Hatch/Paulsen Introduce Family and Retirement Health Investment Act of 2011

Senator Orrin Hatch (R-UT), Ranking Member, Senate Finance Committee and Representative Erik Paulsen (R-3rd, MN) have introduced the “Family and Retirement Health Investment Act of 2011.”   The legislation makes a number of changes to strengthen and expand health savings accounts (HSAs) and flexible spending accounts (FSAs).  Specific provisions in the legislation would:

  • allow a husband and wife to make catch-up contributions to the same HSA;
  • remove the requirement that an individual have a physician’s prescription to obtain HSA or FSA reimbursement for OTC drugs;
  • allow individuals to roll-over up to $500 from their FSA accounts;
  • clarify the use of prescription drugs as preventive care that will not be subject to an HSA-eligible plan deductible;
  • reauthorize the use of Medicaid health opportunity accounts;
  • promote wellness by expanding the definition of qualified medical expenses to encourage more exercise and better diet;
  • allow seniors enrolled in Medicare Part A to continue contributing to their HSAs; and
  • allow for the purchase of low-premium health insurance and long-term care insurance with HSA dollars.

Kevin McKechnie, executive director, ABA’s Health Savings Account Council, said in a statement that the American Bankers Association and ABA’s HSA Council strongly support Senate and House versions of the Family and Retirement Health Investment Act of 2011.

McKechnie said, “The legislation seeks to correct oversights in the current HSA statute to make HSAs available to more Americans, particularly veterans, individuals eligible for TRICARE coverage and individuals that utilize Indian Health Services.  It will also allow seniors to continue to save for future healthcare expenses by enabling Medicare beneficiaries enrolled only in Part A to continue to contribute to their HSA accounts after turning 65.”

Sebelius Unveils New Report on Requested Premium Increases in States Across the Country.

U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius today unveiled a new report, Insurance Companies Prosper, Families Suffer: Our Broken Health Insurance System. The report highlights health insurance premium increases in states across the country and comes shortly after Anthem Blue Cross announced plans to raise rates on its California customers by as much as 39 percent, even after its parent company took in a profit of $2.7 billion in the previous quarter. The complete report is available at www.HealthReform.gov.

“Over the last year, America’s largest insurance companies have requested premium increases of 56 percent in Michigan, 24 percent in Connecticut, 23 percent in Maine, 20 percent in Oregon, and 16 percent in Rhode Island, to name just a few states,” said Sebelius. “Premium increases have left thousands of families that are already struggling during the economic downturn with an unpleasant choice between fewer benefits, higher premiums, or having no insurance at all. Hard-working families deserve better.”

The report examines requested insurance premium increases and notes:

* Anthem of Connecticut requested an increase of 24 percent last year, which was rejected by the state.
* Anthem in Maine had an 18.5 percent premium increase rejected by the state last year as being “excessive and unfairly discriminatory” – but is now requesting a 23 percent increase this year.
* In 2009 Blue Cross Blue Shield of Michigan requested approval for premium increases of 56 percent for plans sold on the individual market.
* Regency Blue Cross Blue Shield of Oregon requested a 20 percent premium increase.
* UnitedHealth, Tufts and Blue Cross requested 13 to 16 percent rate increases in Rhode Island.
* Rates for some individual health plans in Washington increased by up to 40 percent until Washington State imposed stiffer premium regulations.

Health insurance reform will fix our insurance system, help drive down costs, put consumer power and choice in the hands of the American people, and ensure all Americans receive the health care services they need. Reform will:

* Place additional oversight on health insurance companies to ensure that people get value for the premiums they pay.  Insurance companies will have to report how they spend the premium dollars that they collect from their customers. If they spend too much on administrative costs and profits, they will have to give some of that money back to their customers. Insurance companies will also have to provide public justification for premium increases. Consumers can use this information to help decide whether they want to purchase a particular plan. And if insurance companies are not able to justify their premium increases, they could be barred from participating in the health insurance exchanges.

* End Arbitrary Limits Placed on Coverage by Insurance Companies. Under health insurance reform, families will no longer face lifetime limits to their benefits, nor will coverage be denied or watered down based on medical history. As a result, health insurance will provide real protection from high health care costs.

* End Insurance Company Discrimination. Health insurance reform will prevent any insurance company from denying coverage based on underlying health status, including genetic information. It will end insurance discrimination that charges families more if a family member has or had any illness, and limit differences in premiums based on age.

* Create Competition Among Insurers with a Health Insurance Exchange. Health insurance reform creates an “exchange” or marketplace for insurance competition that will drive down premium prices for Americans. The health insurance exchange will bring families and plans together into one organized marketplace so families can compare prices and health plans in order to decide which quality, affordable option is right for them. Health insurance reform will guarantee every American a choice of health coverage, even if someone loses a job, switches jobs, moves, or gets sick.

