Early state implementation of key health reform provisions should be allowed, experts suggest

More than eight out of 10 leaders in health and health care policy (82%) believe states should be allowed to implement key provisions of the Affordable Care Act early with full federal support, ahead of the timeline outlined in the law, according to a survey by the Commonwealth Fund. Such key provisions include expanding Medicaid eligibility to cover more low-income families and creating insurance exchanges with premium subsidies.

There are wide differences of opinion in Congress and among industry experts about the degree to which the federal government or individual states should have authority over health reform. When asked about the overall state-federal balance in the Affordable Care Act, 41 percent of opinion leaders said the federal government should have more authority and 29 percent say that the law has struck an appropriate balance between states' and the federal government's roles. Only 25 percent of respondents thought the states should have more authority.

On many health care reform provisions, opinion leaders were somewhat more likely to think the federal government should have a stronger role. For instance, under the law, new federal rules will prohibit insurers from restricting coverage or basing premiums on health status or gender. Half of health care opinion leaders support granting the federal government more power to set such health insurance market rules; 23 percent feel the law got the balance between the federal government and states about right. In addition, half of respondents favor a stronger role for the federal government in developing and spreading innovative provider payment methods, including new models like accountable care organizations and patient-centered medical homes.

Barriers to implementation. A wide majority of opinion leaders expressed concerns about the barriers states face in successfully implementing the law. Nearly nine of 10 (89%) are concerned or very concerned about the current fiscal situation and budgetary pressures in many states. In addition, more than 70 percent are concerned about state political resistance and legal challenges (78%) and technical knowledge and capacity of state agencies (71%).

"The strong support voiced by health care leaders for federal support of early state implementation of the Affordable Care Act indicates a vote of confidence in the benefits of the new law," said Commonwealth Fund president Karen Davis. "Leaders have also expressed concerns about barriers to implementation, such as capacity of state agencies and budget pressures, which policymakers must address to facilitate effective implementation of the law."

Other findings. Other findings from the survey include:

• A majority of opinion leaders (61%) support or strongly support the creation of a federal health insurance exchange, in addition to the state exchanges that will become operable in 2014.
• Health care opinion leaders are divided on whether states should be given the ability to design their own approaches to health care reform as long as they achieve the same results. About half (49%) support this idea, 32 percent oppose it, and 18 percent neither support nor oppose.
• A plurality of leaders think there should be more federal authority over the health insurance exchanges (42%), the individual mandate (41%), and medical malpractice (40%).

For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

Health reform law expected to have minimal effect on medical cost trend in 2012

According to PricewaterhouseCoopers, the 2010 Affordable Care Act will have only a minimal effect on medical cost trends in 2012.  U.S. employers can expect to see healthcare costs rise by 8.5 percent in 2012, compared with an increase of 8 percent in 2011, according to the annual Behind the Numbers report on medical cost trends, published by PwC’s Health Research Institute.  However, mitigating changes in health benefit plan designs, including increased cost-sharing with employees, could keep employers’ costs increases to an average of 7 percent next year, PwC suggests.

Provisions of the federal health reform law that took place prior to 2012 included small changes for which employers already have fully accounted, PwC suggests. The Medicaid expansions, health insurance exchanges, subsidies to buy private insurance, mandates for employers to offer insurance and mandates for individuals to buy insurance take place in 2014 or later, although PwC notes that health reform could contribute to more cost shifting by further discounting Medicare rates for inpatient care.   

“Healthcare organizations are in state of flux over pending health reform provisions, an uncertain economic outlook and financial pressures, and the way they react will have significant implications for their own long-term health in this rapidly changing market,” said Michael Galper, U.S. healthcare payer leader, PwC.  “Health reform is pressuring employers, providers, insurers and pharmaceutical manufacturers to be more cost-conscious and accountable for costs, quality and performance, and they will need to work together to provide better, coordinated care, greater transparency in pricing and more patient-friendly practices.”

