Archive | Employers Reaction to Bill

CAN WE STOP CALLING THEM ‘CONSUMER PROTECTIONS’ NOW?

Kaiser Daily Health News –

Jan. 10: Supporters of the health law are lamenting how the nickname “ObamaCare” has achieved wider purchase than the law’s official title. More egregious, though, is how supporters have successfully misbranded ObamaCare’s health insurance regulations as “consumer protections.”

In anticipation of the (now-postponed) House vote to repeal ObamaCare, for example, three Obama cabinet officials last week warned House Speaker John Boehner, R-Ohio, about the consequences of eliminating the law’s “consumer protections.”

Major media outlets routinely play along. The New York Times reports, “Many of the law’s consumer protections take effect [January 1]. Health plans generally must allow adult children up to age 26 to stay on their parents’ policies and cannot charge co-payments for preventive services or impose a lifetime limit on benefits.

Other “consumer protections” already in place limit the percentage of revenues insurers can spend on administrative expenses and prohibit them from turning away children with pre-existing conditions. Who could object to such rules? As it happens, an awful lot of people.

These supposed consumer protections are hurting millions of Americans by increasing the cost of insurance, increasing the cost of hiring and driving insurers out of business.

At the same time Secretary of Health and Human Services Kathleen Sebelius was threatening to bankrupt insurers who claim ObamaCare is increasing premiums by more than 1 percent, her own employees estimated that one of the law’s regulations the requirement to purchase unlimited annual coverage will increase some people’s premiums by 7 percent or more when fully implemented.

A Connecticut insurer estimated that just the provisions taking effect last year would increase some premiums by 20-30 percent. Such mandates force consumers to divert income from food, housing, and education to pay for the additional coverage. That can leave consumers worse off, even threaten their health. They can also force employers to reduce hiring, leaving some Americans with neither a job nor health insurance. This reality led McDonald’s to seek a waiver from the unlimited annual coverage mandate, among other rules.

The ban on discriminating against children with pre-existing conditions has caused insurers to stop selling child-only policies in dozens of states. The dependent-coverage mandate was cited as one of the reasons spurring a Service Employees International Union local in New York City to eliminate coverage for 6,000 dependent children.

In 2008, Congress passed a similar mandate that supporters said would expand coverage for mental-health and substance-abuse services. Instead, that mandate spurred the Screen Actors Guild to eliminate mental-health coverage for 12,000 of its lower-paid members. It had the same effect on 3,500 members of the Chicago’s Plumbers Welfare Fund, and 2,200 employees of Woodman’s Food Market in Wisconsin. Other employers are curtailing access to mental-health services thanks to this mandate, and some insurers have stopped selling such coverage altogether.

The list goes on. ObamaCare now forces insurers to spend no more than 20 percent of revenues – 15 percent for large employers – on administrative expenses. Similar state laws have done nothing to slow the growth of premiums.

ObamaCare’s rule spurred Principal Financial Group to stop selling health insurance before it even took effect, leaving nearly 1 million consumers to find new coverage and threatening their continuity of care. Experts expect more consumers to suffer the same fate. This supposed consumer protection also punishes efforts to reduce fraud and improve quality by reviewing claims. Thus, in addition to increasing premiums, it may expose patients to unnecessary and even harmful services.

Consumers, insurers, employers, unions and state officials are begging for protection from these so-called protections. Sebelius has so far issued 222 waivers, which raises the question: if these were really consumer protections, why waive them?

These rules may end up helping somebody, and that should count in the law’s favor. Yet rules that were supposed to protect children have stripped sick kids of their health insurance and made it harder for parents to find coverage for kids who may soon fall ill.

Other rules have reduced wages and discouraged hiring amid high unemployment. Just as the mental-health mandate is ousting vulnerable patients from their rehab or therapy and cutting off their meds, ObamaCare’s voluminous mandates are threatening even more Americans’ access to care.

Calling these rules “consumer protections” implies that the people harmed don’t matter, or one has clairvoyance to know that the benefits outweigh the costs.

ObamaCare supporters should call these supposed consumer protections what they are: regulations that can hurt even more than they help.

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Workers Get Health Care Allowances

New Laws Give Employees Money to Buy Individual Health Insurance

Park City, UT December 1, 2010

For information contact John Barrett at (626 797-4618  www.healthinsbrokers.com

Zane Benefits, Inc. helps employers take advantage of new IRS laws (Section 125 and Section 105) that allow employers and employees to contribute tax free dollars to individual health insurance costs.    Zane Benefits’ solution involves a switch to employer-funded individual health insurance in which each employee receives a tax-free monthly allowance to purchase their own individual policy.