* Ensure Value in Our Health Care System. By rewarding high-quality and efficient care, encouraging care coordination, and reducing medical errors, health reform will slow the growth in health care costs and ensure value for every health care dollar spent.

* Lower Premiums. The Congressional Budget Office estimates that reform will streamline administrative costs of insurance companies and bring more people into the insurance market, lowering premiums of a comparable plan in the individual market by 14 to 20 percent. That means more money in the pockets of American families, and the security of having high-quality coverage.

“Premium hikes in California and across the country are a wakeup call,” added Sebelius. “It’s time for Congress to pass reform and hand control over health care decisions back to American families and their doctors.”

Source: U.S. Department of Health and Human Services (HHS)

Is It Really Double Counting?

Last week, we picked up on a letter that was sent to Congress by the Congressional Budget Office (CBO) that said CBO had double counted the savings that would result from the cuts to Medicare included in the Patient Protection and Affordable Care Act (PPACA). Read post.

Essentially, the CBO said that it had credited the savings to the Health Insurance Trust Fund (HI) extending the amount of benefits that can be paid out. While at the same time, the cuts were also being used to offset the additional costs of providing subsidies to low income uninsureds to all them to buy coverage.

In the words of the CBO:

To describe the full amount of HI trust fund savings as both improving the governments ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the governments fiscal position.

The New York Times tackled this issue yesterday in an article by Robert Pear that attempts to explain how technically it might be possible for the Senate bill to be able to reduce the deficit by $132 billion in the next 10 years while adding nine years to the life of Medicares hospital trust fund.

No disrespect to Mr. Pear, but even after reading his explanation of how this may not be double counting, I have to agree with Sen. Jon Kyl of Arizona, the No. 2 Republican in the Senate, when he summarized the situation by saying. You cant sell the same pony twice.

Why the Big Emotional Reaction to the Senate Health Bill?

John Goodmans Health Policy Blog is a good read today, as the Father of Health Savings Accounts asks, What is causing the huge emotional reaction both on the right and the left? To the health bill the Senate passed on Christmas Eve, that is.

Goodman points out that bill would not solve any of the problems that its proponents talked about. He writes that the bill will not lower health care costs. It will not improve quality of care and probably would not improve the average access to care. But it would do two very important things almost no one has talked about.

  1. For the first time in U.S. history, we are about to nationalize the health insurance industry; and
  2. Going forward, no one will ever be able to pay a real price for health insurance again.

At the heart of this is the fact that health insurance plans will be unable to innovate.

Gone forever will be the ability of insurance companies to creatively and innovatively solve the core problems of cost, quality and access, writes Goodman. Insurers will not be able to innovate in these ways because it will be illegal to charge patients or their employers a premium that reflects the value the innovation creates for the patients.

In the long run, problems are not only not going to be solved. They almost certainly are going to get worse.

Read John Goodmans entire blog post here:

Various Parties React to Passage of Heath Care Bill.

The following are excerpts from statements issued today by various trade groups and individuals regarding the Senate’s passage of the Patient Protection and Affordable Care Act.

AMA: Senate Bill Passage Historic, More Work to Do in Conference

The following statement is attributable to J. James Rohack, M.D., President, American Medical Association:

“Today, the Senate took an historic vote to improve our nation’s health care system by expanding coverage to millions of Americans and strengthening the private insurance market to better serve the patients who rely on it. The AMA supported passage of the bill because it contains a number of key improvements for our health care system, which currently is not working for far too many patients or the physicians who dedicate their lives to patient care.

“Separate action is needed early next year to permanently repeal the current Medicare physician payment formula to preserve access to care for America’s seniors, baby boomers and military families by creating a stable physician payment system. We commend Senators Reid and Baucus for keeping the focus on a permanent solution to this problem, and we will continue to work closely with them to fix the flawed Medicare physician payment formula once and for all early in the new year.”

AARP Thanks Senate for Passing Health Care Reform

AARP CEO A. Barry Rand released this statement after this morning’s passage of the Patient Protection and Affordable Care Act.

“The bill passed by the Senate makes needed progress to prevent coverage denials due to health status and limit insurance companies from charging older Americans much more for coverage because of their age. It also begins to close the dangerous gap in Medicare drug coverage known as the doughnut hole, and Senate leaders have committed that a final bill will close the gap entirely by 2019, in keeping with the President’s pledge. In addition, the Senate bill adds important new Medicare benefits, like free preventive care, and encourages states to provide more home and community-based long-term care services and supports instead of costlier institutional care.

