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Obamacare may get sick if young Americans don’t sign up

Now that more than 2 million people have signed up for private insurance plans created by President Barack Obama’s healthcare law, a crucial next check-up for the new marketplace will be to see how old customers are.

  • Early data from a handful of state exchanges shows the administration needs more young adults to sign up in the next three months to help offset costs from older enrollees and prevent insurers from raising their rates.

Critics of Obama’s Affordable Care Act say the market won’t attract enough young people to keep it financially viable, putting more pressure on government funds to compensate for any insurer losses.

  • Data from seven states and the District of Columbia, which are running their own marketplaces, show that of more than 200,000 enrollees, nearly 22 percent are 18 to 34 years old, according to a Reuters analysis.

The administration had hoped that over 38 percent, or 2.7 million, of all enrollees in 2014 would be 18 to 35 years old, based on a Congressional Budget Office estimate that 7 million people would sign up by the end of March.

“The whole insurance relationship is counting on them signing up,” said Dale Yamamoto, an independent healthcare actuarial consultant. “Otherwise rates will have to increase.”

The picture from the initial state data is likely to change, since it mostly includes people who enrolled only through November, before a year-end surge of sign-ups for people wanting coverage effective Jan 1. Many experts speculate the early enrollees were more likely to be in urgent need of coverage, and therefore more likely to be older or sicker.

A recent survey by The Commonwealth Fund, a healthcare research foundation, found that 41 percent of those who had shopped at the various state marketplaces by the end of December were ages 19 to 34, up from 32 percent from an October survey.

One marketplace with current data, the District of Columbia, said on Friday that of the 3,646 enrollees in private plans through Thursday, about 44 percent are young adults.

A FACTOR OF PRICE

  • The Affordable Care Act, popularly known as Obamacare, prevents insurers from charging people more if they have a health problem. Age is one of the few factors that can affect the price, with insurers allowed to charge up to three times more for a 64-year-old than someone in their early 20s.

But the healthcare costs for a 64-year-old on average are nearly five times as much as a 21-year-old, according to a study of claims from three large insurers Yamamoto conducted for the Society of Actuaries.

“The more that the marketplace is able to attract a broad mix of enrollees including the young and healthy … the more that costs will be sustainable and premiums will be more affordable,” said Robert Zirkelbach, spokesman for America’s Health Insurance plans, a trade group for insurers.

Other factors may be as crucial, if not more, in determining the stability of the new market, including the health status of enrollees, regardless of their age, and how that lines up with what individual insurers had projected. But those details will only become clearer later in the year based on the medical claims filed by the newly insured, making age the best early proxy about whether the market is sustainable.

The Centers for Medicare and Medicaid Services, which oversees the marketplace for 36 states, has yet to provide any demographic data about enrollees. CMS is expected to release an enrollment report later this month.

Data may come sooner from insurers as they discuss their recent financial performance with investors in the next few weeks. Humana Inc said on Thursday that the mix of enrollment in its marketplace plans were likely to be “more adverse than previously expected.

  • But healthcare experts say insurers need a better mix of enrollees than seen in the early data.

“If a quarter or more of the enrollees are young adults, I would think that’s an encouraging sign, particularly for the first half of the open enrollment period,” said Larry Levitt, senior vice president at the Kaiser Family Foundation healthcare think-tank.

By the end of March, “if it’s lower than that, I think there would be some cause for concern,” Levitt said.

Levitt and colleagues at Kaiser analyzed a scenario that they deemed “worst case” in which young adults represented 25 percent of enrollees. They found that costs then would be about 2.4 percent higher, but insurers would retain a very slim profit margin. As a result, the Kaiser authors projected the companies would raise premiums by a commensurate amount, but not enough to destabilize the market.

Using the same data as Kaiser but different assumptions, Seth Chandler, a law professor at the University of Houston who specializes in insurance, said costs would be 3.5 percent higher, should only 25 percent of enrollees be young adults.

  • “If we see fewer than 30 percent of the enrollees being in that 18-to-34 age bracket, that’s a warning sign that there are problems,” Chandler said. “If the demographics come in poorly, insurers are going to lose money.”

Chandler is a skeptic of the healthcare law and writes a blog called “ACA Death Spiral.” Such a spiral is thought to occur if insurers facing higher costs raise premiums, so only very sick people buy coverage, leading to even higher premiums with the pattern continuing until the insurance market either disappears or shrinks to the point that it is not sustainable.

