell. ER wait times have fallen.

A Chicago hospital, too, is readying for the onslaught of ER patients. On the city’s South Side, Advocate Trinity Hospital handles 40,000 emergency visits a year and is expecting more because of the new law.

Greeter Stephanie Bailey makes sure patients don’t get frustrated while they’re waiting. She can take their vital signs and inform staff if the patient is about to leave without treatment.

Inside the emergency department, a giant sheet of paper hangs on a wall. It’s hand-lettered in orange and purple, and tracks daily progress on hospital goals: How many patients left before they were treated? How many minutes did patients stay in the ER?

On a recent day, the note said “0.0 percent” of the patients left without treatment. Someone had added a smiley face. But there was no smiley face next to the average ER length of stay for the same day — nearly four hours. The hospital’s goal is three.

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Health law risks turning away sick – TheHill.com

By Julian Pecquet

The Obama administration has not ruled out turning sick people away from an insurance program created by the new healthcare law to provide coverage for the uninsured.

Critics of the $5 billion high-risk pool program insist it will run out of money before Jan. 1, 2014. That’s when the program sunsets and health plans can no longer discriminate against people with pre-existing conditions.

Administration officials insist they can make changes to the program to ensure it lasts until 2014, and that it may not have to turn away sick people. Officials said the administration could also consider reducing benefits under the program, or redistributing funds between state pools. But they acknowledged turning some people away was also a possibility.

“There’s a certain amount of money authorized in the statute, and we will do our best to make sure that that amount of money insures as many people as possible and does as much good as possible,” said Jay Angoff, director of the Office of Consumer Information and Insurance Oversight at the Department of Health and Human Services (HHS). “I think it’s premature to say [what happens] when it’s gone.”

The administration has not discussed asking Congress for more money down the line if the $5 billion runs out before Jan. 1, 2014. Uninsured sick people could start applying for participation in the high-risk insurance pools on Thursday.

Healthcare experts of all stripes warned during the healthcare debate that $5 billion would likely not last until 2014. Millions of Americans cannot find affordable healthcare because of their pre-existing conditions, and that amount would only cover a couple hundred thousand people, according to a recent study by the chief Medicare actuary.

Republicans continued to hammer that point on Thursday, asking HHS officials to brief them about the program.

We are “deeply concerned that these pools may not provide quality coverage or will limit enrollment,” Reps. Joe Barton (R-Texas), John Shimkus (R-Ill.) and Michael Burgess (R-Texas), the ranking members on the Energy and Commerce panel and its health and oversight subcommittees, wrote in a letter to HHS Secretary Kathleen Sebelius.

The letter requests a briefing on high-risk pools by July 15, particularly on three topics: protections and services in place “to make sure that access is efficient and unimpeded; whether HHS believes the program is financially sustainable through 2013; and details about how each state’s pool will be administered and what options they’ll have available.”

Leading health reform advocate Ron Pollack, founding executive director of Families USA, said the pools were a “very imperfect tool that could be implemented quickly” but were the best option available for the interim period before 2014.

“The pools are going to be helpful for a significant number of people,” he told The Hill, “but nobody thought they’re the ultimate answer for helping people with pre-existing conditions.”

Still, he didn’t rule out that Families USA could press lawmakers to allocate more money in a few years if it looks like the program needs it.

Each state has a certain budget allocation for its pool, and the first step to stay under budget would be to shift money around between states that don’t see a lot of applicants and those that do, said Richard Popper, deputy director of the Office of Consumer Information and Insurance Oversight at HHS.

“If we have that situation where we have strong demand in one state and not as strong demand in another state, the secretary of HHS after a year or two has the authority to reallocate the funding,” said Popper, who used to run Maryland’s high-risk pool.

“Along with that, we can work with the states to adjust their benefit structure, the deductibles, the co-pays, the overall plan structure to address some of those cost drivers, again to help the plan make it to 2014, when it will no longer be needed.”

In addition, Popper said, many people won’t be able to afford to participate in the program since premiums will range between about $140 and $900 a month, depending on applicants’ age and where they live. HHS estimates that at least 200,000 people will be in the program at any one time. To be eligible, applicants have to be citizens or nationals of the United States or be lawfully present; have a pre-existing medical condition; and have been uninsured for at least six months before applying for the high-risk pool plan.

“There are going to be meaningful premiums that are going to be required to stay in this plan — premiums in the hundreds of dollars every month,” Popper said. “There are a significant number of people out there with pre-existing conditions who are uninsured, but a significant number of those people … also have limited income. And some of them, while they may need this plan, the premiums may not be something they can afford.

“We have that to think about as well,” he added. “But for those who can afford it, this is going to be a great, great plan.”

If it looks like too many people are signing up — states will get monthly updates on how many people they can cover with the money they have left — there’s always the option of turning people down.

The bill “does give the secretary authority to limit enrollment in the plan … nationally or on a state-by-state basis,” Popper said. “So that is present, but at this point, we’re starting with no one in the plan as of today … so we don’t see that happening anytime soon

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