“AARP thanks the Senate for advancing this critical legislation. We look forward to working with members of both chambers during the conference committee to improve this legislation and enact a final package that is even stronger so that America’s health care system finally meets the needs of our members and all older Americans.”

AHIP Statement on Passage of Senate Health Care Reform Legislation

Karen Ignagni, President and CEO of America’s Health Insurance Plans (AHIP), released the following statement today on passage of Senate health care reform legislation:

“Providing all Americans with health care coverage is crucial for the country. Health plans support legislative changes that would provide guaranteed access to all Americans, with no pre-existing condition limitations and no health-status-based premiums. These reforms are essential to giving all Americans greater peace of mind and health security.

“At the same time, specific provisions in this legislation will increase, rather than decrease, health care costs; reduce coverage options; and disrupt existing coverage for families, seniors and small businesses – particularly between now and when the legislation is fully implemented in 2014.

FRC Statement on the Christmas Eve Passage of the Health Care ‘Reform’ Bill

Family Research Council President Tony Perkins made the following comments:

“Today’s Christmas Eve vote may signal the end of the debate in the Senate, but it’s far from the end of the debate at large. Since Senator Reid’s bad bill is substantially different from the House’s bad bill, the lower chamber will have to vote on the plan again. The Senate bill’s massive funding for elective abortions and the construction of abortion facilities are among the most radical differences. On Monday, Health and Human Services Secretary Kathleen Sebelius admitted in an interview that the Senate health care bill will force ‘everybody’ in the exchange to pay an abortion premium. The so-called Nelson ‘compromise’ ensures that everyone will pay for abortion–no matter how the funds are divided up.

Pelosi Statement on Senate Passage of Health Insurance Reform Bill

Speaker Nancy Pelosi issued the following statement this morning on the Senate voting 60 to 39 to pass historic health insurance reform legislation:

“Today’s vote in the United States Senate brings us closer to providing quality, affordable health insurance to every American. I commend Senator Reid for his strong leadership in passing this bill, which takes a critical step on behalf of the health and security of all Americans.

“We are proud of the House bill, which provides more affordable coverage for the middle class, covers 36 million currently uninsured Americans, begins health insurance reform in 2013, fully closes the prescription drug donut hole for seniors, mandates strong reforms of the insurance industry, and is fiscally responsible, cutting the deficit by $138 billion over 10 years.

“As we move forward through the legislative process, we will soon produce a final bill that is founded on the core principles of health insurance reform: affordability for the middle class, security for our seniors, responsibility to our children by reducing the deficit, and accountability for the insurance industry.

PhRMA Statement on Senate Health Care Reform Bill

Pharmaceutical Research and Manufacturers of America (PhRMA) Senior Vice President Ken Johnson released the following statement about the Senate health care reform bill:

“We applaud the Senate for taking an important and historic step toward expanding high-quality, affordable health care coverage and services to tens of millions of Americans, many of whom are struggling today financially. While considerable work remains to be done in reconciling differences between the Senate and House bills, we remain convinced that comprehensive health care reform, if done in a smart way, will benefit patients, our economy and the future of our nation.

“Most importantly, the Senate bill recognizes the importance of medical progress in America. Innovative, cutting-edge medicines have dramatically increased life expectancy rates in the United States and have allowed patients with cancer, heart disease, diabetes and other devastating chronic diseases to live longer, healthier and more productive lives. We strongly believe that everyone in America should benefit from promising new advances in medical care.

Statement of Americans United for Life Action President on Passage of Senate Health Care Bill

The following statement was issued by Dr. Charmaine Yoest, President of Americans United for Life Action:

“Americans don’t want taxpayer funding for abortions and are opposed to a first-ever, mandatory abortion tax. Knowing this, the bill’s proponents have rushed it through the Senate at a time when Americans are focused on celebrating Christmas with their families.”

Hewitt Research Continues to Show High Rate of COBRA Enrollments Among Subsidy-Eligible Employees.

A new analysis from Hewitt Associates, a global human resources consulting and outsourcing company, indicates that average monthly enrollment rates in COBRA health care plans among subsidy-eligible employees have increased by 20 percentage points since the COBRA subsidy was enacted in March 2009. This comes as President Obama recently signed the Department of Defense Appropriations Act for Fiscal Year 2010, which includes a law that lengthens the duration of the COBRA subsidy from nine months to 15 months for eligible employees and their dependents. It also extends the subsidy to those Americans who lose their jobs on or before February 28, 2010. Hewitts analysis examined the COBRA enrollment activity for 200 large U.S. companies representing 8 million employees from March 2009 to November 2009. During that period, monthly COBRA enrollment rates for subsidy-eligible employees averaged 39 percent, compared to 19 percent for the period of September 2008 to February 2009prior to when the subsidy was enacted.