As part of the 2011 Touchstone Health and Well-being Employer Survey, PwC asked employers about changes they are making in their benefit plans, particularly in light of health reform. The survey found:  

• Eighty-four percent of employers said they are likely to make changes in plan design to offset anticipated costs associated with the health reform law;
• Eighty-six percent of employers said they are likely to re-evaluate their overall benefits strategy;
• One-half (50 percent) of employers are considering significantly changing or eliminating company subsidies for dependent medical coverage; and
• Eighty-nine percent of employers will likely increase their health and wellness efforts.

“Employers continue to be concerned about the sustainability of healthcare cost increases especially in the long-term, and they are reacting by making changes now,” said Michael Thompson, principal, human resource services, PwC.  “Healthcare in the future will be very different than we know it today, and uncertainty about these changes complicates healthcare benefits strategies.  However, the most proactive employers are planning for potential future scenarios and making incremental changes now toward a longer-term view of transformational change in the way healthcare is delivered and paid for and a more collaborative and integrated model aligned around health and wellness.”

For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

Hefty health insurance rate hikes to face tougher scrutiny

The Department of Health and Human Services (HHS) has issued a final regulation to ensure that large health insurance premium increases will be thoroughly reviewed, and consumers will have access to clear information about those increases. Combined with other protections from the Affordable Care Act, these new rules will help lower insurance costs by moderating premium hikes and provide consumers with greater value for their premium dollar.



In 2011, this will mean rate increases of 10 percent or more must be reviewed by state or federal officials. Many state regulators have the authority to reject increases, though the ACA doesn’t give federal regulators that authority. In fact, according to the National Conference of State Legislatures, about one-fourth of the states allow allowing regulators to approve or disapprove of some types of insurance premium changes.

Do Waivers Disrupt The Medical Loss Ratio Provisions?

The Patient Protection and Affordable Care Act (ACA) allows the Department of Health and Human Services to adjust the medical loss ratio (MLR) standard for a state if it is determined that meeting the 80% Medical Loss Ratio standard may destabilize the individual market. In order to qualify for this adjustment, a state must demonstrate that requiring insurers in its individual market to meet the 80% MLR has a likelihood of destabilizing the individual market and result in fewer choices for consumers.

Medical loss ratio is calculated as the cost of health care services provided as a percentage of premium revenues. In general, the higher the medical loss ratio, the more an insurer spends on claims reimbursements and the less it spends on administration and marketing, or retains as profit.

Three states now have been granted waivers: Maine, New Hampshire, and Nevada, and nine other states have requested waivers. Does this dilute the MLR provisions too much? Judge for yourself.

A Tale Of Two Health Reform Provisions

For reasons that are not all that obscure, two provisions in the Patient Protection and Affordable Care Act (ACA), one aimed at aiding individuals and the other aimed at aiding group health plans, have had strikingly dissimilar results.

As discussed in this blog recently, the Pre-Existing Condition Insurance Plan (PCIP), a temporary high risk health insurance pool for individuals, has a total U.S. enrollment of just over 18,000 individuals, even though estimates of individuals eligible for the program run as high as 5 million. The PCIP requires that an individual be uninsured for six months and plans available often are expensive, thus the low enrollment.

A distinctly different result has been obtained by the Early Retiree Reinsurance Program (ERRP). Group health plans that provide early retiree health coverage are eligible, and reimbursement is available after applying for the program and submitting reimbursement requests—no other strings attached.

Death Panel Redux

A well-recognized deficiency of the Patient Protection and Affordable Care Act (ACA) is adequate cost control. And even though the ACA has more cost control tools in its Medicare provisions than in employer-related provisions, the annual release of the Medicare Trust Fund report emphasizes how important additional cost reductions are to to preserve the program.

The Medicare’s Hospital Insurance (HI) Trust Fund (Part A) is now projected to go broke in 2024, five years earlier than projected in last year's report, according to the Medicare Trustees Report released on May 13.

