Archive | Health Care Bill – Washington

Costs Soaring After Bay State Health Change


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.


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.


Health law risks turning away sick –

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


Q&A: New health coverage rules for employers.

By Noam N. Levey, Tribune Washington Bureau

The Obama administration announces regulations designed to discourage companies from scaling back workers’ benefits.

The Obama administration on Monday announced regulations to discourage companies from scaling back their health benefits, a goal Democrats described as a top priority of the new healthcare law.

The rules may have a profound effect on the health coverage that more than 160 million Americans get from their employers.

Here is a rundown of what the regulations could mean for those who get their benefits through work:

Q. How will the new rules work?

A. The rules affect plans that were in operation when the president signed the healthcare law on March 23. Companies have an incentive to retain this “grandfather status” because it exempts them from some of the healthcare law’s new mandates. To qualify for the exemptions, however, companies will be able to make only limited changes to their plans.

Q. Will my employer be able to charge more for health benefits?

A. Employers would be able to raise premiums and still retain grandfathered status. But the rules limit how much companies could raise co-pays, deductibles and other employee contributions. Employers also could not lower their contribution to their employees’ premiums by more than 5 percentage points.

Q. Could my benefits change?

A. Employers would be able to adjust benefits, but not cut them altogether. For example, if a plan currently covers prescription drugs, it would have to continue doing so, although the list of covered prescriptions could be adjusted.

Q. What if my employer doesn’t want to meet these requirements?

A. Any company can choose to forego grandfathered status and still offer health benefits. But the company’s health plan would then be considered a new plan and would be subject to an escalating series of new mandates. Starting next year, for example, new plans will be required to cover preventive services such as cancer screenings with no co-pays or other cost sharing.

The bigger requirements start in 2014. Businesses then will have to offer plans with a minimum standard of health coverage, which will be outlined by the federal government. Grandfathered plans would not have to meet this standard.

Both new and grandfathered plans are already subject to some mandates starting next year, including a prohibition on lifetime benefit limits and a requirement to cover dependent children under 27.

Q. Will employers just drop coverage altogether because of the new rules?

A. That’s difficult to say. Large employers have an incentive to continue offering health benefits because they could face penalties in 2014 if they do not. But some business leaders believe large employers may ultimately stop providing benefits and let their employees shop for coverage in regulated insurance exchanges.

Even more small businesses are expected to lose grandfather protections. Small businesses typically change their health plans more often than large employers. Some business groups say that will actually encourage companies to drop coverage.

Starting in 2014, small businesses will be able to shop for benefits for their employees in new insurance exchanges designed to improve coverage options.


PPACA: Agencies Release Core Regulations

The Obama administration has unveiled interim final regulations it will use to implement the rescission, preexisting condition exclusion, benefits maximum and patient protection provisions in the new federal health laws.

The Internal Revenue Service, an arm of the U.S. Treasury Department, and the Employee Benefits Security Administration, an arm of the U.S. Labor Department, worked to put out the 196-page batch of interim final rules and guidance together with the new Office of Consumer Information and Insurance Oversight, an arm of the U.S. Department of Health and Human Services.

The Affordable Care Act – the legislative package that includes the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act – created the OCIIO, and it also created the rescission provisions and other provisions that led to the development of the interim final rules.

The IRS also is proposing to adopt the same batch of rules as permanent regulations.

Final drafts of the interim final rules and the IRS notice of proposed rulemaking are now available on the Office of the Federal Register website.

The rules are due to appear in the Federal Register June 28. Agencies sometimes change documents between the time they appear on the Federal Register office website and the time they officially appear in the Federal Register.

Comments on the interim final rules will be due 60 days after the day of official publication in the Federal Register, and comments on the IRS proposed rules will be due 90 days after the publication date.

Many of the group plan and group insurance rules will apply for plan years beginning on or after Sept. 23, and others will apply for plan years beginning on or after Jan. 1, 2014.

Similarly, many of the rules that affect individual health insurance will apply for policy years beginning on or after Sept. 23, and some will apply for policy years beginning on or after Jan. 1, 2014.