*Modified from a Reuters article

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Many who enrolled in health plans still await confirmation

Anxiety grows as health plan delays could leave some customers without a policy by January 1st.

Some people who picked a health plan as far back as October through the Covered California exchange say insurers are telling them they still have no record of their enrollment. As a result, bills haven’t gone out and consumers can’t pay their initial premium to ensure coverage takes effect in less than three weeks.

“There are certainly some people who have enrolled or think they have enrolled and haven’t received confirmation,” said Paul Markovich, chief executive of Blue Shield of California. “It’s our version of Black Friday right now and that is what we are coping with.”

In California, insurers are working with the state exchange on how to address the potentially thorny problem of patients who applied in time but don’t have proof of insurance when they need to visit the emergency room or get a prescription filled in early January.

Insurance companies typically won’t cover any medical bills until a customer pays the premium. The deadline for payment was recently extended to January 6th.

Thousands of Californians have overcome long waits and website glitches to sign up for Obamacare insurance, but now enrollment snags may prevent some of them from actually having coverage starting January 1st.

Consumers’ anxiety has grown as they endure long waits on the phone, computer errors and conflicting answers from the state and insurers about their coverage.

The average wait time at the state’s call centers climbed to 36 minutes last week, and California is still trying to clear a backlog of paper applications filed in October and November.

State officials acknowledge there have been delays, but they say the vast majority of people are enrolling smoothly and getting their first insurance bills. The state said it didn’t have exact figures on how many customers are still waiting for proof of insurance.

Thursday, Covered California said more than 156,000 people had enrolled in private health plans through December 7th. An additional 179,000 Californians have qualified for an expansion of Medi-Cal, the state’s Medicaid program for the poor.

The stakes are big for people with chronic health conditions and serious medical issues. The loss of coverage could pose significant problems for them financially and for their health.

Lee, head of Covered California, said exchange employees are working overtime to process applications, and the state’s call centers will be open the next two Sundays to help meet increased demand. He said the exchange is sending customer files daily to the 11 insurers participating in the state marketplace.

The separate federal exchange for 36 other states has been trying to fix errors in the customer files it has sent to insurance companies. In contrast, the California Assn. of Health Plans, an industry group, says the information from Covered California has had a “high rate of accuracy.”

*Modified from a LATimes.com article

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Finding health plans that include the doctors you want

Many consumers shopping for coverage through Covered California have trouble finding policies that include the doctors and hospitals they’re accustomed to seeing.

  • To make insurance affordable, insurers are seeking to control costs in part by limiting the number of doctors and hospitals included in their networks.

Shopping for doctors is never easy. This year, the state’s new health exchange seems to be making it tougher than ever.

  • Most of the insurance companies on the exchange are offering provider networks that are far narrower than those sold on the market today. Blue Shield is offering a network through its exchange plans that represents roughly 37% of its full network.

Many consumers who currently have insurance and are shopping for a new plan through Covered California are finding it difficult to locate policies that include the doctors and hospitals they’re accustomed to seeing.

Covered California issued a report last week saying that more than 58,000 physicians were available through the exchange’s plans, compared with the 63,000 to 72,000 physicians in the state’s largest commercial networks.  But how that plays out for consumers probably depends on the specific plan they choose.

  • In many cases, even doctors themselves are unsure of their status in the new plans. Insurers have a long history of inaccurate and outdated provider listings, which the law does nothing to fix. And the provider lists found on Covered California have themselves been riddled with errors.

*Modified from a LATimes.com article

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Insurers limiting doctors, hospitals in health insurance market

The doctor can’t see you now. Insurers in California’s new health insurance exchange are holding down premiums by limiting choices, raising concerns that patients will struggle to get care.

  •  To hold down premiums, major insurers in California have sharply limited the number of doctors and hospitals available to patients in the state’s new health insurance market opening Oct. 1.

New data reveal the extent of those cuts in California, a crucial test bed for the federal healthcare law. These diminished medical networks are fueling growing concerns that many patients will still struggle to get care despite the nation’s biggest healthcare expansion in half a century.

  • Consumers could see long wait times, a scarcity of specialists and loss of a longtime doctor. “These narrow networks won’t work because they cut off access for patients,” said Dr. Richard Baker, executive director of the Urban Health Institute at Charles Drew University of Medicine and Science in Los Angeles. “We don’t want this to become a roadblock.”