The increase weve seen in COBRA enrollments since March highlights how important the subsidy benefit has been to families who have been affected by the high rate of unemployment, said Karen Frost, Hewitts Health and Welfare Outsourcing leader. The subsidy provides laid-off Americans with a cost-effective way to continue getting health insurance coverage, and we expect enrollment rates to remain high until the subsidy expires or the labor market shows signs of improving.”

The COBRA subsidy under the American Recovery and Reinvestment Act of 2009 (ARRA) requires eligible employees to pay 35 percent of the COBRA premium, or about $3,000 a year for the average worker. Under the original COBRA law, most involuntarily terminated workers were required to pay 100 percent of the health care premium plus an additional 2 percent to cover administrative costs. This translates to roughly $8,800 a year in COBRA health care costs for the average worker.

COBRA Enrollments by Industry

Since the subsidy was enacted in March 2009, Hewitts analysis shows that companies in the industrial manufacturing and aerospace and defense industries saw the largest overall increases in COBRA enrollment rates for subsidy-eligible employees. In the industrial manufacturing industry, for example, COBRA enrollment rates for eligible employees rose from 7 percent (September 2008 to February 2009) to 67 percent (March 2009 to November 2009). In addition, companies in the aerospace and defense industry saw the rate of COBRA enrollments more than double, from 30 percent (September 2008 to February 2009) to 63 percent (March 2009 to November 2009).

Industry Breakdown of Average Monthly COBRA Enrollment Rates

Avg. Monthly EnrollmentSept. 2008 Feb. 2009Avg. Monthly Enrollment Mar. 2009 Nov. 2009
Aerospace & Defense30%63%
Automotive & Transport25%33%
Banking29%50%
Business Services20%42%
Chemicals9%19%
Computer Hardware/Services22%40%
Construction6%26%
Consumer Products54%65%
Electronics55%75%
Energy & Utilities13%22%
Financial Services27%34%
Food & Beverage12%27%
Health Care10%18%
Industrial Manufacturing7%67%
Insurance23%40%
Leisure11%28%
Media13%36%
Pharmaceuticals20%44%
Retail9%24%
Telecommunications27%44%
Other5%16%
Cross Industry Average19%39%

About Hewitt Associates

For more than 65 years, Hewitt Associates (NYSE:HEW) has provided clients with best-in-class human resources consulting and outsourcing services. Hewitt consults with more than 3,000 large and mid-size companies around the globe to develop and implement HR business strategies covering retirement, financial and health management; compensation and total rewards; and performance, talent and change management. As a market leader in benefits administration, Hewitt delivers health care and retirement programs to millions of participants and retirees, on behalf of more than 300 organizations worldwide. In addition, more than 30 clients rely on Hewitt to provide a broader range of human resources business process outsourcing services to nearly a million client employees. Located in 33 countries, Hewitt employs approximately 23,000 associates. For more information, please visit www.hewitt.com.

Source: Hewitt Associates

CBO Double Counts Medicare Savings in the Patient Protection and Affordable Care Act.

The CBO today admitted that it had double counted the savings that would results from the cuts to Medicare included in the Patient Protection and Affordable Care Act (PPACA).

Essentially, the CBO had credited the savings to the Health Insurance Trust Fund (HI) extending the amount of benefits that can be paid out. At the same time, the cuts were also being used to offset the additional costs of providing subsidies to low income uninsureds to all them to buy coverage.

What impact this will have on the passage of the healthcare bill is yet to be determined, but there is already speculation that the healthcare legislation will not be finalized in time for President Obama’s State of the Union Address.

Here is the letter that was posted today on the CBO website:

CBO has been asked for additional information about the projected effects of the Patient Protection and Affordable Care Act (PPACA), the pending health care reform legislation, on the federal budget and on the balance in the Hospital Insurance (HI) trust fund, from which Medicare Part A benefits are paid. Specifically, CBO has been asked whether the reductions in projected Part A outlays and increases in projected HI revenues under the legislation can provide additional resources to pay future Medicare benefits while simultaneously providing resources to pay for new programs outside of Medicare. Our answer is basically no.

How the HI Trust Fund Works

The HI trust fund, like other federal trust funds, is essentially an accounting mechanism. In a given year, the sum of specified HI receipts and the interest that is credited on the previous trust fund balance, less spending for Medicare Part A benefits, represents the surplus (or deficit, if the latter is greater) in the trust fund for that year. Any cash generated when there is an excess of receipts over spending is not retained by the trust fund; rather, it is turned over to the Treasury, which provides government bonds to the trust fund in exchange and uses the cash to finance the governments ongoing activities. The resources to redeem government bonds in the HI trust fund and thereby pay for Medicare benefits in some future year will have to be generated from taxes, other government income, or government borrowing in that year.