The ACA provisions banning lifetime benefits caps will take effect Sept. 23, and provisions restricting use of annual caps will take effect that same date. A ban on annual benefits caps is set to take effect Jan. 1, 2014.

Grandfathered individual policies are exempted from this provision, officials note.

“The statute provides that, with respect to benefits that are not essential health benefits, a plan or issuer may impose annual or lifetime per-individual dollar limits on specific covered benefits,” officials say.

The regulations describing “essential health benefits” have not been issued, officials say.

“For plan years (in the individual market, policy years) beginning before the issuance of regulations defining ‘essential health benefits,’ for purposes of enforcement, the Departments will take into account good faith efforts to comply with a reasonable interpretation of the term ‘essential health benefits,’” officials say. “For this purpose, a plan or issuer must apply the definition of essential health benefits consistently. For example, a plan could not both apply a lifetime limit to a particular benefit – thus taking the position that it was not an essential health benefit – and at the same time treat that particular benefit as an essential health benefit for purposes of applying the restricted annual limit.”

Between Sept. 23 and Jan. 2004, group plans and individual health insurers can “establish a restricted annual limit on the dollar value of essential health benefits,” officials say.

To avoid the possibility of big premium increases, federal agencies will phase the annual limits in over 3 years.

Starting Sept. 23, the annual limits must be at least $750,000. The minimum annual limit will increase to $1.25 million Sept. 23, 2011, and to $2 million Sept. 23, 2012.

The new ACA annual maximum rules do not apply to health savings accounts or to health reimbursement arrangements, officials say.


The federal agencies are making special allowances for limited benefit “mini med plans.”

To keep members of those plans from suffering a severe impact, “these interim final regulations provide for the secretary of Health and Human Services to establish a program under which the requirements relating to restricted annual limits may be waived if compliance with these interim final regulations would result in a significant decrease in access to benefits or a significant increase in premiums,” officials say.

HHS officials will put out limited-benefit plan guidance “in the near future,” officials say.


The ACA preexisting conditions exclusions provisions will prohibit group plans and individual issuers from imposing preexisting condition exclusions after Jan. 1, 2014; those provisions take effect for enrollees under age 19 for plan years beginning on or after Sept. 23.

Until the ACA provisions take effect, the rules included in the Health Insurance Portability and Accountability Act (HIPAA) of 1996 continue to apply, officials say in a preamble to the proposed regulations.

“These interim final regulations do not change the HIPAA rule that an exclusion of benefits for a condition under a plan or policy is not a preexisting condition exclusion if the exclusion applies regardless of when the condition arose relative to the effective date of coverage,” officials say.


ACA bans on group health plan and individual health policy rescissions, except in cases involving fraud or intentional misrepresentation of a material fact, are set to take effect Sept. 23.

Under the current standard, carriers can rescind coverage in cases involving unintentional misrepresentations of material facts, officials say.

The new ACA rescission standard “applies to all rescissions, whether in the group or individual insurance market, and whether insured or self-insured coverage,” officials say. “These rules also apply regardless of any contestability period that may otherwise apply.”

Starting with policy years beginning on or after Jan. 1, 2014, ACA provisions will ban health carrier discrimination based on health status, and those changes “will reduce the likelihood of rescissions,” officials predict.

State anti-rescission laws apply if the state laws are tougher than the federal standard, officials say.


Some ACA provisions require health plans to give enrollees easier access to certain types of providers, such as gynecologists, and in-network-level emergency services, without imposing prior authorization requirements.

“The emergency services must be provided without regard to any other term or condition of the plan or health insurance coverage other than the exclusion or coordination of benefits, an affiliation or waiting period … or applicable cost-sharing requirements,” officials say.


President Obama said today in the White House that he has just spoken to the chief executive officers of some of the largest U.S. health carriers and some state insurance commissioners to talk about implementing the ACA provisions.