To see the challenges awaiting some consumers, consider Woodland Hills-based insurer Health Net Inc. Across Southern California the company has the lowest rates, with monthly premiums as much as $100 cheaper than the closest competitor in some cases.

  • Health Net also has the fewest doctors, less than half what some other companies are offering in Southern California, according to a Times analysis of insurance data.

In Los Angeles County, for instance, Health Net customers in the state exchange would be limited to 2,316 primary-care doctors and specialists. That’s less than a third of the doctors Health Net offers to workers on employer plans.

In San Diego, there are only 204 primary-care doctors to serve Health Net patients.

  • Other major insurers have pared their list of medical providers too, but not to Health Net’s degree. Statewide, Blue Shield of California says exchange customers will be restricted to about 50% of its regular physician network.

In response, California officials have been pressing Health Net and other insurers to add more doctors since companies filed their initial rosters in May. The state exchange, Covered California, says it will monitor enrollment closely once it begins next month and it’s prepared to step in if problems arise.

“Our interest is in assuring everyone enrolled in a plan has ready access to the clinicians they need,” said Peter Lee, executive director of Covered California. “That means if a plan can’t serve patients, we’ll close it down from taking new enrollment. That is in some ways the nuclear option.”

In recent months, the top priority for state officials and insurers has been affordable premiums. A smaller panel of doctors and hospitals generally yields lower rates because insurers can negotiate better discounts with providers who receive more patients.

  • The California Medical Assn., which represents more than 37,000 doctors statewide, thinks the state is underestimating the difficulties ahead. Based on its research, the organization is skeptical of the state’s claim that its health plans will cover about 80% of all California physicians. Other doctors worry about the effect on certain Latino and African American communities that have been historically underserved.

But some health policy experts say that medical costs will continue to escalate if patients can’t see their doctor regularly and get the follow-up care they need for chronic conditions such as diabetes. Similar concerns over patient access have surfaced in other states such as Maine and Wisconsin.

  • “We are nervous about these narrow networks,” said Donald Crane, chief executive of the California Assn. of Physician Groups. “It was all about price. But at what cost in terms of quality and access? Is this contrary to the purpose of the Affordable Care Act?”

The federal law requires exchange plans to include enough providers so that services are available “without unreasonable delay.” Likewise, state law sets various requirements for “network adequacy” so patients have enough doctors and hospitals nearby.

  • The differences in network size are noticeable across Southern California. Health Net has 920 physicians in Orange County, compared with more than 2,500 for Blue Shield, according to company data.

Health Net has fewer than 800 doctors in San Diego County, while nearly 3,000 physicians are available in an Anthem Blue Cross plan.

  • In addition to doctors, some big-name hospitals may be left out. A spokesman for Cedars-Sinai Medical Center said the hospital has received many calls from patients who were worried about keeping their access to the hospital and its affiliated doctors in the new health plans next year.

*Modified from a LATimes.com article

 

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The Administration’s War on the Young: ACA Version

It’s not news at this point that the Affordable Care Act (ACA) is built around the perverse premise that younger, healthier people should spend more for their health insurance, to subsidize the cost of health insurance for older, sicker people.

  • A new study by the Kaiser Family Foundation, released this week, brings into the light the full extent of this wealth redistribution from young and healthy to old and sick. In fact, when individuals choose less generous plans in “Bronze Tier” a 60 year old could pay 1/3 of what a 25 year old with the same income would pay!

