To help pay for health care reform, would you be willing to pay a “sin tax” on your favorite snack foods or soft drinks? If you answered “no,” you’re not alone (but you’re not in the majority, either). According to the Kaiser Family Foundation’s April health tracking poll, when asked if respondents would favor or oppose increasing taxes on a package of items including soda, alcohol, junk food, and cigarettes to pay for health reform and provide coverage for the uninsured, six in ten (61%) favor such taxes while roughly four in ten (37%) are opposed. Asked about each of these items specifically, the poll suggests there is somewhat more support for increasing taxes on cigarettes (65%) and wine and beer (68%) than on snack foods (52%) or soda (46%).
These results are interesting, but not really remarkable. What’s more intriguing about this survey is the researchers’ efforts to show how possible arguments in the reform debate can sway public opinion. For example, the survey tested some arguments for and against the sin tax approach. Support for the approach declines overall (39% favor, 57% oppose) when supporters are told that the tax increase would hit low-income people the hardest. When initial opponents are told that the tax increase would raise money for reform and improve health by encouraging healthier habits, overall support increases moderately (70% favor, 27% oppose).
The key findings state, “It’s a safe bet that health care reform in 2009, as was true in 1993-1994, will play out in the context of a spirited debate, with opponents and proponents taking their cases directly to the public, with substantive, impassioned pleas mixed in with specious arguments and spin. For this reason, we chose a handful of the endless possible numbers of messages for and against these policy proposals and asked supporters and opponents separately if they would ‘still support’ or ‘still oppose’ if they heard this argument against their position. And what we found is that, at this early but still crucial stage of a possibly fast-moving process, there are many arguments (true or not) which can move opinion for or against.”
As the process unfolds, let’s be wary of the various messages for and against the offered reform proposals, and let’s examine them closely before making up our minds.
In the meantime, please pass the pretzels.
Thursday, April 30, 2009
Wednesday, April 29, 2009
Reform resonates with small employers
In contrast to large employers’ insistence on maintaining the current employer-based health insurance system, small businesses say that health care reform is a top concern, according to a survey by the Robert Wood Johnson Foundation. A recent report on reform notes that nearly one-third of the uninsured – 13 million people – are employees of firms with less than 100 workers.
The most popular health care reform measure, favored by 78% of the small employers to make health insurance benefits more affordable for them, is a combination of government-sponsored purchasing pools to obtain premiums at bulk rates and tax credits. More than two-thirds (68%) would support establishing a market-based approach that gives employees a tax credit to buy health insurance on their own, encouraging the use of health savings accounts, and enacting tort reform for medical liability. More than half of small employers (53% each) would support the following:
1) requiring employers that have at least ten employees and that do not provide health insurance to their employees to pay 4% of their payroll to cover the uninsured; and
2) requiring that employees be offered at least one public plan and one private plan, and also requiring that all insurance companies provide coverage without regard to age or preexisting conditions.
AHPs, anyone? Efforts to help small businesses with the challenges of providing health benefits have not had much success. To dredge up just one example from the past, remember the proposal to create federally licensed association health plans (AHPs)? Such AHPs would have been exempt from state laws and regulations (current Wolters Kluwer benefits customers, click here for an interview about the risks associated with such plans, according to one expert). That means AHPs would not have had to provide state-mandated health insurance benefits, such as emergency room services, diabetic health, cancer screenings or reproductive health services, just to name a few of the ever-growing list of state requirements. For this, and many other reasons, the proposal died on the vine.
We don’t know yet what Congress’ efforts to help small businesses provide health benefits will look like. But I bring up the AHP example to point out that which benefits – those required by state laws, the same (or similar) ones as covered by Medicare, newly created mandates or others? – might be provided is yet another issue that will need to be addressed.
The most popular health care reform measure, favored by 78% of the small employers to make health insurance benefits more affordable for them, is a combination of government-sponsored purchasing pools to obtain premiums at bulk rates and tax credits. More than two-thirds (68%) would support establishing a market-based approach that gives employees a tax credit to buy health insurance on their own, encouraging the use of health savings accounts, and enacting tort reform for medical liability. More than half of small employers (53% each) would support the following:
1) requiring employers that have at least ten employees and that do not provide health insurance to their employees to pay 4% of their payroll to cover the uninsured; and
2) requiring that employees be offered at least one public plan and one private plan, and also requiring that all insurance companies provide coverage without regard to age or preexisting conditions.
AHPs, anyone? Efforts to help small businesses with the challenges of providing health benefits have not had much success. To dredge up just one example from the past, remember the proposal to create federally licensed association health plans (AHPs)? Such AHPs would have been exempt from state laws and regulations (current Wolters Kluwer benefits customers, click here for an interview about the risks associated with such plans, according to one expert). That means AHPs would not have had to provide state-mandated health insurance benefits, such as emergency room services, diabetic health, cancer screenings or reproductive health services, just to name a few of the ever-growing list of state requirements. For this, and many other reasons, the proposal died on the vine.
We don’t know yet what Congress’ efforts to help small businesses provide health benefits will look like. But I bring up the AHP example to point out that which benefits – those required by state laws, the same (or similar) ones as covered by Medicare, newly created mandates or others? – might be provided is yet another issue that will need to be addressed.
Tuesday, April 28, 2009
Why Continue Employer-Based Health Insurance?
In 2008, larger employers paid an average premium of $392 per month for individual coverage and $1,057 per month for family coverage (Kaiser Family Foundation), the average annual premium for small group health insurance was $10,956 ($913 per month) for family coverage and $4,155 ($346 per month) for individual (America’s Health Insurance Plans). According to the Mercer National Survey of Employer-Sponsored Health Plans for 2008, the total cost of health benefits averaged $8,482 per year, for the employer and employee portion, not including employee out-of-pocket expenses.
Since 1994, when the last major effort to reform health care ended, the number of uninsured nonelderly Americans has risen significantly. Fewer working people have health insurance, and the average costs that workers pay for health insurance has multiplied eight times faster than workers' average income, according to a recent report from the Robert Wood Johnson Foundation. Furthermore, the percentage of nonelderly adults with private health insurance has dropped by six percentage points to 67%.
More working people are uninsured. The number of working uninsured adults has risen by more than 6 million, to 26.9 million. Currently, nearly one in five working adults (18%) is uninsured. Workers' insurance costs have risen much faster than their incomes. Average costs for an individual insurance policy rose 61% in ten years --from $2,560 in 1996 to $4,118 in 2006. The amount that employees pay for an individual policy has increased 79%, with wages in the U.S increasing only 10% over the period.
And a number of signs point to a continuing decline in health insurance coverage, the U.S. Institute of Medicine (IOM, reported in America's Uninsured Crisis: Consequences for Health and Health Care. The IOM noted that more people will lose their health insurance as the economy weakens, health care becomes more expensive, and fewer employers offer coverage. In 2007, 45.7 million Americans, or 15% of the population, had no public or private health care coverage. In the report, the IOM points to a major gap between the health care needs of people without health insurance and access to effective health care services, a gap that results in needless illness, suffering, and even death.
The majority of people still are covered under employer-sponsored health care plans, with an estimated 160 million Americans getting their health insurance this way. However, rising health care costs make it difficult for employers to offer health insurance to their workers. In addition, when workers are offered insurance, many of them cannot afford the premiums, the IOM report said. According to the report, between 1999 and 2008, the average annual employee premium contribution for family coverage more than doubled from $1,543 to $3,354.
Although the majority of large employers that currently sponsor health care benefits for their employees are confident that they will continue to offer the benefits ten years from now, far fewer than last year expressed such confidence, a recent study from Watson Wyatt and the National Business Group on Health (NBGH) reported. As of January 2009, 62% of 489 large employers were very confident that they will continue to offer health care benefits ten years from now, down from 73% last year.
Not surprisingly, Americans increasingly are worried about losing their health insurance (34% of those with coverage, including one-third of households with annual earnings between $30,000 and $75,000). Nearly two-fifths (38%) of the respondents are very worried about affording care that they need; that number rises to 56% among respondents who believe a household member will lose his or her job this year, the Kaiser Family Foundation first health care tracking poll of 2009 found.