A year ago, everyone, including insurers recognized “that finally something needed to be done about America’s broken health care system,” Obama said, according to a written version of his remarks. “One thing was clear to everybody: We couldn’t keep traveling down the same road.”

The new ACA regulations and the rest of the health system change process is “not punitive,” Obama said. “It’s not meant to punish insurance companies. They provide a critical service. They employ large numbers of Americans.  And in fact, once this reform is fully implemented a few years from now, America’s private insurance companies have the opportunity to prosper from the opportunity to compete for tens of millions of new customers. We want them to take advantage of that competition.”

But consumers need protection from problems with the current system, such as discrimination against children with preexisting conditions and efforts to rescind policies issued to women with breast cancer, Obama said.

“I’m pleased to say that some insurance companies have already stopped these practices,” Obama said.

Some have “questioned whether insurance companies might find a loophole in the new law and continue to discriminate against children with preexisting conditions,” Obama said. “And to their credit, when we called the insurance companies to provide coverage to our most vulnerable Americans, the industry agreed.  Those were the right things to do for their consumers, their customers — the American people. And I applaud industry for that.  And we’re going to hold industry to that standard, a standard in which industry can still thrive but Americans are getting a fair shake.”

Similarly, some insurers have tried to increase rates a great deal before new restrictions take effect, but at least one carrier withdrew a large rate increase when asked about it, Obama said.

“There are genuine cost-drivers that are not caused by insurance companies,” Obama said.

But “we’ve got to make sure that this new law is not being used as an excuse to simply drive up costs,” Obama said. “So what we do is make sure that the Affordable Care Act gives us new tools to promote competition, transparency and better deals for consumers. The CEOs here today need to know that they’re going to be required to publicly justify unreasonable premium increases on your websites, as well as the law’s new website — As we set up the exchanges, we’ll be watching closely, and we’ll fully support states if they exercise their review authority to keep excessively expensive plans out of their insurance exchanges.”


New rules could make 66 percent of employer plans lose ‘grandfathered’ status

New rules from the Obama administration that regulate health care plans that existed before the reform bill was passed highlight the difficulty the administration faces in both reforming the system and allowing people to keep the plans they like.

Under new regulations issued Monday, anywhere from 39 percent to 66 percent of employer plans will lose their “grandfathered status” by 2013, according to estimates included with the rules.

For plans that do not fall under the grandfathered status, employers would have to find a plan that complies with the health care bill passed March 23. Whether or not costs for the new plans will be less than grandfathered plans has yet to be seen.

Small businesses would be harder hit than large employers, losing grandfathered status for as few as 49 percent and as many as 80 percent of plans. Employers may keep their plan if it does not raise its prices beyond “reasonable changes” and if it does not cut substantially cut benefits for a particular condition.

Health and Human Services Secretary Kathleen Sebelius reiterated a saying that President Obama said many times during the health care debate: “If you like the plan you have, you can keep it,” Sebelius said at a press conference Tuesday.

But experts say the new regulations reflect the limits to which that promise can be kept.

“Given the direction that President Obama wanted to go with health care, his promise that people could keep their existing plans was always a dicey one,” said Tevi Troy, former HHS deputy secretary under President Bush and visiting senior fellow at the Hudson Institute.

The administration said that it would “take into account reasonable changes” that insurers routinely make in response to changes in cost and availability but would not outline details about what “reasonable changes” might be.

The regulations stipulate that insurers may make changes to their plans, but only to increase benefits or adapt to consumer protections outlined in the health care bill.

“They give all Americans with health insurance some important protections this year and create a path to the consumer-friendly health insurance marketplace of the future,” Sebelius said.

The new rules mandate that new individuals may not be added to grandfathered health plans after a business merger or restructuring so that grandfather status is not traded as a commodity. Thus companies will likely have employees with two different types of health care coverage, if the companies stay with their current plan.

Troy anticipates that insurance companies will try to freeze their plans to retain their grandfathered status for as long as possible.