  • Much has been made about the three to one age band rating requirements for health insurance contained in the ACA. In English that means that an insurer cannot charge a sick 60 year old more than three times what they charge a healthy 25 year old. This can be seen clearly in the Kaiser study when one looks at the cost of a so-called “Silver plan” for a 60 year old, 40 year old and 25 year old who all have identical incomes at 250 percent of the poverty level.
  • In Los Angeles, CA for example the 60 year old would pay $541 per month before subsidies for the second lowest cost silver plan (which serves as the benchmark for calculating the subsidy), the 40 year old would pay $255 before subsidies, and the 25 year old would pay $200 before subsidies. Because all three are at 250 percent of poverty their out of pocket monthly cost is capped at $193 per month. Each receives a subsidy sufficient to bring their monthly premium down to the $193 cap.
  •  Now that their subsidy is set, each individual can choose to stick with the silver plan, move up to a gold plan, or move down to a bronze plan. This is where the president’s war on the young becomes strikingly clear. Whether these three individuals buy a gold, silver or bronze plan, their monthly subsidies stay the same – in the Los Angeles example $341 for the 60 year old, $62 for the 40 year old, and $7 for the 25 year old. If all three choose to buy the same bronze plan, the 60 year old would pay $50 a month, the 40 year old would pay $125 a month, and the 25 year old would pay $140 a month
  •  What that means is that those whose health care costs are the highest pays $90 LESS per month, than the individuals whose health care costs are non-existent. Of the eighteen states Kaiser examined, the largest discrepancy was in Connecticut where a healthy 25 year old would pay $117 a month for the same insurance that a 60 year old could get for FREE. The smallest margin – excluding New York and Vermont which have full community rating in effect – was in Portland, OR where the healthy 25 year old would pay $14 more for the same bronze plan than the more expensive to insure 60 year old.

Modified from an AmericanActionForum.com article.

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WellPoint’s Anthem Blue Cross spurns Calif. small-business exchange

Health insurance giant Anthem Blue Cross said it won’t participate in California’s new insurance market for small businesses. Anthem, a unit of WellPoint Inc., is California’s largest insurer for small employers. This surprising move could hamper the state’s ability to enroll businesses in its new exchange called Covered California that opens Jan. 1 as part of the federal healthcare law.

  • Instead, Anthem said it will keep selling coverage to small firms outside the exchange in direct competition with the state-run market. Anthem also remains one of 13 health insurers that will offer policies to individuals in Covered California.

Nonetheless, Anthem’s decision stunned many observers.

  • “That’s really surprising and not a good thing for the exchange,” said Micah Weinberg, a senior policy advisor at the Bay Area Council, an employer-backed San Francisco group. “Anthem is a very major player in the small-group market and you want a broad range of insurers, particularly the most compelling brand names,” Weinberg said.

A spokesman for Covered California couldn’t immediately be reached for comment.

The state had required health insurers wanting to sell in the individual exchange to also submit a bid for the small-business market, which is limited to employers with 50 or fewer workers. Darrel Ng, a spokesman for Anthem, said Covered California lifted the requirement last month so the company opted to leave what’s known as the SHOP, or small-business health options program.

“Because Anthem is no longer required to participate in SHOP as a condition of being on the individual exchange,” Ng said, “Anthem has withdrawn its SHOP application. Anthem will continue to participate in the individual exchange.” Anthem also said it will remain part of a private exchange for small firms called California Choice.

  • Covered California is expected to announce the health insurers and their proposed rates for the small-business exchange in about two weeks. In the first few years, the state estimates up to 200,000 small-business workers and their dependents may get coverage through the state’s market.

Last month, California Insurance Commissioner Dave Jones asked the exchange to bar Anthem from its small-group market because of what he viewed as unreasonable rate hikes in recent months.

At the time, Covered California said it would consider the commissioner’s request alongside other factors. Some business groups opposed the exclusion, out of concern that Anthem’s absence would limit competition and employee choice.

The insurer said the recommendation by Jones had no bearing on its decision.

  • Anthem led California with 31% of the small-employer market in 2011, according to the most recent Citigroup data. Kaiser Permanente was a close second with a 28% share, followed by Blue Shield of California with 18% of small firms. Several major insurers have already spurned California ahead of the health law rollout. In May, UnitedHealth Group Inc., Aetna Inc. and Cigna Corp. opted not to participate in the state’s individual exchange.
  • Last month, both UnitedHealth and Aetna went a step further and announced they were leaving the state’s individual market entirely at year end, leaving nearly 60,000 customers to find new coverage.

*Modified from a LA Times.com article

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What Obamacare Means for Small Employers in 2013

October 4, 2012:

This June, the U.S. Supreme Court ruled in favor of the constitutionality of the Patient Protection and Affordable Care Act, often called Obamacare, clearing the way for the law’s implementation. Some small business owners are still ignoring the implications of reform or are in denial about it, says Jay Starkman, chief executive of Engage PEO, a Fort Lauderdale professional employer organization that handles administration and payroll for 100 small businesses. “We get some employers who say [health-care reform is] going to be repealed and others who say they’ll make changes when they have to,” says Starkman.