Yet, it appears that the majority of employers favor keeping the employer-based provision of health insurance. The American Benefits Council own proposal for health care reform is focused on maintaining and reinforcing the employer-based and private individual health insurance systems, including conserving ERISA. Build on what works, the group emphasized--strengthening the current voluntary employer-based health insurance coverage is the best foundation for health care reform [How does this stand to reason?]. Improve tax policy to make health care coverage more affordable and accessible and continue to allow employers to deduct health care benefits costs, continue to allow employees to obtain the benefits tax-free, and extend the favorable tax treatment to individuals who buy individual health insurance.
In a recent letter to President Barack Obama, the ERISA Industry Committee (ERIC) and 184 other organizations, including the American Benefits Council, asserted that any successful health care reform effort must build on the strengths of America's voluntary employer-based health care system while ensuring that there is a greater variety of affordable private health care plan options in the marketplace for all. The ERIC letter signatories include auto-makers Chrysler, Ford, and General Motors, all in severe financial difficulties, to put it mildly, which already has resulted in thousands of employees losing their jobs and many more to follow. Health care costs for employees and retirees has contributed to the auto-makers’ unsustainable business.
The Watson Wyatt/NBGH survey cited earlier also found that employers do not support most of the health care reform strategies proposed thus far. The reform strategy with the most employer support is a so-called consumer-directed (account-based high-deductible health plan) model with greater emphasis on individual responsibility (68% support this to some extent). Not surprisingly, policy changes that remove tax deductibility of employer premium contributions is at the bottom of employers' favorable rating (only 12% support this). Nearly two-thirds of respondents (64%) also were opposed to individual and pay-or-play mandates, but 55% believed that the present system could not remain.
Considering all the statistics, including the costs to U.S. business in terms of direct medical and insurance and of their inability to compete in the global market, and the current state of the economy, employers’ insistence on maintaining the current employer-based health insurance system is incomprehensible. I’m looking for a well-reasoned, well-supported explanation for employers’ stance. I’m waiting…
Since 1994, when the last major effort to reform health care ended, the number of uninsured nonelderly Americans has risen significantly. Fewer working people have health insurance, and the average costs that workers pay for health insurance has multiplied eight times faster than workers' average income, according to a recent report from the Robert Wood Johnson Foundation. Furthermore, the percentage of nonelderly adults with private health insurance has dropped by six percentage points to 67%.
More working people are uninsured. The number of working uninsured adults has risen by more than 6 million, to 26.9 million. Currently, nearly one in five working adults (18%) is uninsured. Workers' insurance costs have risen much faster than their incomes. Average costs for an individual insurance policy rose 61% in ten years --from $2,560 in 1996 to $4,118 in 2006. The amount that employees pay for an individual policy has increased 79%, with wages in the U.S increasing only 10% over the period.
And a number of signs point to a continuing decline in health insurance coverage, the U.S. Institute of Medicine (IOM, reported in America's Uninsured Crisis: Consequences for Health and Health Care. The IOM noted that more people will lose their health insurance as the economy weakens, health care becomes more expensive, and fewer employers offer coverage. In 2007, 45.7 million Americans, or 15% of the population, had no public or private health care coverage. In the report, the IOM points to a major gap between the health care needs of people without health insurance and access to effective health care services, a gap that results in needless illness, suffering, and even death.
The majority of people still are covered under employer-sponsored health care plans, with an estimated 160 million Americans getting their health insurance this way. However, rising health care costs make it difficult for employers to offer health insurance to their workers. In addition, when workers are offered insurance, many of them cannot afford the premiums, the IOM report said. According to the report, between 1999 and 2008, the average annual employee premium contribution for family coverage more than doubled from $1,543 to $3,354.
Although the majority of large employers that currently sponsor health care benefits for their employees are confident that they will continue to offer the benefits ten years from now, far fewer than last year expressed such confidence, a recent study from Watson Wyatt and the National Business Group on Health (NBGH) reported. As of January 2009, 62% of 489 large employers were very confident that they will continue to offer health care benefits ten years from now, down from 73% last year.
Not surprisingly, Americans increasingly are worried about losing their health insurance (34% of those with coverage, including one-third of households with annual earnings between $30,000 and $75,000). Nearly two-fifths (38%) of the respondents are very worried about affording care that they need; that number rises to 56% among respondents who believe a household member will lose his or her job this year, the Kaiser Family Foundation first health care tracking poll of 2009 found.
Yet, it appears that the majority of employers favor keeping the employer-based provision of health insurance. The American Benefits Council own proposal for health care reform is focused on maintaining and reinforcing the employer-based and private individual health insurance systems, including conserving ERISA. Build on what works, the group emphasized--strengthening the current voluntary employer-based health insurance coverage is the best foundation for health care reform [How does this stand to reason?]. Improve tax policy to make health care coverage more affordable and accessible and continue to allow employers to deduct health care benefits costs, continue to allow employees to obtain the benefits tax-free, and extend the favorable tax treatment to individuals who buy individual health insurance.
In a recent letter to President Barack Obama, the ERISA Industry Committee (ERIC) and 184 other organizations, including the American Benefits Council, asserted that any successful health care reform effort must build on the strengths of America's voluntary employer-based health care system while ensuring that there is a greater variety of affordable private health care plan options in the marketplace for all. The ERIC letter signatories include auto-makers Chrysler, Ford, and General Motors, all in severe financial difficulties, to put it mildly, which already has resulted in thousands of employees losing their jobs and many more to follow. Health care costs for employees and retirees has contributed to the auto-makers’ unsustainable business.
The Watson Wyatt/NBGH survey cited earlier also found that employers do not support most of the health care reform strategies proposed thus far. The reform strategy with the most employer support is a so-called consumer-directed (account-based high-deductible health plan) model with greater emphasis on individual responsibility (68% support this to some extent). Not surprisingly, policy changes that remove tax deductibility of employer premium contributions is at the bottom of employers' favorable rating (only 12% support this). Nearly two-thirds of respondents (64%) also were opposed to individual and pay-or-play mandates, but 55% believed that the present system could not remain.
Considering all the statistics, including the costs to U.S. business in terms of direct medical and insurance and of their inability to compete in the global market, and the current state of the economy, employers’ insistence on maintaining the current employer-based health insurance system is incomprehensible. I’m looking for a well-reasoned, well-supported explanation for employers’ stance. I’m waiting…
Monday, April 27, 2009
Actuarial equivalence: “And by that you mean…?”
Even for those interested in the details of health care reform, attempting to evaluate the statistical comparisons of various types of health care financing arrangements made by policymakers and other stakeholders can bring on feelings of anxiety to those for whom the college statistics course is a memory best forgotten.
Nevertheless, those interested in health care reform need to be comfortable with evaluating comparisons based on numbers. Such comparisons will start to come fast and furious now that the debate is heating up in Congress. For example: are Medicare’s administrative expenses really lower than those in the private insurance market, and what impact does that have on the debate over a new public plan? What’s the financial impact on healthy individuals if they are required under new legislation to purchase health insurance?
Here’s where your federal government can help. This report, issued in April by the Congressional Research Service offers a good start, because it simply describes key concepts often used when valuing health insurance benefits. For example, according to the report, two plans’ benefit packages—that is, the benefits covered and the cost-sharing required for those benefits--are “actuarially equivalent” if the percentage of medical expenses paid by the plan for a given population would be more or less the same.
The report then goes on to explore the nuances of the notion of “equivalence” among health plans. What’s the impact of administrative expenses? Will an individual’s experience expenses track those of the insured group as a whole?
It’s good stuff. Check it out.
Nevertheless, those interested in health care reform need to be comfortable with evaluating comparisons based on numbers. Such comparisons will start to come fast and furious now that the debate is heating up in Congress. For example: are Medicare’s administrative expenses really lower than those in the private insurance market, and what impact does that have on the debate over a new public plan? What’s the financial impact on healthy individuals if they are required under new legislation to purchase health insurance?
Here’s where your federal government can help. This report, issued in April by the Congressional Research Service offers a good start, because it simply describes key concepts often used when valuing health insurance benefits. For example, according to the report, two plans’ benefit packages—that is, the benefits covered and the cost-sharing required for those benefits--are “actuarially equivalent” if the percentage of medical expenses paid by the plan for a given population would be more or less the same.
The report then goes on to explore the nuances of the notion of “equivalence” among health plans. What’s the impact of administrative expenses? Will an individual’s experience expenses track those of the insured group as a whole?
It’s good stuff. Check it out.