Individual health insurance used to be expensive and hard to get. However, due to health insurance reforms, individual policies are now more affordable and accessible. For example, insurance companies must now accept children regardless of preexisting conditions, and guaranteed acceptance is being extended to all citizens over the next few years. Additionally, a new federal risk pool is now available for anyone who cannot find health insurance on the individual market.

Many employees are able to buy individual policies for less than the monthly amount funded by the company. The allowance can also be used for eyeglasses, dental care and other medical expenses. Today, there are various ways for all employees to get some kind of health coverage through state and federal programs.

Zane Benefits offers two options (“ZaneHRA” and “ZanePOP”) to employers that want to make the switch to employer-funded individual health insurance.

ZaneHRA, which is a defined contribution health plan, works best for companies that want to offer health benefits, but cannot offer group health insurance due to high cost or participation requirements. With ZaneHRA, employers offer a defined contribution health plan in which they make available monthly contributions (“allowances”) that employees choose how to spend. Employees can use their monthly “ZaneHRA Allowance” to reimburse their individual health insurance costs and eligible medical expenses 100% tax free.

ZanePOP, which is a premium-only-plan for individual health insurance, works best for companies that do not offer health insurance or have employees who are not eligible for a group health insurance plan. With ZanePOP, employers allow employees to reimburse themselves for individual health insurance costs using pre-tax salary. Employees typically save 20-40% on their insurance premiums. Employers save an additional 7.65% in FICA taxes on all reimbursements.

According to Rick Lindquist, who manages Zane Benefits’ affiliate distribution, “an employer can setup a ZaneHRA or ZanePOP plan in 10 minutes online. Once the plan is setup, it takes less than 5 minutes per month to administer because we integrate with the company’s existing payroll service.”

Zane Benefits has built a web-based training program to help insurance agents and CPAs learn the new rules. “Our products are distributed in all 50 states by independent licensed insurance brokers. However, many agents do not realize individual health insurance can be reimbursed tax free. We are working hard to educate brokers on these new products so that they can help their clients.”

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Employers Looking at Health Insurance Options

The new health care law wasn’t supposed to undercut employer plans that have provided most peopleT in the U.S. with coverage for generations.

But last week a leading manufacturer told workers their costs will jump partly because of the law. Also, a Democratic governor laid out a scheme for employers to get out of health care by shifting workers into taxpayer-subsidized insurance markets that open in 2014.

While it’s too early to proclaim the demise of job-based coverage, corporate number crunchers are looking at options that could lead to major changes. Gov. Phil Bredesen, D-Tenn., said the economics of dropping coverage are “about to become very attractive to many employers, both public and private.”

That’s just not going to happen, White House officials say.

“The absolute certainty about the Affordable Care Act is that for many, many employers who cover millions of people, it increases the incentives for them to offer coverage,” said Jason Furman, an economic adviser to President Barack Obama.

Yet at least one major employer has shifted a greater share of plan costs to workers, and others are weighing the pros and cons of eventually forcing employees to strike out on their own.

“I don’t think you are going to hear anybody publicly say ‘We’ve made a decision to drop insurance,’ ” said Paul Keckley, executive director of the Deloitte Center for Health Solutions. “What we are hearing in our meetings is, ‘We don’t want to be the first one to drop benefits, but we would be the fast second.’ We are hearing that a lot.” Deloitte is a major accounting and consulting firm.

“My conclusion on all of this is that it is a huge roll of the dice,” said James Klein, president of the American Benefits Council, which represents big company benefits administrators. “It could work out well and build on the employer-based system, or it could begin to dismantle the employer-based system.”

Employer health benefits have been a middle-class mainstay since World War II, when companies were encouraged to offer health insurance instead of pay raises. About 150 million workers and family members are now covered.

When lawmakers debated the legislation, the nonpartisan Congressional Budget Office projected it would only have minimal impact on employer plans. About 3 million fewer people would be covered through the job, but they’d be able to get insurance elsewhere.

Two provisions in the new law are leading companies to look at their plans in a different light.

One is a hefty tax on high-cost health insurance aimed at the most generous coverage. Although the “Cadillac tax” doesn’t hit until 2018, companies may have to disclose their exposure to investors well before that. Karen Forte, a Boeing spokeswoman, said concerns about the tax were partly behind a 50 percent increase in insurance deductibles the company just announced.

The tax is 40 percent of the value of a plan above $10,200 for individual coverage and $27,500 for a family plan. Family coverage now averages about $13,800.

White House adviser Furman said blaming a cost increase next year on a tax that won’t take effect for eight years “stretches credibility very far past the breaking point.”

Bigger questions loom over the new insurance markets that will be set up under the law.

They’re called exchanges, and every state will have one in a few years. Consumers will be able to shop for coverage among a range of plans in the exchange, with a guarantee they can’t be turned down because of an existing medical problem. To help make premiums affordable, the law provides tax credits for households making up to four times the federal poverty level, about $88,000 for a family of four.