Regardless of what small employers hope happens to the law, a new Kaiser Family Foundation study of insurance coverage for businesses with fewer than 25 employees shows that reforms such as the ability to buy insurance on exchanges and the prohibition on barring people with preexisting conditions may affect as many small business business owners as employees of small businesses.

The study examined where small business owners get their personal coverage, as opposed to earlier studies that focus on where their employees get coverage. It found that small business owners are in similar straits as their employees: One-quarter are uninsured and half rely on a family member for coverage or buy private health insurance, if they can afford and qualify for it. Only 19 percent get insurance through their companies.

In contrast, 60 percent of non-elderly Americans get employer-sponsored coverage. Sixty percent of entrepreneurs who buy private insurance have incomes up to 400 percent of the poverty level, qualifying them for tax credits under the Affordable Care Act; 83 percent of the small business owners who are uninsured would be eligible for subsidized coverage under the law.

Preliminary data from another study of employers that have 10 to more than 500 employees, the 2012 National Survey of Employer-Sponsored Health Plans, predicts that the average per-employee cost of health coverage will rise about 6.5 percent in 2013 and that 58 percent of employers surveyed plan to shift costs to their employees to reduce the increase, says George Lane, principal at Mercer, the human resource consulting company that conducts the annual survey.

The study found that while very few employers anticipate canceling their health benefit plans after reform is fully implemented, smaller employers are nearly three times as likely to say they will.

  • When asked whether they plan to terminate employee health coverage in five years, after reform is fully implemented, 16 percent of smaller employers (between 10 and 499 employees) said they believed they would terminate their plans.
  • Only 6 percent of larger employers said they would cancel coverage once insurance exchanges go online and individual mandates and employer penalties become effective. (The penalties will not apply to companies with fewer than 50 employees.)

While 2014 will be a banner year for major portions of the reform law to take effect, including the opening of insurance exchanges, below are some provisions going into effect in 2013 that may affect small business owners and the self-employed. (For a more comprehensive timeline, see Kaiser’s interactive tool.)

Exchange enrollment. Open enrollment for individual and small business health insurance exchanges begins Oct. 1, 2013. “Exchanges are probably the most important provision of health-care reform for small businesses because they will help lower costs and improve choice of plans,” says Erin Musgrave, communications director at Small Business Majority, an advocacy group that has pushed for health-care reform.

  • States have until the middle of November 2012 to declare whether they will operate their own exchanges or default to exchanges operated by the federal government. There is some question about how many states will have their exchanges ready for business by the Jan. 1, 2014, target date. The exchanges will allow individuals and small businesses with up to 100 employees to shop for qualified health insurance coverage online, using a one-stop option.
  • Tax implications. As in recent years, dating to tax year 2010, eligible employers that provide health coverage will again get a tax credit for up to 35 percent of their contribution toward employee insurance. The credit is calculated based on average wages and number of employees; it goes up to 50 percent for tax year 2014.
  • High-income individuals. For singles with modified adjusted gross income over $200,000 and married taxpayers with $250,000 MAGI, a 3.8 percent Medicare contribution tax will apply for tax year 2013 to investment income, including interest, dividends, annuities, royalties and rents.
  • W-2 reporting. Tax form W-2s issued in January 2013 for wages paid in 2012 must for the first time include a line showing the benefit employees receive from their employer-sponsored health care. The provision is an attempt to make health-care benefits and spending more transparent. Small companies may face an increase in their W-2 preparation costs to cover gathering that information and reporting it, Starkman says.

*Modified from Bloomberg Businessweek

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California health insurers to raise average rates 8% to 14%

California’s largest health insurers are raising average rates by about 8% to 14% for hundreds of thousands of consumers with individual coverage, outpacing the costs of overall medical care.

The cost of goods and services associated with medical care grew just 3.6% over the last 12 months nationally, government figures show. But insurance premiums have kept climbing at a faster pace in California.

Insurers defended their rate hikes, saying they are based on their claims experience with the customers they insure and not just the broader rate of medical inflation. They also say that healthier members dropped out of the individual market as premiums rose and the economy worsened in recent years, leaving behind a group of policyholders who have higher average costs.