Friday, April 24, 2009
Health Reform’s Focus: Three Committees, A Subcommittee, And A Process
Sorting through the hundreds of news sources, dozens of blogs, and a seemingly endless procession of editorials and other opinion pieces on health care reform may seem daunting, if not impossible.
If you don’t have a lot of time but remain interested in health reform, here is one shortcut to knowing how health reform is proceeding: just pay attention to three Congressional Committees, one subcommittee, and a Congressional process known as reconciliation. You’ll save a lot of time and be able to concentrate on the actual process of health reform.
Reconciliation first: Keep track of the budget proposal soon to be wrangled over by a House/ Senate conference committee. The House on April 22 voted 227-196 against a Republican proposal that would have instructed its conferees to reject the use of the budget reconciliation process to pass health care overhaul legislation. The House conferees, who will meet with Senate conferees to resolve their budget resolutions into a final version, are Reps. John Spratt (Dem., S.C.), Rosa DeLauro (Dem., Conn.), Allen Boyd ((Dem., Fla), Paul Ryan (Rep., Wis.), Jeb Hensarling (Rep., Texas). The Senate has appointed Sens. Kent Conrad (Dem., N.D.), Patty Murray (Dem., Wash.); and Judd Gregg.(Rep., N.H.).
The fate of reconciliation will determine whether a simple majority of 51 Senators will be needed to pass health reform (rather than 60 votes need to overcome a filibuster). Track the process by checking the status of two budget resolutions: S.Con.Res.13 and H.Con.Res.85.
Now the Committees: Three Congressional committees and one subcommittee are busy writing health reform legislation. They, and their chairmen, are the key sources for what proposals actually will move through the legislative process:
- House Ways and Means Committee (Rep Charles B. Rangel, chairman)
- Health, Employment, Labor, and Pensions Subcommittee of the House Education and Labor Committee (Rep. George Miller, chairman)
- Senate Finance Committee, Sen. Max Baucus, chairman
- Senate Committee on Health, Education, Labor, and Pensions, Sen. Edward Kennedy, chairman
Each of these groups is busy conducting hearings on health reform. Their topics and speakers can provide many clues to where we are headed:
- Ways And Means: April 22, Health Reform in the 21st Century: Insurance Market Reforms
- HELP Subcommittee: April 23, Ways to Reduce the Cost of Health Insurance for Employers, Employees and their Families
- Finance: April 21, Reforming America’s Health Care Delivery System
- Health, Education, Labor, and Pensions: March 24, Addressing Insurance Market Reform in National Health Reform; other hearings scheduled for next week are April 28, Subcommittee Hearing - Addressing Insurance Market Reform in National Health Reform; April 28, Learning from the States: Individual State Experiences with Health Care Reform Coverage Initiatives in the Context of National Reform, and April 30, Primary Health Care Access Reform: Community Health Centers and the National Health Service Corps.
So whenever health reform becomes overwhelming, just remember, until the House or the Senate passes a bill, it’s all about three committees, a subcommittee, and a process.
Thursday, April 23, 2009
Smell it while it lasts! Team spirit is in the air
As we wait with bated breath for legislative language on health care reform, stakeholders are displaying a cooperative attitude. The ERISA Industry Committee (ERIC) and 184 employers recently sent a letter to President Obama stating that “We are eager to work with you to find solutions for this urgent national priority.” At the same time, the health insurance industry has offered to ease its longstanding position on pre-existing conditions. Meanwhile, politicians are vowing to work together to tackle reform.
Continuing this spirit of cooperation is crucial to reaching the reform goal. Yet if we let history be our guide, there’s a good chance we’ll notice attitude adjustments when legislative text is revealed. The gloves tend to come off when it’s time to reconcile bills. Often, lawmakers dig in their heels on their positions.
Considering all the talk that health care reform is essential, wouldn’t it be nice if we could avoid business as usual? One option for doing so would be to revisit the negotiation techniques discussed years ago in the well-known book “Getting to Yes.” One of these techniques is to “focus on interests, not positions.” An interest is the “why” underlying the “what” of a position. Of course there are numerous interests involved in reforming health care — costs, coverage, quality, efficiency — just to name a few. In sorting out these interests during the negotiations, let’s hope those at the table don’t lose sight of “why” we’re all having this discussion in the first place: good health.
Continuing this spirit of cooperation is crucial to reaching the reform goal. Yet if we let history be our guide, there’s a good chance we’ll notice attitude adjustments when legislative text is revealed. The gloves tend to come off when it’s time to reconcile bills. Often, lawmakers dig in their heels on their positions.
Considering all the talk that health care reform is essential, wouldn’t it be nice if we could avoid business as usual? One option for doing so would be to revisit the negotiation techniques discussed years ago in the well-known book “Getting to Yes.” One of these techniques is to “focus on interests, not positions.” An interest is the “why” underlying the “what” of a position. Of course there are numerous interests involved in reforming health care — costs, coverage, quality, efficiency — just to name a few. In sorting out these interests during the negotiations, let’s hope those at the table don’t lose sight of “why” we’re all having this discussion in the first place: good health.
Wednesday, April 22, 2009
Lost in the shuffle: the cost of health reform inaction
Lost amidst all the hoopla over the costs associated with health care reform is one important point: the cost of not acting on health care reform. The “costs” of doing nothing are staggering and inaction is something America can’t afford. Tens of millions of Americans lacking health care coverage is just the tip of the iceberg.
Economic cost
The economic cost of not fixing America’s broken health care system is higher than the upfront costs of comprehensive health care reform. In 2006, for instance, our economy lost as much as $200 billion, experts say, due to poorer health and shorter lifespans of the uninsured. This is believed to be at least as much as the costs of making sure that all Americans have access to quality, affordable health care.
As health care costs continue to grow faster than American workers’ wages, health insurance will become less and less affordable and, without action, these financial burdens will only get worse. By some estimates, by 2016, American families will need to spend half of their income to buy health insurance.
Health care costs undermine the ability of American firms to compete with companies overseas. For instance, health care costs add $1,525 to the price of every General Motors vehicle. In 2007, GM spent $4.6 billion on health care, which was more than its cost for steel. As a result of these huge health care expenses, American businesses are losing their ability to compete globally. Health care at General Motors puts the company at a serious financial disadvantage against Toyota, which spends $1,400 less on health care per vehicle.
On average, the cost of an employer-based family insurance policy in 2008 was $12,680, which was nearly the annual earnings of a full-time minimum wage job.
An estimated 87 million people--about one in every three Americans under the age 65--were uninsured at some point in 2007 and 2008.
Outlook for 2009
This year is the time to act on health care reform. Various options should be carefully weighed and analyzed, of course, but something needs to be done. What do you think? Can we afford the costs of health reform inaction?
Economic cost
The economic cost of not fixing America’s broken health care system is higher than the upfront costs of comprehensive health care reform. In 2006, for instance, our economy lost as much as $200 billion, experts say, due to poorer health and shorter lifespans of the uninsured. This is believed to be at least as much as the costs of making sure that all Americans have access to quality, affordable health care.
As health care costs continue to grow faster than American workers’ wages, health insurance will become less and less affordable and, without action, these financial burdens will only get worse. By some estimates, by 2016, American families will need to spend half of their income to buy health insurance.
Health care costs undermine the ability of American firms to compete with companies overseas. For instance, health care costs add $1,525 to the price of every General Motors vehicle. In 2007, GM spent $4.6 billion on health care, which was more than its cost for steel. As a result of these huge health care expenses, American businesses are losing their ability to compete globally. Health care at General Motors puts the company at a serious financial disadvantage against Toyota, which spends $1,400 less on health care per vehicle.
On average, the cost of an employer-based family insurance policy in 2008 was $12,680, which was nearly the annual earnings of a full-time minimum wage job.
An estimated 87 million people--about one in every three Americans under the age 65--were uninsured at some point in 2007 and 2008.
Outlook for 2009
This year is the time to act on health care reform. Various options should be carefully weighed and analyzed, of course, but something needs to be done. What do you think? Can we afford the costs of health reform inaction?
Tuesday, April 21, 2009
What About A Public Health Plan Option Don’t You Like?
The role a public plan might play in health care reform appears to be a major concern for many people. On April 15, At a health care reform Newsmaker Interview sponsored by the Kaiser Family Foundation, Families USA, and the National Federation of Independent Business, at least five major news organizations asked Nancy-Ann DeParle, director of the White House Office of Health Reform, questions focused on a public plan.