Bredesen said last week that employers could save big money by dropping their health plans and sending workers to buy coverage in the exchange. They’d face a fine of $2,000 per worker, but that’s still way less than the cost of providing health insurance. Employers could even afford to give workers a raise and still come out ahead, Bredesen wrote in a Wall Street Journal opinion piece.

Employers are actively looking at that. “I don’t know if the intent was to find an exit strategy for providing benefits, but the bill as written provides the mechanism,” said Deloitte’s Keckley, the consultant.

Erin Shields, a spokeswoman for the senators who wrote that part of the law, says she’s confident that when companies do the math, they’ll decide to keep offering coverage.

That’s because employers get to deduct the cost of workers’ health care from the company’s taxes. Take away the health plan and two things happen: Employers lose the deduction and they’ll probably have to pay workers more to get them to accept the benefit cut. Not only will the company’s income taxes go up, but the employer will also face a bigger bill for Social Security and Medicare payroll taxes. So it’s not as simple as paying $2,000 and walking away.

“It is clearly cheaper for employers to continue providing coverage,” Shields said.

Another wrinkle: the health insurance tax credits available through the law are keyed to relatively Spartan insurance plans, not as generous as most big employers provide. Send your workers into the insurance exchange, and valuable employees might jump to a competitor that still offers health care.

MIT economist Jon Gruber says it’s impossible to create new government benefits without some unintended consequences, but he doesn’t see a big drop in employer coverage. “This is a brave new world with uncertainties,” said Gruber. But “the best available evidence suggests a small erosion. It’s not going go down wildly.”

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Health Reform’s $550B Hidden Costs to Taxpayers

 

Pop Quiz: if McDonald’s offered a 30 percent discount on hamburgers, would consumption increase, decrease or remain unchanged?

If you said “increase,” you understand a basic principle of economics that most Americans with common sense realize even without completing Econ 101. The idea that “if you tax something, you get less of it” is the same principle in reverse. Yet Congress completely ignored this truism in passing the health bill last March.

Notwithstanding President Obama’s firm pledge to the contrary, “Obamacare” included a plethora of new taxes that will impact Americans at all income levels. Indeed, less than half the revenue raised by Obamacare comes from taxes explicitly limited to high income households ($200,000 for individuals/$250,000 for families).

The remaining new taxes affect all consumers and include levies on prescription drugs, medical devices, health insurance providers and even tanning parlors. These and related revenue increases amount over 10 years to more about $225 billion (over $700 per U.S. resident), an enormous burden on the economy.

It is bad enough that the President would violate so flagrantly his own repeatedly-stated tax pledge. Even worse, Congress completely ignored hundreds of billions of dollars in hidden costs related to these taxes. Recall that virtually any increase in taxes results in lost production. So if we tax prescription drugs and medical devices, fewer people will buy them. The net dollar value of this lost production is called “deadweight losses” by economists, but it’s simpler to call it a social welfare loss.

This may seem trivial. However, economists have figured out that for every additional dollar imposed in new federal taxes, social welfare losses amount to 42 cents per dollar of new tax revenue collected.

Thus, every dollar of tax-financed spending really costs society $1.42 — one dollar in visible transfers from taxpayers to the government and another 42 cents in hidden losses related to unseen goods and services that would have been produced but for these added taxes.
You would think that Congress would take into account such massive hidden losses when debating proposals as expensive as health reform. Yet it does not. By ignoring these costs, the true costs of health reform — even if accepting the unrealistic way in which the bill was scored –were probably $157 billion higher than advertised.

But the bill also included Medicare and Medicaid savings that even the Medicare actuary has said “may be unrealistic,” along with an assumed 21 percent reduction in physician payments that no one expects to happen. Including the added taxes needed to cover $550 billion in savings never realized or to pay the roughly $300 billion needed over 10 years for a “doc fix” to avert deep cuts in physician pay, the overall hidden social welfare costs of taxes needed for health reform would rise to $550 billion.

Imagine you were a member of Congress who reluctantly cast a vote for health reform because Presidential arm-twisting persuaded you that the benefits exceeded costs. Had you been aware that the true cost of the bill was at least half a trillion dollars more expensive, might that have changed your vote?

It is distressing to think that such a massive cost would have made no difference in how some members of Congress evaluated this plan. Health reform barely passed the House. Yet a mere four more “no” House votes would have defeated it.

It is plausible to believe the outcome would have been different had Congress been made aware of the enormous, hidden costs embedded in this bill. Like the consumer who jumped at McDonald’s 30 percent off sale, Congress passed a plan that appeared to be about 30 percent cheaper than it actually will be after purchase. And now, we all are beginning to pay the price for this hasty and ill-informed decision.