“We will continue to examine the fundamental issues at the heart of rising healthcare costs, including the prevention of chronic disease, increasing the quality of care and reducing unnecessary health expenses,” said Darrel Ng, spokesman for Anthem Blue Cross, the state’s largest for-profit health insurer.

Consumer advocates and others are skeptical, however, questioning whether insurers are doing enough to hold down costs. These latest increases follow years of 20% to 30% rate hikes for families that are at the center of a looming fight between the insurance industry and its critics over a proposed ballot measure seeking tougher rate regulation.

“Consumers should be outraged that premiums continue to grow faster than underlying costs,” said Gerald Kominski, director of the UCLA Center for Health Policy Research. “There’s help on the horizon for millions of Californians from health reform, but things may get worse before they get better.”

Anthem has proposed raising premiums 9.6% to 13.8% on average, effective May 1 or July 1, for about 700,000 individual policyholders and their family members. The rate increases are under review by state officials.

Nonprofit Kaiser Permanente increased premiums 9% on average for nearly 300,000 customers last month.

Blue Shield of California, also a nonprofit, is boosting average rates by 7.9% for 265,000 members and by 8.9% for 56,000 members, both effective March 1.

Insurers in California must submit proposed rate hikes for review to determine whether they meet certain state requirements, but state officials don’t have the authority to reject rate hikes for being unreasonable. But regulators have been challenging insurers’ arithmetic in calculating rates.

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Clinics halt Lap-Band surgeries

By Stuart Pfeifer, Los Angeles Times

February 8, 2012

Two clinics tied to 1-800-GET-THIN have temporarily halted Lap-Band weight-loss surgeries after the device’s maker said it would no longer sell to companies affiliated with the massive advertising campaign.

The two brothers identified in lawsuits as owners of the surgery centers also hired a top Los Angeles defense attorney to represent them in a flood of pending lawsuits. They retained John Hueston, a white-collar defense lawyer now at Irell & Manella who helped lead the Justice Department’s criminal prosecution of Enron Corp. executives Kenneth Lay and Jeffrey Skilling.

Those steps come days after Allergan Inc., the Irvine-based maker of the Lap-Band, said it would no longer sell the device to clinics affiliated with the marketing company. The Food and Drug Administration, California Department of Insurance and Los Angeles County Board of Supervisors are investigating the ad campaign and its affiliated surgery centers.

At least five Southern California patients have died since 2009 after Lap-Band surgeries at clinics affiliated with 1-800-GET-THIN, according to lawsuits, autopsy reports and other public records. Each of the patients had been treated at surgery centers in Beverly Hills and West Hills tied to the ad campaign, according to the records.

“Unfortunately, recent allegations question the safety of the Lap-Band procedures at two centers,” the clinics said in a statement Tuesday. “While we strongly believe these allegations paint a false picture of the care provided and discount our capabilities and success rate, we have stopped scheduling new Lap-Band surgeries at those centers, effective immediately.”

The New Life Surgery Center in Beverly Hills and Valley Surgical Center in West Hills have stopped performing Lap-Band surgeries while they perform “a top-to-bottom medical and operational review” of their Lap-Band surgery business, the companies said.

The surgery centers are among several clinics affiliated with 1-800-GET-THIN, whose ads for Lap-Band surgery have become fixtures on Southern California roadside billboards, radio, television and the Internet.

The Lap-Band is a ring that is surgically implanted around the stomach to discourage patients from overeating and help them lose weight. Allergan declined to say why it made the decision to stop selling the device to the surgery centers.

Tuesday’s announcement that the clinics would at least temporarily halt Lap-Band procedures comes as 1-800-GET-THIN and its affiliated companies face a stream of government investigations and civil lawsuits.

Among them is a whistle-blower lawsuit, filed by two former surgery center workers, that alleged unsanitary conditions at the clinics and accused the centers of billing insurers for medically unnecessary procedures and surgeries that were never performed. There are also several pending wrongful-death lawsuits and a lawsuit, filed by patients, accusing the firms of false advertising.

Hueston said he has agreed to represent brothers Michael and Julian Omidi in “all matters arising out of the lawsuits that have been filed with respect to 1-800-GET-THIN.” The two brothers have been named in lawsuits as owners of the marketing company. Hueston said he was unaware of any criminal investigations against them.

Further, Hueston has extensive experience in crisis management. His past clients include Angelo R. Mozilo, the former chief of mortgage giant Countrywide Financial Corp.