How critical to President Obama is the inclusion of a new public plan option in a health.
insurance exchange? Would the Obama Administration consider a health insurance exchange that is administered by the federal government but that offers only private health insurance options? Would the President sign legislation that does not include a public plan? Could the insistence on including a public plan option be a deal breaker?
“We’re very hopeful that a consensus can be reached on a public plan that we feel can help us attain crucial goals of health reform—to control costs, make affordable coverage available so that everyone will be covered, and keep private health insurance plans on their toes and competitive,” Ms. DeParle said. She defined a “public plan” as one that is sponsored by the government which, unlike private insurance plans, has the advantage of much lower administrative costs and no need to make profits. The design of a public plan will affect its success. A public health plan model could look like state employee health insurance plans, which often are operated by private plans.
Some groups oppose including a public plan in health reform, even before there has been any discussion of how such a plan might be structured. There is a great deal of confusion about it, how it might work without “negatively” affecting the financial and power status quo. But “no one wants the status quo” for health care, Ms. DeParle said. She noted that congressional committee chairs and their staffs are more engaged in moving to reach reform than in previous years As Ms. DeParle suggested, “The devil is in the details,” and there are many to work out before we start saying we reject it outright. A previous blog post reviewed some design factors that could make a public plan work for everyone, given a chance.
How critical to President Obama is the inclusion of a new public plan option in a health.
insurance exchange? Would the Obama Administration consider a health insurance exchange that is administered by the federal government but that offers only private health insurance options? Would the President sign legislation that does not include a public plan? Could the insistence on including a public plan option be a deal breaker?
“We’re very hopeful that a consensus can be reached on a public plan that we feel can help us attain crucial goals of health reform—to control costs, make affordable coverage available so that everyone will be covered, and keep private health insurance plans on their toes and competitive,” Ms. DeParle said. She defined a “public plan” as one that is sponsored by the government which, unlike private insurance plans, has the advantage of much lower administrative costs and no need to make profits. The design of a public plan will affect its success. A public health plan model could look like state employee health insurance plans, which often are operated by private plans.
Some groups oppose including a public plan in health reform, even before there has been any discussion of how such a plan might be structured. There is a great deal of confusion about it, how it might work without “negatively” affecting the financial and power status quo. But “no one wants the status quo” for health care, Ms. DeParle said. She noted that congressional committee chairs and their staffs are more engaged in moving to reach reform than in previous years As Ms. DeParle suggested, “The devil is in the details,” and there are many to work out before we start saying we reject it outright. A previous blog post reviewed some design factors that could make a public plan work for everyone, given a chance.
Monday, April 20, 2009
With or without reform: focus on employee wellness
As Congress returns from recess this week, legislators will begin to make decisions about the ultimate shape of health care legislation, including how to pay for reform and how to prioritize the timing of the legislative battle. We continue to wait (and to watch for) detailed legislation.
In the meantime, however, employers have not waited for comprehensive health care reform to make decisions about "wellness" health benefit programs, and whether they offer the most value for their employee populations. Even in a down economy, experts suggest employers think carefully before eliminating benefits designed to support their employees’ well-being.
"When companies struggle economically they often pare down the benefits offered to employees like wellness services, day care, flexible spending accounts and paid time off," said Dr. Marilyn Howarth, Medical Director for the Penn Center for Executive Health, in an interview with CCH, a Wolters Kluwer Company. "In addition, downsizing increases the work for each individual employee. The added work load leads to more stress and less time for employees to focus on good nutrition, exercise and relaxation. The combination of added work and reduction in benefits compete with good health habits."
It is understandable that struggling companies might decrease wellness programs during times of economic decline. After all, these programs could be classified as "fringe" or "extra" benefits. It's not like you'd be taking away employee health care, right? Wrong, says Howarth. "Keeping the workforce healthy and productive is essential to keeping each company, and the economy, strong," she said. "And that means maintaining your employee health and wellness programs."
"The idea that spending money on employee health is an 'extra cost' is not supported by the literature," Howarth explained. "There is good evidence that well-designed, integrated and well-supported health promotion programs provide a substantial return on investment. A 2008 report by Naydeck et al [here is the abstract from the Journal of Occupational and Environmental Medicine] showed a $1.65 ROI. Investing money in the right health promotion activities actually saves money in the long run."
In the meantime, however, employers have not waited for comprehensive health care reform to make decisions about "wellness" health benefit programs, and whether they offer the most value for their employee populations. Even in a down economy, experts suggest employers think carefully before eliminating benefits designed to support their employees’ well-being.
"When companies struggle economically they often pare down the benefits offered to employees like wellness services, day care, flexible spending accounts and paid time off," said Dr. Marilyn Howarth, Medical Director for the Penn Center for Executive Health, in an interview with CCH, a Wolters Kluwer Company. "In addition, downsizing increases the work for each individual employee. The added work load leads to more stress and less time for employees to focus on good nutrition, exercise and relaxation. The combination of added work and reduction in benefits compete with good health habits."
It is understandable that struggling companies might decrease wellness programs during times of economic decline. After all, these programs could be classified as "fringe" or "extra" benefits. It's not like you'd be taking away employee health care, right? Wrong, says Howarth. "Keeping the workforce healthy and productive is essential to keeping each company, and the economy, strong," she said. "And that means maintaining your employee health and wellness programs."
"The idea that spending money on employee health is an 'extra cost' is not supported by the literature," Howarth explained. "There is good evidence that well-designed, integrated and well-supported health promotion programs provide a substantial return on investment. A 2008 report by Naydeck et al [here is the abstract from the Journal of Occupational and Environmental Medicine] showed a $1.65 ROI. Investing money in the right health promotion activities actually saves money in the long run."
Friday, April 17, 2009
Universal Health Care Now A Given?
“The time for universal health insurance coverage has come. Everybody seems to know that -- except for the Republicans, all too many of whom cling to traditional denunciations of universal coverage as socialism….
“There's a massive constituency behind [universal health care]. Buffeted by the recession and the threat of losing their employer-provided health insurance, the American people want universal coverage. Much of the U.S. business community wants it too.”
Yet another statement from a liberal ideologue on health care reform?
Is this a comment from a more left-leaning Congressman trying to badger conservatives into the health reform camp?
Not exactly. The quotes are from an April 13 post in The Atlantic online by Regina Herzlinger, professor at Harvard Business School, an icon in conservative health policy circles who may rightly be called the godmother of consumer-driven health care.
So now what?
If in fact a consensus has been reached on whether to work for universal coverage (the consensus is yes), then the battle lines will be drawn over how, and at least right now the focus of the debate is over the degree of government involvement, and specifically whether and how a public (government-sponsored) health plan might work (see earlier Health Reform Talk posts here and here).
Ms. Herzlinger assumes that a public plan would transform the government into “a monopolistic buyer of health care.” She suggests that “the Republicans could instead offer a consumer-controlled universal coverage system, like that in Switzerland, in which the people, not the government, control how much they spend on health.”
Key elements of the Swiss model include:
- Insurance coverage is mandatory – compliance is enforced by heavy fines and forced enrolment.
- This ‘compulsory insurance’ provides a safety net for the poor and protects people from health-related financial risks.
- Health insurance is supplied privately - Insurers must offer a basic coverage model that is compulsory for all residents, are not allowed to make a profit on compulsory insurance and cannot refuse any applicant.
- Insurers cross-subsidies the compulsory plans with ‘complementary insurance’ – offered as a top-up to the compulsory coverage for things like dental care and private hospital rooms — for which premiums can be risk-adjusted for age, gender and history.
- Insurers compete on deductibles, complementary plans and managed care schemes.
Could this approach open up a dialogue about the proper role of government in health care?
Or possibly we could use bipartisan legislation already proposed by Sens. Ron Wyden (Ore.) and Robert Bennett (Utah), which bears remarkable similarities to the Swiss system
Whether a compromise can be reached on the government’s role and the makeup of a public plan (today’s most contentious health reform issue) was suggested by recent comments by Nancy-Ann DeParle, director of the White House Office of Health Reform, at a Kaiser Family Foundation Webcast.
In response to questions about whether a public plan was a necessary component to President Barack Obama’s health reform principles and whether acceptable model might be a public program only offering private plans, Ms. DeParle said that in discussions she has had “that idea has not come up yet…but the president said he is open to a model that lowers costs and keeps the private sector honest and competitive.