“Freezing is not sustainable,” Troy told the Daily Caller. “The majority of plans will lose their grandfathered status in relatively short order, which I suspect was the unstated intent of both the legislators and the regulators.”


White House moves to keep employers from dropping insurance

From the

The White House on Monday outlined broad new rules designed to prevent employers from dropping health insurance benefits for their workers or shifting huge new costs onto them.

The regulations empower the administration to revoke the so-called grandfather status of businesses that shift “significant” new burdens onto employees — a considerable penalty that would subject those plans to all the consumer protections in the Democrats’ new healthcare reform law.

Unveiling the rules Monday, Health and Human Services Secretary Kathleen Sebelius told reporters that the changes will make good on one of the administration’s central promises during the contentious debate over reform: “If you like your doctor and your plan, you keep it,” she said.

Democrats exempted existing health insurance plans from a number of provisions of the new law as a concession to the insurance industry and business community. For example, grandfathered plans — those up and running when the legislation became law in March — don’t have to offer an insurance product without a cost-sharing requirement. Businesses, particularly large companies, prefer that arrangement because they don’t have to make sweeping changes to their existing plans.

The new rules say that employers can make “routine and modest” adjustments to their premium, deductible and co-pay requirements, Sebelius said, but “significant” cost hikes or benefit cuts would cost them their exempted status. The goal is to ensure that grandfathered plans “don’t use this additional flexibility to take advantage of their customers,” she said.

“We don’t want a massive shift of cost to employees,” Sebelius said.

Officials expect the new rules to have the greatest impact on the roughly 133 million employees at large companies, whose insurance offerings tend to remain more stable than at smaller businesses. Labor Secretary Hilda Solis told reporters Monday that the new rules will help “minimize market disruptions.”

Republicans are not convinced. Senate Minority Leader Mitch McConnell (R-Ky.) said Monday that the rules would force more than half of the U.S. workforce out of their current health plan — which “flatly contradicts” the Democrats’ promises during the debate.

“Here’s one more promise the administration has broken on healthcare,” McConnell said.

Sen. Chuck Grassley (Iowa), senior Republican on the Finance Committee, echoed that message, calling the rules “more proof” that, under the new law, “you actually can’t keep what you like.”

“Change is coming for a lot of people,” Grassley said in a statement, “whether they want it or not.”

The new rules came on the same day analysts at PricewaterhouseCoopers issued a report projecting that employers’ healthcare costs will jump 9 percent in 2011. The authors predict that employers next year will shift more costs onto workers, hiking deductibles and replacing co-pays with co-insurance policies.

The White House was quick to push back against the report, pointing out that the employer surveys on which it was based were conducted before the Democrats’ reform bill was passed. Also, the analysts noted that the new reform law, much of which takes effect in 2014, had only a “minor” influence on next year’s cost trends.

Asked about the report Monday, Sebelius conceded that many people will wonder why all the benefits of the health reform law don’t begin immediately. Still, she added, the survey “argues the case that we could absolutely not afford to do nothing.”

“People are being absolutely priced out of the marketplace,” she said.


Pre-Reform Health Plans Might Lose Reform Law Exemption

Draft regulations by the Obama administration indicate that more than half of employer-sponsored health care plans might lose their “grandfathered status” in 2013 and be forced to change in order to comply with regulations in the new health reform law, the Wall Street Journal reports.

The regulations — currently being written by HHS, as well as the Labor and Treasury Departments — appear to contradict Obama’s promise throughout the reform debate that people who like their insurance plans will be able to keep them (Johnson, Wall Street Journal, 6/12).

Qualifying for Grandfathered Status

Plans that were implemented before the new reform law was signed in March can qualify for grandfathered status, which exempts them from many, but not all, of the law’s consumer protections (AP/Washington Post, 6/12).

For example, grandfathered plans are exempt from limits on cost-sharing (Wall Street Journal, 6/12). The plans also are not required to comply with mandates that plans offer preventive care without co-payments or requirements that they institute an appeals process for disputed claims following guidelines stipulated in the overhaul (AP/Washington Post, 6/12).