The balance in the trust fund represents the accumulated difference between the funds receipts and outlays over time, including interest credited to the fund. Reports on HI trust fund balances from the Medicare trustees and others show the extent of prefunding of benefits that theoretically is occurring in the trust fund. However, because the government has used the cash from the trust fund surpluses to finance other current activities rather than saving the cash by running unified budget surpluses, the government as a whole has not been truly prefunding Medicare benefits.

The Impact of the PPACA on the HI Trust Fund and on the Budget as a Whole

In a report released this afternoon, CBO and the staff of the Joint Committee on Taxation (JCT) estimated that the PPACA, incorporating the managers amendment, would reduce Part A outlays by $245 billion and increase HI revenues by $113 billion during the 2010-2019 period. Those changes would increase the trust funds balances sufficiently to postpone exhaustion for several years. However, the improvement in Medicares finances would not be matched by a corresponding improvement in the federal governments overall finances. CBO and JCT estimated that the PPACA as amended would add more than $400 billion ($245 billion + $113 billion + interest) to the balance of the HI trust fund by 2019, while reducing federal budget deficits by a total of $132 billion by 2019.

The reductions in projected Part A outlays and increases in projected HI revenues would significantly raise balances in the HI trust fund and create the appearance that significant additional resources had been set aside to pay for future Medicare benefits. However, the additional savings by the government as a wholewhich represent the true increase in the ability to pay for future Medicare benefits or other programswould be a good deal smaller.

The key point is that the savings to the HI trust fund under the PPACA would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs. Trust fund accounting shows the magnitude of the savings within the trust fund, and those savings indeed improve the solvency of that fund; however, that accounting ignores the burden that would be faced by the rest of the government later in redeeming the bonds held by the trust fund. Unified budget accounting shows that the majority of the HI trust fund savings would be used to pay for other spending under the PPACA and would not enhance the ability of the government to redeem the bonds credited to the trust fund to pay for future Medicare benefits. To describe the full amount of HI trust fund savings as both improving the governments ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the governments fiscal position.

Senate Opponents Delivering Mistruths Crafted to Sow Fear on Health Reform, says Consumer Watchdog.

Opinion.

Group Offers “Truth Squad” Messages to Counter What They Call Insurer-Spun Sound Bites. You decide.

Opponents of health reform are fear-mongering relentlessly during prolonged Senate debate, said Consumer Watchdog, a nonpartisan consumer advocacy organization. The group is saying that the messages being delivered during the Senate healthcare debate have been crafted to stoke fear and anger, particularly in Medicare recipients.

Below,to according Consumer Watchdog, is a list of the most deceptive sound bites, and the longer truth of the reform plans.

“The fairy-tale character Chicken Little warned ceaselessly that the sky was falling, and health reform opponents are spinning similar tales to kill current legislation,” said Judy Dugan, research director for Consumer Watchdog. “The same conservatives who spent years bashing Medicare are now all but sobbing at the podium as they ‘defend’ Medicare, by implying wrongly that seniors will lose large portions of their benefits.”

The nonprofit, nonpartisan Consumer Watchdog said Senate Republicans are honing a batch of deceptive, poll-driven sound bites to drive the fear of seniors, stressed-out families and worried workers. The biggest beneficiaries will be major for-profit health insurers and allied companies that see even modest reforms of private Medicare, and the so-called public option, as threats to their bottom lines.

Consumer Watchdog noted Aetna’s announcement in October to shareholders that it expected improved profits next year after substantial rate hikes force out up to 650,000 individual and small business clients. Senate leader Harry Reid focused on that statement over the weekend to illustrate the profit demands that drive the insurance industry, and its opposition to the current health reform bill.

That profit imperative is Aetna’s truth, unlike its caring-for-you marketing messages, said Consumer Watchdog. The Chicken Little sound bites of Senate opponents are like those insurance marketing materials, said Consumer Watchdog — aimed at an emotional response, not the more complicated reality.

Here are the top Chicken Little messages, along with a truth that, as usual, is more than a sound bite.

** Medicare benefits will be cut, up to 64%!!!

The longer truth: No regular Medicare benefits would be cut, and some would be strengthened. The health reform bills would reduce overpayments of more than $1,000 per beneficiary to private, for-profit Medicare Advantage plans (which sometimes offer extras like gym memberships). The overpayments, gained through relentless insurance industry lobbying in Congress, threaten the health of overall Medicare, and are paid for by people in regular Medicare, who are charged about $90 a year extra on their physician-care “part B” payments — money that goes directly to Aetna, United Health Group, Kaiser and others that market, and profit from, the Medicare Advantage plans.