Will those who want a public plan be willing to examine models such as the Wyden/Bennett proposal? Will those who oppose a public plan also be willing to examine such a model?
Staffers in both the House and the Senate are working hard to devise legislation that matches the Obama principles. When that legislation appears later this spring or summer, look carefully for the language that specifies and defines a “public plan.” This language will be key to the success of health care reform.
Thursday, April 16, 2009
ERISA: Rock of Gibraltar or rock in the road to reform?
The efforts of states, and even some cities, to reform health care coverage in their regions have seen mixed results. One of the reasons for such results is the operation of a federal law, the Employee Retirement Income Security Act (ERISA). This law is the cornerstone of employee benefits. One of ERISA’s purposes is to ensure uniform nationwide administration of employer-sponsored health insurance plans. This prevents multi-state employers from potentially having to meet 50 different sets of health plan laws. To this end, ERISA preempts or supersedes state laws that “relate to” employee benefit plans.
Figuring out the meaning of “relate to” has been a long and winding road. Courts don’t necessarily agree on the meaning, so their seemingly conflicting rulings on whether ERISA preempts a certain state law have produced mixed results. For example, the Fourth Circuit Court of Appeals struck down the Maryland Fair Share Health Care Fund Act, while the Ninth Circuit Court of Appeals upheld the San Francisco Health Care Security Ordinance (although this latter case appears to be on its way to the Supreme Court). The Massachusetts Health Care Reform Act has not been challenged yet and has been in effect for a few years.
As we ponder the roadblocks to health care reform, it’s hard to see around the one called ERISA. Are state reforms a viable option? What are some possible solutions to this problem? This legal issue, among others, is addressed in the Legal Solutions in Health Reform project. The study on the ERISA preemption issue examines the law’s role in health reform, specifically “what opportunities exist to facilitate health care initiatives given the constraints of ERISA preemption.” The study also suggests some ways the federal government can act to solve the preemption problem. Because, if the federal government’s efforts to reform health care don’t travel far this year, perhaps it can at least clear the road for states to address the issue on their own in the future.
Figuring out the meaning of “relate to” has been a long and winding road. Courts don’t necessarily agree on the meaning, so their seemingly conflicting rulings on whether ERISA preempts a certain state law have produced mixed results. For example, the Fourth Circuit Court of Appeals struck down the Maryland Fair Share Health Care Fund Act, while the Ninth Circuit Court of Appeals upheld the San Francisco Health Care Security Ordinance (although this latter case appears to be on its way to the Supreme Court). The Massachusetts Health Care Reform Act has not been challenged yet and has been in effect for a few years.
As we ponder the roadblocks to health care reform, it’s hard to see around the one called ERISA. Are state reforms a viable option? What are some possible solutions to this problem? This legal issue, among others, is addressed in the Legal Solutions in Health Reform project. The study on the ERISA preemption issue examines the law’s role in health reform, specifically “what opportunities exist to facilitate health care initiatives given the constraints of ERISA preemption.” The study also suggests some ways the federal government can act to solve the preemption problem. Because, if the federal government’s efforts to reform health care don’t travel far this year, perhaps it can at least clear the road for states to address the issue on their own in the future.
Wednesday, April 15, 2009
Is the media providing enough coverage on health care reform?
It might seem that the media spends more time examining what type of dog the Obama family should get or who gave the best performance on American Idol last night (for the record, I’m a fan of Adam and Allison) than it spends addressing health care matters. However, that’s not necessarily the case, at least according to a recent survey by the Kaiser Family Foundation.
Coverage of health-related issues was the eighth most “popular” topic, accounting for 3.6 percent of national news coverage, Kaiser says. That’s more than three times the amount of media coverage for transportation or education, according to Kaiser, but less than coverage about crime, disasters, or foreign affairs.
A few caveats: The Kaiser survey was done before the current health care reform debate really got going so this number could well be higher now. (One can hope, anyway.) The survey analyzed media coverage of health issues from January 2007 through June 2008 though it did not include local television news, and for newspapers, included only front-page news stories.
Clearly then, the media talks quite a bit about health-related topics but much of that focuses on particular diseases, such as cancer or diabetes, or specific health-related stories. For instance, the recent item about a doctor-in-training who has tuberculosis would count as a health story under the survey guidelines. Even so, Kaiser found, more than one-fourth--27.4 percent--of health coverage focused on “health policy or the well-being of the U.S. health care system itself.” Not surprisingly, newspapers and PBS spent more time covering health policy/health care system issues than say, online media outlets or network TV.
“Everybody talks about the weather, but nobody does anything about it,” Mark Twain once said. However, when it comes to the media, their analysis of the health care reform debate can influence public perception and ultimately, what might or might not get done. Here’s hoping that the media provides thoughtful coverage of health care reform and that important issues, such as coverage for emerging medical trends like the use of cancer pills, get the full attention of the media.
What do you think? Is the media devoting enough attention to the health care reform debate? Are they doing a good job?
Coverage of health-related issues was the eighth most “popular” topic, accounting for 3.6 percent of national news coverage, Kaiser says. That’s more than three times the amount of media coverage for transportation or education, according to Kaiser, but less than coverage about crime, disasters, or foreign affairs.
A few caveats: The Kaiser survey was done before the current health care reform debate really got going so this number could well be higher now. (One can hope, anyway.) The survey analyzed media coverage of health issues from January 2007 through June 2008 though it did not include local television news, and for newspapers, included only front-page news stories.
Clearly then, the media talks quite a bit about health-related topics but much of that focuses on particular diseases, such as cancer or diabetes, or specific health-related stories. For instance, the recent item about a doctor-in-training who has tuberculosis would count as a health story under the survey guidelines. Even so, Kaiser found, more than one-fourth--27.4 percent--of health coverage focused on “health policy or the well-being of the U.S. health care system itself.” Not surprisingly, newspapers and PBS spent more time covering health policy/health care system issues than say, online media outlets or network TV.
“Everybody talks about the weather, but nobody does anything about it,” Mark Twain once said. However, when it comes to the media, their analysis of the health care reform debate can influence public perception and ultimately, what might or might not get done. Here’s hoping that the media provides thoughtful coverage of health care reform and that important issues, such as coverage for emerging medical trends like the use of cancer pills, get the full attention of the media.
What do you think? Is the media devoting enough attention to the health care reform debate? Are they doing a good job?
Tuesday, April 14, 2009
We Could Please All Stakeholders If...
Two recently released reports examine how a public health insurance option might work in a health care reform scenario and its potential effect on the health insurance market, on medical providers, an on coverage. Many health care reform proposals include a public health insurance plan option to compete with private health insurance options, usually in the context of a health insurance exchange. Yesterday’s blog briefly reviewed one of the reports, from the Lewin Group, a research firm owned by Ingenix, a UnitedHealth Group subsidiary. The Lewin Group report only analyzes potential outcomes under several coverage designs.
The second report, by University of California Berkeley political science professor Jacob S. Hacker, looks at how a public health insurance plan option might be made to work for all stakeholders. The report, Healthy Competition: How to Structure Public Health Insurance Plan Choice to Ensure Risk-Sharing, Cost Control, and Quality Improvement, was prepared with the joint support of Berkeley Center on Health, Economic & Family Security, UC Berkeley School of Law, and the Institute for America’s Future.
As Mr. Hacker envisions it, a public health plan would build upon Medicare’s administrative infrastructure and basic coverage framework with an independent public health care plan with a risk pool separate from Medicare’s risk pool, and with a different payment and benefits structure. The public plan would be one of several options offered, including private health insurance plans, through a national health insurance exchange.
To create a level playing field for public-private plan competition, all plans offered through the national health insurance exchange must be subject to the same rules; be risk adjusted to protect plans from being disadvantaged if its insured population is less healthy; and priced according to region to allow plans within regions to compete on the same terms. All of the plans offered through the exchange would offer community-rated premiums, guaranteed issue, standard and defined benefits, and transparency. Furthermore, “a Medicare-like public plan should include safeguards designed to ensure that [medical] providers are fairly represented and that bargaining for lower prices does not negatively affect patients’ access to care or shift costs onto private insurers,” Mr. Hacker explained.
There you have it. It just may be possible to implement a national health insurance exchange that includes a public plan option along with private ones and protects all stakeholders. The question is, “Will all stakeholders buy it?”