Losing Grandfathered Status

The draft regulations suggest that the plans could lose their statuses if they make significant changes in deductibles, co-payments or benefits (Pear, New York Times, 6/13). A plan could lose its grandfathered status if it were to increase an employee’s share of medical costs from 20% to 30% or if it increased a deductible beyond the set limit of medical inflation plus 15% (Wall Street Journal, 6/12).

Health plans often change due because of increasing costs, making it likely that many grandfathered plans will change enough to lose their status (Alonso-Zaldivar, AP/San Diego Union-Tribune, 6/11).

The most extreme scenario under the draft is that 80% of small-business plans will lose their grandfathered status by 2013, according to the Journal (Wall Street Journal, 6/12).

Employer Groups, GOP Respond to Regulations

Some employer groups said the stricter guidelines associated with losing grandfathered status could be a positive development for workers.

Alex Vachon, an independent health policy consultant, said, “On the face of it, having consumer protections apply to all insurance plans could be a good thing for employees,” adding, “Technically, it’s actually improved coverage.”

However, Republicans criticized the draft regulations, saying that Obama broke his promise that workers can choose to keep their current coverage (AP/San Diego Union-Tribune, 6/11). Senate Minority Leader Mitch McConnell (R-Ky.) called Obama’s pledge a “myth.” He said, “Since its passage, Republican arguments against the bill have been repeatedly vindicated, even as the administration’s many promises about the bill have been called into question again and again” (AP/Washington Post, 6/12).

Representatives from the U.S. Chamber of Commerce added that the regulations serve as evidence that the reform law will raise costs (AP/San Diego Union-Tribune, 6/11). James Gelfand, health policy director at the Chamber of Commerce, said, “These rules are extremely strict,” adding, “Almost no plan is going to be able to maintain grandfathered status.”

An Obama administration spokesperson said the final rules are still being written, adding that the administration’s goal is to ensure that the regulations do not affect most grandfathered plans (Wall Street Journal, 6/12).


Consumers Worry Over Health Reform’s Costs: Deloitte


A survey found that many consumers are worried about changes to their current health insurance plans and the cost of insurance under the new Patient Protection and Affordable Care Act.

Consumers with employer-sponsored coverage seem to be the most skeptical of health care reform, according to a survey by Deloitte Consulting L.L.P, New York. Deloitte found 61% of these consumers believe their employer will reduce benefits for dependents and retirees. And 32% think employers will stop providing any health coverage for employees.

The survey also found 82% of consumers with employer-sponsored health plans believe that the cost of the health reform act will be higher than expected, and 58% believe the health reform act will not reduce health care costs in the long term.

American consumers will continue to worry about current and future health insurance coverage as the new federal Affordable Care Act goes into effect, says Paul Keckley, executive director of the Deloitte Center for Health Solutions.

Many consumers who say they are familiar with provisions in the Affordable Care Act are worried about future access to quality health care. The survey found 72% of them believe that some hospitals and medical practices will close, and 51% believe that their employers may drop their coverage.

In addition, most consumers are worried about the cost of care under the new legislation, according to the poll. Survey respondents anticipate increases in taxes and in health insurance costs, including premiums and out-of pocket expenses, hospitals and physicians services, and the cost of medications.

Of adults aged 18-34 51% believe that the health reform bill will reduce health care costs in the long erm, compared to 23% of 45-54 year-olds, 36% of 55-64 year-olds, and 30% of 65 year-olds and above, according to the survey.

The research suggest that health insurance plans and employers may need to work together more than ever to help ease the worry of plan participants and employees as new health reform measures are implemented, Deloitte suggests.

Deloitte found 84% of all the consumers it surveyed had health insurance.


ObamaCare strikes out with workers


ObamaCare, formally known as the Patient Protection and Affordable Care Act, is bad news for U.S. workers.

Strike One: ObamaCare is fiscally dangerous, raising the risk of higher taxes all around — including taxes on labor at a time when the job market is struggling.