Under the reform bill, the overpayments would be reduced, though not eliminated. It would be up to the insurance companies whether to reduce the extra benefits, or trim their own costs, profits and up to $100 million a year in CEO compensation pay to retain the extra benefits.

None of the regular guaranteed benefits of Medicare could be cut, much less by “64%” — a figure proclaimed out of thin air by Sen. Chuck Grassley on Friday in an obvious attempt to make seniors think their basic benefits are at risk. In fact, the Senate bill strengthens preventive care benefits in traditional Medicare.

** A half-trillion robbed from Medicare for a huge federal entitlement!!! (Related: Hospitals and doctors will refuse to treat Medicare patients!!!)

The longer truth: The money saved from cutting fraud and abuse, reducing the Medicare Advantage overpayment, and reducing the growth of hospital costs would be largely or entirely used to shore up Medicare’s financing, at least delaying the program’s risk of insolvency. Hospitals and other medical groups have agreed that the cuts would be offset by more revenue when millions more people are insured, and the American Hospital Association has said loudly and clearly that its members would not, ever, turn away Medicare patients.

Having more non-seniors insured — the “entitlement” part — offers a major indirect benefit even to Medicare patients, because hospital resources are not drained off to pay for treatment of the uninsured, often in costly emergency rooms.

** Health reform is a job killer!!!

Longer truth: This one is hard to follow — usually somehow related to rural hospitals laying off staff if any of their federal payments are cut. But it’s an utter lie. Economists are unanimous that health reform would create good jobs — not just doctor and registered nurse jobs, but for medical assistants, technicians, home health aides — real jobs that pay more than minimum wage and often come with benefits.

** Government would take over control of your health care!!! (Related: Federal bureaucrats will deny and delay your care!!!)

Longer truth: The current bills are about as privatized as a reform could be, with government’s role mainly as a provider of subsidies for those who cannot afford private insurance, and guarantor that insurance benefits are worth the paper they’re written on. In credible polls, people are happier with (government-run) Medicare than with even employer-provided health insurance, so in many ways it’s too bad that the government presence is as small as it is.

As for federal bureaucrats controlling care, government would indeed set minimums on the care that must be provided in most plans, as well as study what is most effective in treating chronic disease. Unfortunately, private insurance companies will still be hunting every loophole, as they already do, to limit care and increase shareholder profits.

** America can’t afford this huge entitlement program!!! (Implication: It’s just like welfare!!!)

Longer truth: America can’t afford not to fix its health care system, which is sucking up an ever-larger share of national economic output, while caring for ever-fewer people. The costs are bankrupting families and businesses alike. Insurance companies can capriciously deny to insure any applicant, and cancel their insurance if policyholders get sick. While the health reform bills in Congress are weaker than they could be — a failed attempt to appease insurers — they curb the worst abuses and would insure more than half of the 48 million uninsured Americans.

While no one can guarantee the future, the fiscally conservative Congressional Budget Office finds that the reforms would not increase federal indebtedness, and would slightly decrease it. The reforms would certainly spur new economic activity.

The aim of the sound-bite brigades is to kill health reform, since they offer no alternative that would increase the number of people with health care. They clearly hope to delay action long enough to build generalized fear of loss, and loathing of government.

A similar assault met Franklin D. Roosevelt’s finally successful effort to establish the Social Security program. Corporations fought back by putting scary warnings about “new taxes” in employees’ pay envelopes and railing against big government. Roosevelt was buoyed, however, by persistent public support for the retirement program for the elderly.

This time around, the opponents’ scientifically crafted sound bites are sharper and less bound by truth. They deliberately use words that would make seniors think all of their Medicare benefits are at risk.

“What we have to hope is that Americans are also sharper at seeing through smear and fear,” said Dugan, “and willing to respond to those who spread the deceptive sound bites.”

Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at:http://www.ConsumerWatchdog.org

Source: Consumer Watchdog

Web Site: http://www.consumerwatchdog.org/

Majority of Employers Would Reduce Health Benefits to Avoid Proposed Excise Tax, Survey Finds.

Nearly two-thirds (63 percent) of employers in a recent survey by Mercer say they would cut health benefits to avoid paying an excise tax included in the Senates Patient Protection and Affordable Care Act, unveiled November 18. Mercer estimates that one in five employers offer health coverage that would be deemed too generous and thus be subject to the Acts 40 percent non-deductible tax on the excess value.

In early November, Mercer surveyed 465 employer health plan sponsors to find out how they might respond to such a tax on their health plans. Respondents included roughly equal numbers of small employers (fewer than 500 employees), mid-sized employers (500-4,999 employees) and large employers (5,000 or more employees).