Without the reforms in the Patient Protection and Affordable Care Act (ACA), the Medicare HI Trust Fund would expire in just five years – in 2016. “This report shows that without the Affordable Care Act, the outlook for the Hospital Insurance Trust Fund today would be much worse,” said Donald Berwick, M.D., Administrator of the Centers for Medicare & Medicaid Services (CMS). “CMS is implementing critical reforms to improve care and reduce costs and improve the overall health of Medicare’s beneficiaries and the Trust Fund.” 

There are, of course, only two ways to relieve the pressures of cost increases –reduce expenditures and/or increase revenues.

Continued ACA Implementation Important To Health Benefits Management

At least half of the respondents to an onsite conference survey consider the continued implementation of the Patient Protection and Affordable Care Act (ACA) as important (29%) or very important (21%) to the management of health benefits. Another 29% of participants, who were attending the Midwest Business Group on Health (MBGH) annual conference on May 5 and 6, consider it somewhat important.

Enrollment Grows, But Remains Low, In Health Reform’s Temporary High-Risk Pool

More than 18,000 individuals have enrolled in the Pre-Existing Condition Insurance Plan (PCIP), a temporary high risk health insurance pool established under the Patient Protection and Affordable Care Act, according to the most recent data from the Center For Consumer Information and Insurance Oversight (CCIIO).

The 18,313 total for March 31 is 47% more than in February 2011 and more than twice as many as in late 2010. Nevertheless, the enrollment figures are far below the 5 million expected to enroll in the $5 billion program.

More Than 600,000 Young Adults Covered In Parents' Health Plans Under ACA

As of the first quarter of 2011, at least 637,000 young adults are getting coverage under their parents' health plans as allowed by the Patient Protection and Affordable Health Care Act (ACA), the Kaiser Family Foundation reported based on major insurers' data. The ACA requires health insurance plans to allow young adults up to age 26 to be covered under their parents' plans, even if the young adult is a full-time student, not living with or a dependent of the parent, or married.

Speak up about health coverage, IRS requests

The IRS requests comments to initiate the development of regulatory guidance regarding shared employer provisions in Code Sec. 4980H. The provisions apply for months beginning after December 31, 2013, in reference to health coverage provided by employers to their full-time employees. The notice invites comments on a number of possible rules, definitions and approaches that may be incorporated as future proposed regulations.

The Department of Treasury, the Department of Labor and the Department of Health and Human Services are working together to coordinate efforts on the shared employer responsibility provisions, the 90-day limitation on waiting periods, the automatic enrollment for employees of large employers and other provisions of the Patient Protection and Affordable Care Act (Affordable Care Act)

Early Retiree Program Issues New Reminders and Tips

The Center for Consumer Information and Insurance Oversight (CCIIO) has published a series of reminders and tips regarding the Early Retiree Reimbursement Program (ERRP), which includes the following information for resolving the most common early retiree list questions:

Submitting the Early Retiree List

Including Eligible Records. When preparing an early retiree list, plan sponsors should ensure that the list includes only early retirees who meet or exceed the $15,000 cost threshold. In addition, plan sponsors should verify that each member record has a corresponding subscriber record, even if the subscriber is no longer eligible for reimbursement under the ERRP.

Adding Early Retirees. If a plan sponsor submits an early retiree list and then finds that additional early retirees need to be added to the list, it may do so by submitting another complete early retiree list. Each early retiree list submission is a full replacement of the previously submitted list.

Sneak peek at health exchanges

States aren't required to have an American Health Benefit Exchange in place until January 1, 2014, pursuant to the Patient Protection and Affordable Care Act (ACA). But one private company is testing the waters before then.

Aon Hewitt has announced plans to offer a corporate health care exchange to employers nationwide, targeting 1,000 or more full-time employees, beginning as early as 2012. Aon Hewitt has been providing and administering retiree medical exchanges for several years. In anticipation of changes to the insurance market, the organization is extending its exchange model to offer employers a viable option for active employees.