Strike Two: ObamaCare creates strong incentives for employers — even while holding workers financial harmless — to drop employer-sponsored health insurance for as many as 35 million Americans. This is sure to lead to widespread turmoil in labor compensation, employee insurance coverage and labor relations.

Strike Three: ObamaCare slaps big increases in effective marginal tax rates on low-income workers. Every worker forced onto the subsidized exchanges is sure to face higher barriers to upward mobility and the pursuit of the American Dream.

ObamaCare should be sent back to the dugout.

But, sadly, the political arithmetic argues against a simple repeal. So the focus should be on cutting the massive subsidies that lie at the heart of the problem. Let’s take the reasons in turn.

The Congressional Budget Office projects that ObamaCare will reduce federal deficits by $143 billion over its first 10 years. But Michael Ramlet and I expose the bill to closer scrutiny in our coming Health Affairs article.

Not surprisingly for an act that creates two new, rapidly-growing entitlement programs —insurance subsidies and long-term care insurance — we conclude that ObamaCare instead increases the deficit by more than $500 billion in the first 10 years.

Not the best step at a time when even the sober-minded are beginning to worry that events in Greece and Europe are the ghost of America’s fiscal future.

Deficits represent a commitment to either raise taxes or reduce future outlays. New taxes on labor is sure to impede smooth functioning of labor markets by interfering with decisions involving education, career choice, hiring, job switching, second-jobs and myriad aspects of the most crucial U.S. economic activity today.

For better or — more likely — worse, health insurance is heavily entangled with the labor market. Today, roughly 163 million workers and their families receive health insurance coverage from their employers; and about one-half of the ObamaCare spending is for insurance subsidies.

These subsidies are remarkably generous — even for those with relatively high incomes.

For example, a family earning about $59,000 a year in 2014 would receive a premium subsidy of about $7,200. A family making $71,000 would receive about $5,200. Even a family earning about $95,000 would receive a subsidy of almost $3,000.

These subsidies threaten to undermine existing labor market relationships.

Health insurance is generally only one piece of an overall compensation package that employees receive as a result of competitive pressures. Evidence suggests that if the health insurance portion of that package is reduced or eliminated, the wage aspect will ultimately be increased as a competitive necessity to retain and attract valuable labor.

So the key question is whether the employer can keep the employee “happy” — appropriately compensated and insured — and save money.

The answer is frequently “yes” — thanks to the generosity of federal subsidies. In a study available at the American Action Forum website, we find that for a worker with an income of $59,250 — 250 percent of the federal poverty level — the employer could drop $12,000 in insurance, pay the $2,000 penalty ObamaCare imposes on doing so, give the worker a raise of $8,391 and pocket a tidy $1,550.

More important, the worker could use her raise and the $7,530 subsidy to purchase insurance as good as what she gave up.

What’s not to like — as long as the other 138 million taxpayers are financing the deal?

The potential affect is large. There are now 123 million Americans at or below this income cutoff. Roughly 60 percent of Americans work; about 60 percent of those receive employer-sponsored insurance. This suggests that there are about 43 million workers for whom it may make financial sense to drop insurance.

In the interest of being conservative, let’s say it is 35-40 million.

CBO estimated that only 19 million would receive subsidies, at a cost of about $450 billion over the first 10 years. This analysis suggests that the number could easily be triple that — or 19 million plus an additional 38 million in 2014. Meaning the price tag would be $1.4 trillion.

On top of that, there would be a disruptive and vast reworking of compensation packages, insurance coverage and labor market relations.

Strike Three is that our study shows that every worker shifted to public subsidies will face striking increases in effective marginal tax rates (EMTRs). These rates — the fraction of each additional dollar workers get to save or spend — are at the heart of economic incentives and should be kept as low as possible.

Unfortunately, ObamaCare imposes stunning increases on EMTRs for low-income workers. For every worker who faces a loss in employer coverage, we have a worker who faces a greater difficulty in getting ahead when taking an extra shift; finding a way for a second parent to work, or investing in night school courses to qualify for a raise.