Conover is a research scholar at the Center for Health Policy and Inequalities Research at Duke University.

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Employers looking at health insurance options

By Ricardo Alonso-Zaldivar Associated Press

WASHINGTON—The new health care law wasn’t supposed to undercut employer plans that have provided most people in the U.S. with coverage for generations.  But last week a leading manufacturer told workers their costs will jump partly because of the law. Also, a Democratic governor laid out a scheme for employers to get out of health care by shifting workers into taxpayer-subsidized insurance markets that open in 2014.

While it’s too early to proclaim the demise of job-based coverage, corporate number crunchers are looking at options that could lead to major changes. Gov. Phil Bredesen, D-Tenn., said the economics of dropping coverage are “about to become very attractive to many employers, both public and private.”

That’s just not going to happen, White House officials say.

“The absolute certainty about the Affordable Care Act is that for many, many employers who cover millions of people, it increases the incentives for them to offer coverage,” said Jason Furman, an economic adviser to President Barack Obama.

Yet at least one major employer has shifted a greater share of plan costs to workers, and others are weighing the pros and cons of eventually forcing employees to strike out on their own.

“I don’t think you are going to hear anybody publicly say ‘We’ve made a decision to drop insurance,’ ” said Paul Keckley, executive director of the Deloitte Center for Health Solutions. “What we are hearing in our meetings is, ‘We don’t want to be the first one to drop benefits, but we would be the fast second.’ We are hearing that a lot.” Deloitte is a major accounting and consulting firm.

“My conclusion on all of this is that it is a huge roll of the dice,” said James Klein, president of the American Benefits Council, which represents big company benefits administrators. “It could work out well and build on the employer-based system, or it could begin to dismantle the employer-based system.”

Employer health benefits have been a middle-class mainstay since World War II, when companies were encouraged to offer health insurance instead of pay raises. About 150 million workers and family members are now covered.

When lawmakers debated the legislation, the nonpartisan Congressional Budget Office projected it would only have minimal impact on employer plans. About 3 million fewer people would be covered through the job, but they’d be able to get insurance elsewhere.

Two provisions in the new law are leading companies to look at their plans in a different light.

One is a hefty tax on high-cost health insurance aimed at the most generous coverage. Although the “Cadillac tax” doesn’t hit until 2018, companies may have to disclose their exposure to investors well before that. Karen Forte, a Boeing spokeswoman, said concerns about the tax were partly behind a 50 percent increase in insurance deductibles the company just announced.

The tax is 40 percent of the value of a plan above $10,200 for individual coverage and $27,500 for a family plan. Family coverage now averages about $13,800.

White House adviser Furman said blaming a cost increase next year on a tax that won’t take effect for eight years “stretches credibility very far past the breaking point.”

Bigger questions loom over the new insurance markets that will be set up under the law.

They’re called exchanges, and every state will have one in a few years. Consumers will be able to shop for coverage among a range of plans in the exchange, with a guarantee they can’t be turned down because of an existing medical problem. To help make premiums affordable, the law provides tax credits for households making up to four times the federal poverty level, about $88,000 for a family of four.

Bredesen said last week that employers could save big money by dropping their health plans and sending workers to buy coverage in the exchange. They’d face a fine of $2,000 per worker, but that’s still way less than the cost of providing health insurance. Employers could even afford to give workers a raise and still come out ahead, Bredesen wrote in a Wall Street Journal opinion piece.

Employers are actively looking at that. “I don’t know if the intent was to find an exit strategy for providing benefits, but the bill as written provides the mechanism,” said Deloitte’s Keckley, the consultant.

Erin Shields, a spokeswoman for the senators who wrote that part of the law, says she’s confident that when companies do the math, they’ll decide to keep offering coverage.

That’s because employers get to deduct the cost of workers’ health care from the company’s taxes. Take away the health plan and two things happen: Employers lose the deduction and they’ll probably have to pay workers more to get them to accept the benefit cut. Not only will the company’s income taxes go up, but the employer will also face a bigger bill for Social Security and Medicare payroll taxes. So it’s not as simple as paying $2,000 and walking away.

“It is clearly cheaper for employers to continue providing coverage,” Shields said.

Another wrinkle: the health insurance tax credits available through the law are keyed to relatively Spartan insurance plans, not as generous as most big employers provide. Send your workers into the insurance exchange, and valuable employees might jump to a competitor that still offers health care.

MIT economist Jon Gruber says it’s impossible to create new government benefits without some unintended consequences, but he doesn’t see a big drop in employer coverage. “This is a brave new world with uncertainties,” said Gruber. But “the best available evidence suggests a small erosion. It’s not going go down wildly.”

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