The second report, by University of California Berkeley political science professor Jacob S. Hacker, looks at how a public health insurance plan option might be made to work for all stakeholders. The report, Healthy Competition: How to Structure Public Health Insurance Plan Choice to Ensure Risk-Sharing, Cost Control, and Quality Improvement, was prepared with the joint support of Berkeley Center on Health, Economic & Family Security, UC Berkeley School of Law, and the Institute for America’s Future.
As Mr. Hacker envisions it, a public health plan would build upon Medicare’s administrative infrastructure and basic coverage framework with an independent public health care plan with a risk pool separate from Medicare’s risk pool, and with a different payment and benefits structure. The public plan would be one of several options offered, including private health insurance plans, through a national health insurance exchange.
To create a level playing field for public-private plan competition, all plans offered through the national health insurance exchange must be subject to the same rules; be risk adjusted to protect plans from being disadvantaged if its insured population is less healthy; and priced according to region to allow plans within regions to compete on the same terms. All of the plans offered through the exchange would offer community-rated premiums, guaranteed issue, standard and defined benefits, and transparency. Furthermore, “a Medicare-like public plan should include safeguards designed to ensure that [medical] providers are fairly represented and that bargaining for lower prices does not negatively affect patients’ access to care or shift costs onto private insurers,” Mr. Hacker explained.
There you have it. It just may be possible to implement a national health insurance exchange that includes a public plan option along with private ones and protects all stakeholders. The question is, “Will all stakeholders buy it?”
Monday, April 13, 2009
Public health plan: “Nobody knows anything”
“Nobody knows anything”: such is the wry comment commonly attributed to a screenwriter regarding Hollywood’s ability to predict a movie’s success prior to its release.
The same might be said of the various stakeholders awaiting legislative language from the Democratic majority in Congress regarding the shape the President’s health care reform proposal will take.
Though it’s been reported that Democratic leaders in Congress have reached consensus on key elements of a plan--e.g., some form of an individual mandate, an employer mandate and a public plan that would augment the private insurance market--nobody knows yet what the crucial details of such a plan will look like.
The Lewin Group, a health policy research and management firm, concedes as much in the introduction to its study “The Cost and Coverage Impacts of a Public Plan: Alternative Design Options”: “The public plan is difficult to evaluate because no one has specified in legislation how it would work.”
So, in order to evaluate the impact of a public plan, Lewin first makes several assumptions as to what the health care environment would look like under an Obama plan. These assumptions include: a mandate for children to have coverage (but not all adults); a mandate for large employers to offer insurance or pay a payroll tax; tax credits for small employers; and expansion of Medicare eligibility.
Using these assumptions to model the impact of a public health plan, the Lewin study (which was cited approvingly in an editorial in today's Wall Street Journal) reaches certain conclusions, including the following:
1. If Medicare payment levels are used in the public plan, premiums would be up to 30 percent less than premiums for comparable private coverage.
2. If only small employers and individuals may participate in a public plan, then nearly 43 million people would enroll in the plan. If a public plan is opened to all employers, then Lewin estimates that about 131 million people would enroll. This would represent a two-thirds reduction in the number of people with private coverage.
3. Assuming Medicare reimbursement rates and broad public plan eligibility, net income of doctors and hospitals would decline under the public plan proposal (even after taking into account new revenue from the previously uninsured). If eligibility is restricted to individuals and small employers, Lewin projects that hospital net revenue would increase, but doctor income would still decline (though not by as much).
Lewin’s study offers information on the implications of one version of a possible public health plan. Does it offer an accurate picture what a public health plan enacted into law as part of a broader health care reform package might look like?
Until we see a proposed bill, nobody knows anything.
The same might be said of the various stakeholders awaiting legislative language from the Democratic majority in Congress regarding the shape the President’s health care reform proposal will take.
Though it’s been reported that Democratic leaders in Congress have reached consensus on key elements of a plan--e.g., some form of an individual mandate, an employer mandate and a public plan that would augment the private insurance market--nobody knows yet what the crucial details of such a plan will look like.
The Lewin Group, a health policy research and management firm, concedes as much in the introduction to its study “The Cost and Coverage Impacts of a Public Plan: Alternative Design Options”: “The public plan is difficult to evaluate because no one has specified in legislation how it would work.”
So, in order to evaluate the impact of a public plan, Lewin first makes several assumptions as to what the health care environment would look like under an Obama plan. These assumptions include: a mandate for children to have coverage (but not all adults); a mandate for large employers to offer insurance or pay a payroll tax; tax credits for small employers; and expansion of Medicare eligibility.
Using these assumptions to model the impact of a public health plan, the Lewin study (which was cited approvingly in an editorial in today's Wall Street Journal) reaches certain conclusions, including the following:
1. If Medicare payment levels are used in the public plan, premiums would be up to 30 percent less than premiums for comparable private coverage.
2. If only small employers and individuals may participate in a public plan, then nearly 43 million people would enroll in the plan. If a public plan is opened to all employers, then Lewin estimates that about 131 million people would enroll. This would represent a two-thirds reduction in the number of people with private coverage.
3. Assuming Medicare reimbursement rates and broad public plan eligibility, net income of doctors and hospitals would decline under the public plan proposal (even after taking into account new revenue from the previously uninsured). If eligibility is restricted to individuals and small employers, Lewin projects that hospital net revenue would increase, but doctor income would still decline (though not by as much).
Lewin’s study offers information on the implications of one version of a possible public health plan. Does it offer an accurate picture what a public health plan enacted into law as part of a broader health care reform package might look like?
Until we see a proposed bill, nobody knows anything.
Friday, April 10, 2009
What’s Up First: The Uninsured Or the Costs To Insure Them?
With baseball season underway, it's appropriate to consider the lineup for health care reform and what issue will be up first. Two candidates in contention for the leadoff spot are coverage and costs. As with almost every aspect of health care reform, there are clear differences of opinion.
The majority view seems to be that the cost of health care must be addressed and the method for paying for reform settled before any significant reform can take place.
For example, Jonathan Cohn, writing in the New Republic’s blog, thinks that by discussing issues of coverage and mandates, “We are also getting ahead of ourselves. Another, more important problem should be commanding our political attention--a problem that, if unresolved, could undermine health care reform all by itself.
“That problem is money.”
Mr. Cohn goes on to say that “It's terrific to see such passion behind the idea of a public insurance option….And it's important to defend the virtues of comparative effectiveness research, which--like a public plan--should help reduce the cost of care, particularly over the long run.
“But, as my grandmother would say, none of these things will mean bubkes if we don't come up with the money to pay for reform.”
Ramesh Ponnuru, a senior editor at National Review, in an April 8 New York Times OpEd, suggests, “The political case for universal coverage is based on the assumption that voters want it. But people’s preference for universal coverage is not as great as their desire to reduce health care costs, a Kaiser Family Foundation poll found in late 2007.”
There is an alternative approach. Also writing in the New Republic’s blog, Jonathan Gruber, after praising Massachusetts health reform for “nothing less than the most significant expansion in insurance coverage, in percentage terms, in the history of the United States,” goes on to note the following:
“The Massachusetts law explicitly did not take on the fundamental determinants of medical cost growth--and this is, in my mind, the genius of the approach. For decades, efforts to move towards universal coverage have always floundered on the shoals of cost control. For thirty years we have seen growing numbers of uninsured for one reason: because well-meaning reformers have tried to fit the square [peg] of cost control into the round hole that is political viability. And when they lose, they take the uninsured with them.”
What are your thoughts on health reform priorities?
The majority view seems to be that the cost of health care must be addressed and the method for paying for reform settled before any significant reform can take place.
For example, Jonathan Cohn, writing in the New Republic’s blog, thinks that by discussing issues of coverage and mandates, “We are also getting ahead of ourselves. Another, more important problem should be commanding our political attention--a problem that, if unresolved, could undermine health care reform all by itself.
“That problem is money.”
Mr. Cohn goes on to say that “It's terrific to see such passion behind the idea of a public insurance option….And it's important to defend the virtues of comparative effectiveness research, which--like a public plan--should help reduce the cost of care, particularly over the long run.
“But, as my grandmother would say, none of these things will mean bubkes if we don't come up with the money to pay for reform.”