An opposing attorney who represents former surgery center workers said he believes hiring Hueston is a sign that the Omidis view the pending investigations as a serious matter.

“I think they do see the handwriting on the wall,” said Alexander Robertson, an attorney representing former surgery center workers. “They’re circling the wagons and getting ready for the onslaught.”

In a separate development, Dan E. Chambers, an attorney who represents the two surgery centers, sent a letter to the Los Angeles County coroner defending the treatment of a patient named Paula Rojeski, who died following Lap-Band surgery in September.

The letter challenged allegations in the whistle-blower lawsuit that a series of mishaps contributed to Rojeski’s death. The coroner’s office has not yet released the cause of Rojeski’s death, even though her autopsy was performed five months ago.

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Youth Discontent with New Health Reform Law

Christopher Conover, PhD

Support for the Democrats among voters under 30 has plummeted since 2008. Why? The new health reform law packs ample reasons for youth to be very concerned (or even outraged). The law makes health insurance coverage for twenty-somethings more expensive, likely will contribute to their already abysmal unemployment rate, and will force millions to buy insurance they do not want at a price that is a bad deal for them.

The bill makes coverage more expensive for young adults in two ways. First, it restricts how insurance companies can price insurance. Compared to 20-24 year-olds, average health spending for males age 55-59 is more than six times as high, while for males age 60-64 this spending ratio is nearly 9 to 1. But under reform, premiums cannot vary by more than a factor of three across age groups. Young people will pay higher premiums so their parents can pay lower premiums. Since the average income of households headed by 55-64 year olds is 2.5 times as high as that of households headed by those under 25, this rule may strike many young adults as less than fair.  Young adults will be permitted to sign up for a catastrophic plan not available to others, but the adverse impact remains: those under 30 either will have to pay more for the same coverage or pay the same for less coverage.

Obamacare also increases premiums by requiring health insurers to offer preventive benefits with no patient cost-sharing (i.e., deductibles or copayments). There is nothing to stop insurers from offering free preventive benefits now; indeed, many do. However, tens of millions of Americans have coverage with cost-sharing for preventive care; for them, the elimination of cost-sharing apparently is not worth the higher premiums required. This is especially true for young adults since many preventive services (e.g., mammography, cholesterol screening, colorectal cancer screening, osteoporosis screening) are only recommended for adults 35 and older. Young adults again must cross-subside older adults who generally have much higher incomes.

Workers under 25 years of age are far more likely than older workers to be unemployed. For workers age 20-24, the August unemployment rate was 14.7 percent. But it was even higher for 20-24 year-old black males (29.7 percent) and 16-19 year-old black males (49.3 percent). Unfortunately, the new health law amounts to a tax on low-skill workers (e.g., teenagers) and those in low-pay entry-level positions (typically young workers).

The best job opportunities for low-skill workers are in leisure/hospitality services and retail trade. Under the new law, employers with more than 50 workers will be required to either offer health coverage or pay a penalty of $2,000 per full-time equivalent worker. (For part-time workers, total hours worked are summed and divided by 30 to obtain FTE workers). This penalty equals 15 percent of average wages in the food and beverage industry, and 9 percent of wages in retail trade. Worse, even employers who offer coverage still face a penalty of $3,000 for every worker who opts out of employer coverage to obtain subsidized coverage in the new health insurance Exchange. The Exchange will offer minimum-wage workers coverage for no more than 3 percent of their annual income (equaling $36 per month). This is well below the amount most employees contribute toward their employer-provided health plan, so many low-wage workers will want to jump to the Exchange.

For jobs paying only minimum wage, employers will be unable to recover the cost of these penalties by reducing wages. This will provide them a strong incentive to eliminate low-wage jobs by automating services or shifting more tasks to the customer (e.g., scanning one’s own retail purchases). Unemployment among teens and young workers will rise even further.

Finally, everyone must buy coverage (which the foregoing shows will not be a good deal for the young), or pay a tax penalty of $695 per year up to a maximum of three times that amount ($2,085) per family or 2.5 percent of household income, whichever is larger. Thus, minimum-wage youth workers either must buy overpriced coverage or pay a penalty equaling 4.8 percent of wages.

It’s little wonder that voters under 30 who gave President Obama more than two-thirds of their votes in 2008 have grown disillusioned.

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

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