In general, excess annual costs under the legislation are those above $8,500 for employee-only coverage or $23,000 for family coverage, starting in 2013. Higher annual cost thresholds $9,850 and $26,000 would apply to retiree plans, coverage for certain workers in high-risk jobs and coverage in certain high-cost states.

In all cases, annual costs include employer-paid, employee-paid, pre-tax and after-tax premium or premium-equivalent amounts for the health, dental and vision coverage. Annual expenses also include pre-tax (not after-tax) contributions to flexible health spending, and employer contributions to health reimbursement and health savings accounts.

As health care costs continue to trend upwards, the proposed tax is predicted to apply to about a fifth of all employers if it becomes effective in 2013. The percent of employers impacted by the cap would increase annually because the Act proposes that the baseline trend be inflated by the annual consumer price index (CPI) plus 1 percent, which is about half the average health care trend.

According to Linda Havlin, a Worldwide Partner with Mercer, For many employers, its a matter of when, not if, they will hit the cap. While some policy analysts expect the cap would prompt employers to make major changes to cut back on excessive health care spending, its important to note that not all the plans that would be subject to the tax are particularly generous. There are other factors beside plan design that drive up cost.

Nearly two-thirds (63 percent) of employers who responded say they would cut covered benefits to avoid paying the excise tax. About a fourth of respondents (23 percent) say they wouldmaintain their current plan, but pass along the cost of the tax to their employees. Just 2 percent say they would keep their plan, but absorb the new tax themselves. These employers may be constrained by bargaining agreements from shifting cost or they may simply feel that out-ofpocket costs are already as high as their employees can tolerate.

Seven percent of the responding employers say they would terminate the high-cost plan. Notably, 9 percent of small employers which typically offer only one medical plan choice saythey would terminate their plans, potentially forcing their employees into the individual market.

Ms. Havlin noted, Small employers have been exiting the health market for years and this statistic is another indicator of their frustration. Only 60 percent of employers with fewer than 50 employees offered coverage last year compared to 99 percent of large employers. In some markets that have expensive benefit mandates and taxes on insurance, such as New York City, were seeing an uptick in that exit rate.

Of those employers that would reduce covered benefits, 75 percent say they would use the familiar strategy of raising deductibles and copays. Forty percent would add an alternative lowcost plan to their benefit offerings and 32 percent would replace their current plan with a lowcost option.

Many of the larger employers would attempt more sophisticated strategies. One-fourth of employers with 5,000 employees say they would seek quality and cost-efficiency improvements through high-performance networks, medical homes, and health management incentives.

We all need to work to take the inefficiencies and inappropriate spending out of health care, Ms. Havlin stressed. The risk to employers is that reform has a lot of other costs that will make it even harder to stay under the cap. For example, employers will likely bear the brunt of the governments $156 billion fees on insurers, manufacturers, hospitals and other suppliers and they will pass the cost on to employees.

The largest responding employers would also be the most likely to terminate employer contributions to flexible health spending, health reimbursement and health spending accounts: 25 percent of those with 5,000 or more employees would do so, compared to 19 percent of all sizes.

One argument that some have made in favor of the excise tax is that employers cutting benefits would return the savings to employees in the form of higher wages. However, less than a fifth of respondents (16 percent) say they would convert their cost savings into higher pay.

Large employers more likely to favor the individual mandate

Both the House-passed bill and the reform plan headed to the Senate floor would require all individuals to obtain coverage if they can afford it, either through their employer or in the individual market. A majority of responding employers (52 percent) is in favor of the individual mandate: 37 percent are opposed and 11 percent have no opinion. The largest responding employers (those with 5,000 or more employees) are the most in favor: 65 percent favor the individual mandate, while only 45 percent of the small responding employers support this mandate.

Respondents overwhelmingly agree that if individuals are required to have coverage, Congress should allow employers and insurance companies to offer low-cost, catastrophic plans (86 percent), which would not be permitted under the current House and Senate proposals. On this point, Ms. Havlin notes that Expensive plans arent appealing for many self-employed or low wage earners. These people are more likely to take the risk of being uninsured, particularly if they are young. The individual market is an opportunity for us to offer a variety of plans that meet different needs, including some plans that provide breakthrough ideas in quality, compliance and outcomes.

Source: Mercer

Diabetes Population to Double, Diabetes Costs to Nearly Triple, in 25 Years, New Study Shows.

Findings Underscore Urgent Need to Reform CBO Scoring of Preventive Care

The diabetes population in the United States will almost double over the next 25 years and annual medical spending on the disease is projected to hit $336 billion, up from $113 billion today, according to a study published in the December issue of Diabetes Care. The National Changing Diabetes Program (NCDP), a program of Novo Nordisk, commissioned the analysis by a team from the University of Chicago.