Ramesh Ponnuru, a senior editor at National Review, in an April 8 New York Times OpEd, suggests, “The political case for universal coverage is based on the assumption that voters want it. But people’s preference for universal coverage is not as great as their desire to reduce health care costs, a Kaiser Family Foundation poll found in late 2007.”
There is an alternative approach. Also writing in the New Republic’s blog, Jonathan Gruber, after praising Massachusetts health reform for “nothing less than the most significant expansion in insurance coverage, in percentage terms, in the history of the United States,” goes on to note the following:
“The Massachusetts law explicitly did not take on the fundamental determinants of medical cost growth--and this is, in my mind, the genius of the approach. For decades, efforts to move towards universal coverage have always floundered on the shoals of cost control. For thirty years we have seen growing numbers of uninsured for one reason: because well-meaning reformers have tried to fit the square [peg] of cost control into the round hole that is political viability. And when they lose, they take the uninsured with them.”
What are your thoughts on health reform priorities?
Thursday, April 9, 2009
Pennies for push-ups: employers would get tax credit for wellness programs
In an effort to make wellness and prevention a part of the national discussion on health care reform, Senators Tom Harkin (D-Iowa) and John Cornyn (R-Tex) and Representatives Earl Blumenauer (D-Or) and Mary Bono Mack (R-Cal) have reintroduced legislation (S. 803/H. 1897) that would provide a tax credit to employers that offer comprehensive wellness programs.
Called the Healthy Workforce Act, the bill would amend the Internal Revenue Code to provide a tax credit for 50 percent of the cost of the wellness program, up to $200/employee for the first 200 employees and $100/employee for remaining employees. To receive the credit, the employer's wellness program is required to include components such as health risk assessments, health awareness and behavior change programs, meaningful incentives for program participation and an employee committee that tailors programs to meet workforce needs.
"Health reform will not be complete without prevention and wellness being a center piece for fixing this broken system, the lifesaving and cost-saving benefits have been proven in study after study," said Harkin. "With healthcare costs quickly increasing, it is no surprise that some companies report spending more than 50 percent of their profits to cover these expenses. Employer spending on health promotion and chronic disease prevention is a good investment. Studies have reported a proven rate of return on investment within 12 to 18 months, ranging from $2 to $10 for each dollar invested. It simply makes sense to partner with employers and leverage the place where Americans spend the majority of their waking hours – the workplace."
Paternalism gone wild? There seem to be good intentions behind offering wellness programs at work. But note that proposed legislation such as this perpetuates employer involvement in health care. Do we really want our employers telling us how many push-ups to do? Really, do we?
Well, maybe we don’t, but what’s the current alternative? If you’re lucky enough to have employer-sponsored health care (46 million Americans are uninsured), then the amount of your premium payments might depend on whether you participate in such wellness programs (in compliance with HIPAA, of course). If you don’t participate, your premiums could be higher than the premiums of employees who do. If you decide instead to obtain coverage on your own in the individual market (good luck with that!), then perhaps you’d be able to forgo push-ups altogether. At least your wallet will feel lighter, even if your body doesn’t.
Called the Healthy Workforce Act, the bill would amend the Internal Revenue Code to provide a tax credit for 50 percent of the cost of the wellness program, up to $200/employee for the first 200 employees and $100/employee for remaining employees. To receive the credit, the employer's wellness program is required to include components such as health risk assessments, health awareness and behavior change programs, meaningful incentives for program participation and an employee committee that tailors programs to meet workforce needs.
"Health reform will not be complete without prevention and wellness being a center piece for fixing this broken system, the lifesaving and cost-saving benefits have been proven in study after study," said Harkin. "With healthcare costs quickly increasing, it is no surprise that some companies report spending more than 50 percent of their profits to cover these expenses. Employer spending on health promotion and chronic disease prevention is a good investment. Studies have reported a proven rate of return on investment within 12 to 18 months, ranging from $2 to $10 for each dollar invested. It simply makes sense to partner with employers and leverage the place where Americans spend the majority of their waking hours – the workplace."
Paternalism gone wild? There seem to be good intentions behind offering wellness programs at work. But note that proposed legislation such as this perpetuates employer involvement in health care. Do we really want our employers telling us how many push-ups to do? Really, do we?
Well, maybe we don’t, but what’s the current alternative? If you’re lucky enough to have employer-sponsored health care (46 million Americans are uninsured), then the amount of your premium payments might depend on whether you participate in such wellness programs (in compliance with HIPAA, of course). If you don’t participate, your premiums could be higher than the premiums of employees who do. If you decide instead to obtain coverage on your own in the individual market (good luck with that!), then perhaps you’d be able to forgo push-ups altogether. At least your wallet will feel lighter, even if your body doesn’t.
Wednesday, April 8, 2009
Dems considering use of controversial legislative maneuver to ease health care reform through Congress
Senate Democrats are taking a close look at using a controversial legislative tactic that would make it much easier to push health care reform through Congress. Depending on your political views, “reconciliation” is either a useful tool to protect the measure from Republican filibuster or a heavy-handed partisan tactic.
Language being considered by the House would let lawmakers combine all health care reform matters, including coverage and the tax and spending cuts needed to pay for it, into one bill. In the Senate, if reconciliation is used, only a simple majority, 51 votes, would be needed for passage, rather than the 60 votes needed to overcome a filibuster.
Many people probably have never heard of reconciliation but it’s a legislative tool that has been around for more than 25 years. It is a fast-track process that was originally intended, in the early 1980s, to make it easier to move deficit-reduction measures through Congress. Despite the original intent, reconciliation has been used to advance presidential agendas, such as Bill Clinton’s budget plan or George W. Bush’s tax cuts, when the president’s party has had a majority in Congress.
Experts in the reconciliation process say it helps parties get their initiatives through Congress but it does so at great cost, namely long-term legislative divisiveness. Is it worth it? Only Democratic leaders (for now) know that for sure.
Language being considered by the House would let lawmakers combine all health care reform matters, including coverage and the tax and spending cuts needed to pay for it, into one bill. In the Senate, if reconciliation is used, only a simple majority, 51 votes, would be needed for passage, rather than the 60 votes needed to overcome a filibuster.
Many people probably have never heard of reconciliation but it’s a legislative tool that has been around for more than 25 years. It is a fast-track process that was originally intended, in the early 1980s, to make it easier to move deficit-reduction measures through Congress. Despite the original intent, reconciliation has been used to advance presidential agendas, such as Bill Clinton’s budget plan or George W. Bush’s tax cuts, when the president’s party has had a majority in Congress.
Experts in the reconciliation process say it helps parties get their initiatives through Congress but it does so at great cost, namely long-term legislative divisiveness. Is it worth it? Only Democratic leaders (for now) know that for sure.
Tuesday, April 7, 2009
A Single Payer Option Considered
While nearly all health reform legislation proposed thus far primarily tinkers with the existing private, employer-based health insurance scheme, a new Senate bill would replace outright the current private health insurance system with a single payer option. If enacted, S. 703, the American Health Security Act of 2009 (AHSA), introduced on March 25 by Sen. Bernard Sanders (Vt.), would replace public health plans, including the Federal Employee Health Benefits Plan (FEHBP), and Medicare, and employer-provided primary health insurance with a federally-funded, state-based health security program. Comparable legislation, H.R.1200, was introduced in the House in February by Jim McDermott (Wa.).
The stated purpose of the AHSA is to provide for health care for every American and to control the cost and enhance the quality of the health care system. This state-based health security program would provide all U.S. residents, citizens, or nationals, or lawful resident aliens with comprehensive health care benefits including prevention, dental services, and long-term care coverage. The states would administer their programs according to federal standards and funding would be provided from federal funds that otherwise would have been appropriated for Medicare, Medicaid, FEHBP, Tricare (the military civilian health program), and SCHIP (the state children’s health insurance program), along with an 8.7% tax on employers for wages paid or on self-employment income and a 2.2% tax on individuals’ taxable income. Employers could not duplicate the health insurance coverage provided under the health security programs, but states and employers could provide additional benefits. Covered individuals could choose their own doctors, who would be reimbursed a rate negotiated with the state.
There has been virtually no public discussion of the AHSA and, given the current political climate, it has no chance of passage. As it is said, “The devil we know is better than the devil we do not know.” Yet the AHSA certainly has some appeal. Hmmm. Paying 2.2% of our taxable income for universal health insurance that we can keep regardless of where we work, or don’t, sure sounds a lot more reasonable than the nearly 7% of our household income that we currently pay just for premiums for our employer-sponsored high deductible health plan. And an AHSA-type option just might save our employers, too.
The stated purpose of the AHSA is to provide for health care for every American and to control the cost and enhance the quality of the health care system. This state-based health security program would provide all U.S. residents, citizens, or nationals, or lawful resident aliens with comprehensive health care benefits including prevention, dental services, and long-term care coverage. The states would administer their programs according to federal standards and funding would be provided from federal funds that otherwise would have been appropriated for Medicare, Medicaid, FEHBP, Tricare (the military civilian health program), and SCHIP (the state children’s health insurance program), along with an 8.7% tax on employers for wages paid or on self-employment income and a 2.2% tax on individuals’ taxable income. Employers could not duplicate the health insurance coverage provided under the health security programs, but states and employers could provide additional benefits. Covered individuals could choose their own doctors, who would be reimbursed a rate negotiated with the state.
There has been virtually no public discussion of the AHSA and, given the current political climate, it has no chance of passage. As it is said, “The devil we know is better than the devil we do not know.” Yet the AHSA certainly has some appeal. Hmmm. Paying 2.2% of our taxable income for universal health insurance that we can keep regardless of where we work, or don’t, sure sounds a lot more reasonable than the nearly 7% of our household income that we currently pay just for premiums for our employer-sponsored high deductible health plan. And an AHSA-type option just might save our employers, too.
Monday, April 6, 2009
COBRA premium subsidy: what's an "involuntary" termination?
Some view the new COBRA premium subsidy, enacted as part of the American Recovery and Reinvestment Act (or the “stimulus act”) as something of a stop-gap measure, as policymakers debate health care reform—a way to continue affordable (or more affordable, anyway) coverage for those who otherwise would join the ranks of the uninsured.
Availability of the premium subsidy is limited, though, to those who are “involuntarily terminated.” In Notice 2009-27, the IRS begins to answer a key question for employers and insurers tasked with the responsibility of administering the subsidy: what does the stimulus act mean by “involuntary” termination?
According to the IRS, the following scenarios are involuntary termination, for which the subsidy must be provided:
Availability of the premium subsidy is limited, though, to those who are “involuntarily terminated.” In Notice 2009-27, the IRS begins to answer a key question for employers and insurers tasked with the responsibility of administering the subsidy: what does the stimulus act mean by “involuntary” termination?
According to the IRS, the following scenarios are involuntary termination, for which the subsidy must be provided:
- A lay-off period with a right of recall or a temporary furlough period;
- "Voluntary" early retirement, if the facts indicate that, absent retirement, the employer would have terminated the employee's services;
- Termination for cause (except for "gross misconduct");
- Resignation, when to keep the job the employee would have been forced to move to a "materially" different geographic area;
- A lockout initiated by the employer; and
- A "buy-out", in which the employer indicates that after a severance package offer period, a certain number of remaining employees in the employee's group will be terminated.
Friday, April 3, 2009
What Agency Would You Choose To Lead Implementation Of Health Care Reform?
Yesterday, the House and the Senate passed budget resolutions that include a reserve fund of more than $650 billion to provide for health reform, which could include health care coverage for all Americans. In the meantime, some consensus is building for a variant of President Barack Obama’s proposal: that is, a type of public-private partnership for health care coverage that provides individuals with choices of employer-provided coverage and a public plan with standardized benefits.
Many experts, pundits, legislators, and others already are discussing what a final health reform law might look like. But no matter what form such legislation might take, the implementation of the law will be critical for employer-plan sponsors already struggling with legal compliance on a host of other issues.
One key to what employers can expect can be found in the recent implementation of the 65% COBRA subsidy and the notices required to be provided to employees.
There is a significant amount of good news in the implementation of this new law, which might be viewed as one of the first salvos in the congressional battle to achieve health reform.
Most employers are affected by the subsidy: all employers that are mandated to offer COBRA continuation of coverage and all employers that are mandated to offer COBRA-like coverage by state laws. Included are private employers, the federal government, and state and local governments. Because these different employers are involved, three separate agencies have a part in the implementation of the 65% subsidy: the Internal Revenue Service (IRS), The Department of Labor’s Employee Benefit Security Administration (EBSA), and the Department of Health and Human Services’ Centers for Medicare and Medicaid Services (CMS).
One agency has done a terrific job in implementing the subsidy provisions and providing a simple way to get more information.
Hands down, it’s EBSA (which also provides links to the other agencies). The IRS also has done a good job and provides a relatively simple way to find information (including that from the DOL). However, starting with the IRS does not give you a single source from which to find information from all three agencies. Starting with CMS (which is responsible for coordinating implementation with state COBRA laws) will probably frustrate a searcher more often than direct a searcher to the relevant information.
The task has not been easy, considering that the law was passed less than two months ago and has required some significant coordination. So take a look at how I think how federal implementation works well (and how implementation of how health reform legislation might work well), by clicking here.
Many experts, pundits, legislators, and others already are discussing what a final health reform law might look like. But no matter what form such legislation might take, the implementation of the law will be critical for employer-plan sponsors already struggling with legal compliance on a host of other issues.
One key to what employers can expect can be found in the recent implementation of the 65% COBRA subsidy and the notices required to be provided to employees.
There is a significant amount of good news in the implementation of this new law, which might be viewed as one of the first salvos in the congressional battle to achieve health reform.
Most employers are affected by the subsidy: all employers that are mandated to offer COBRA continuation of coverage and all employers that are mandated to offer COBRA-like coverage by state laws. Included are private employers, the federal government, and state and local governments. Because these different employers are involved, three separate agencies have a part in the implementation of the 65% subsidy: the Internal Revenue Service (IRS), The Department of Labor’s Employee Benefit Security Administration (EBSA), and the Department of Health and Human Services’ Centers for Medicare and Medicaid Services (CMS).
One agency has done a terrific job in implementing the subsidy provisions and providing a simple way to get more information.
Hands down, it’s EBSA (which also provides links to the other agencies). The IRS also has done a good job and provides a relatively simple way to find information (including that from the DOL). However, starting with the IRS does not give you a single source from which to find information from all three agencies. Starting with CMS (which is responsible for coordinating implementation with state COBRA laws) will probably frustrate a searcher more often than direct a searcher to the relevant information.
The task has not been easy, considering that the law was passed less than two months ago and has required some significant coordination. So take a look at how I think how federal implementation works well (and how implementation of how health reform legislation might work well), by clicking here.
Thursday, April 2, 2009
The journey of employer-sponsored health care
As we celebrate National Employee Benefits Day, it seems appropriate to reflect on the beginnings of employer-sponsored health care. Many people trace the expansion of employer-sponsored health care to the wage controls imposed during World War II. Employers could not offer higher wages due to these controls, so they offered health care coverage to attract and compensate workers. About a decade later, the government solidified employer involvement in health care by providing a tax deduction for contributions to health benefits and allowing employees to receive such benefits tax free. Since then – partially because of this tax exemption – the trend of employer-sponsored health care continued to grow. Employment-based coverage remains the dominant source of health care coverage in the U.S. today, according to the Employee Benefit Research Institute (EBRI).
So now we know how we got here. But what we need to find out is – where are we going? What road should we take to reform health care? Some have suggested that the tax exemption for health care benefits be eliminated. Others don’t think that’s a good idea, particularly because of the possible effects on employer-sponsored plans. What do you say? Let us know your thoughts.
So now we know how we got here. But what we need to find out is – where are we going? What road should we take to reform health care? Some have suggested that the tax exemption for health care benefits be eliminated. Others don’t think that’s a good idea, particularly because of the possible effects on employer-sponsored plans. What do you say? Let us know your thoughts.
Wednesday, April 1, 2009
Insurers back off on pre-existing conditions
It’s no April Fool’s joke. Last week, the health insurance industry made a major concession, by offering to ease its longstanding position on pre-existing conditions.
Under the offer, the health insurance industry would end the practice of charging sick people higher premiums if Congress were to enact a plan that covered all Americans. Some experts believe this will increase the chances of passing significant health care reform legislation in 2009. Will this help? Stay tuned.
Under the offer, the health insurance industry would end the practice of charging sick people higher premiums if Congress were to enact a plan that covered all Americans. Some experts believe this will increase the chances of passing significant health care reform legislation in 2009. Will this help? Stay tuned.
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