According to the forecast, the number of Americans living with diabetes will rise from 23.7 million in 2009 to 44.1 million in 2034. For the Medicare program, the increases over the next 25 years are even more dramatic: the number of Americans living with diabetes and covered by Medicare will rise from 6.5 million to 14.1 million, and Medicare spending on diabetes will almost quadruple, skyrocketing from $45 billion this year to $171 billion in 2034. Based on this projection, “Medicare spending alone will represent just over 50% of direct spending on diabetes in 2034,” the authors concluded.

Factors not used in government budget analysts

Unlike past efforts to predict trends in diabetes, the model developed by the University of Chicago team considers the natural progression of the disease, effects of treatment and obesity rates in the United States, which are “factors that are currently not used by government budget analysts,” according to the authors.

“Obesity is a significant driver of future increases in the number of Americans with diabetes,” said Michael O’Grady, Ph.D., one of the study authors and a senior fellow at the National Opinion Research Center at the University of Chicago. “While our modeling, as well as that done by the Centers for Disease Control and Prevention, project obesity rates leveling off, neither model has obesity rates lowering substantially. High obesity rates among the American population over an extended period of time substantially increases the probability of developing type 2 diabetes.”

This forecasting model, which the authors contend improves the rigor of the estimates of health care spending for diabetes, was designed to inform policymakers as they explore ways to control spiraling health care costs. Currently, official government estimates of the potential costs and cost offsets associated with proposed preventive health legislation do not consider savings that may occur more than 10 years out, thus providing an incomplete view of preventive health measures as an investment.

“The size of the current diabetes population exceeds many prior forecasts and we expect that the future growth of population and its associated costs will be explosive. Finding ways to reduce the number of people who develop diabetes is both a national public health priority and a fiscal imperative,” said Dr. Elbert Huang, the lead author of the paper and an assistant professor of medicine in the Department of Medicine at the University of Chicago. “The best way to stem the dramatic rise in diabetes is to implement proven preventive care programs on a national level. This will require that policymakers understand that diabetes prevention is a long-term investment that will only reap benefits over decades, not years.”

The Congressional Budget Office (CBO), which assesses the cost of proposed legislation, does not typically consider any cost savings beyond 10 years. Because diabetes develops over a long period of time, with the highest costs coming later in life of the disease, savings are far more apparent at 25 years than at 10 years. For this reason, policymakers need a long-term analysis of costs in order to make accurate decisions that reflect the true impact of prevention programs.

“Managing diabetes means preventing the pain and expense of diabetes complications, including heart disease, amputation, kidney disease, and blindness,” said Michael Mawby, Chief Government Affairs Officer and director of the NCDP, a diabetes leadership initiative established by Novo Nordisk to drive health systems change at the national and local level, which funded the research. “Therefore, it is critical that lawmakers see the long-term projections of the impact of diabetes interventions.”

Legislation introduced earlier this year is designed to lead to a more accurate assessment of the costs and benefits of preventive health, including preventing complications and delaying progression of chronic diseases such as diabetes. The bipartisan Preventive Health Savings Act of 2009 (HR 3148), calls on the CBO to weigh clinical or observational studies when modeling projected costs and savings related to preventive health, and in certain circumstances, to look beyond the traditional 10-year budget window.

About the National Changing Diabetes Program

The National Changing Diabetes Program (NCDP) is a multi-faceted initiative that brings together leaders in diabetes and policy to improve the lives of people with diabetes. NCDP strives to create change in the U.S. health care system to provide dramatic improvement in the prevention and care of diabetes. Launched in 2005, NCDP is a program of Novo Nordisk. For more information, please visit www.ncdp.com.

About Novo Nordisk

Novo Nordisk is a healthcare company with an 86-year history of innovation and achievement in diabetes care. The company has the broadest diabetes product portfolio in the industry, including the most advanced products within the area of insulin delivery systems. In addition to diabetes care, Novo Nordisk has a leading position within areas such as hemostasis management, growth hormone therapy, and hormone therapy for women. Novo Nordisk’s business is driven by the Triple Bottom Line: a commitment to social responsibility to employees and customers, environmental soundness and economic success. With headquarters in Denmark, Novo Nordisk employs more than 27,550 employees in 81 countries, and markets its products in 179 countries. Novo Nordisk’s B shares are listed on the stock exchanges in Copenhagen and London. Its ADRs are listed on the New York Stock Exchange under the symbol ‘NVO’. For global information, visit novonordisk.com; for United States information, visit novonordisk-us.com.

Source: National Changing Diabetes Program