Health Care Reform Myths
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The President earlier today has signed The Health Care and Education Affordability Reconciliation Act of 2010, a historic health care reform that’s been 14 months in the making. This is after Sunday’s Congressional passage by the slim margins of 219-212.
The Bill for the most part follows the President’s version of the Reform Health Bill which tweaked measures such as elimination of Nebraska’s politically wrangled special Medicaid deal, delays on Cadillac Tax enactment and the establishment of a new Health Insurance Rate Authority to give guidance and oversight to states and monitor insurance market behavior. “If a rate increase is unreasonable and unjustified, health insurers must lower premiums, provide rebates, or take other actions to make premiums affordable.” The 21% Medicare cuts to providers were rescinded.
The $940 billion over 10 year bill wont see most significant provisions until 2014.
Here’s a quick rundown of some of the expected changes.
Changes This Year:
Long Term Changes:
Individual Mandate:
Employer Requirements:
There is no employer mandate but employers with more than 50 employees will be assessed a fee of $2000 per full-time employee (excluding the first 30 employees from the assessment)
Small Business Tax Credit
American Health Benefit Exchanges
A more comprehensive chart is available through NAHU (National Association of health Underwriters).
Several states have already challenged this law as an over extension of Federal powers. Additionally, the requirement of mandating an individual to buy insurance is not so clear.
Many additional questions will arise such as:
-How will plans with Federal minimum standards reconcile with progressive states like NY that have numerous state mandates already?
-Afterall, a Healthy NY plan can operate commercially without mandates that an ordinary group plan must comply with?
-What happens to community rated states like NY?
-Will they drop this rating methodology altogether?
-Since there will be no longer pre-existing conditions is it just cheaper for an individual to just withdraw pay the penalty and then hop in when in need of coverage?
Lastly and importantly, the bending of the cost curve is weak. There is language, however, on attacking fraud & billing abuses as well successful Pharmaceutical concession for Medicare Part D. But Rome was not built in a day and this lays the foundation for a path of extending coverage to as many people as possible. Heavy topics such as Tort Reform, exorbitant malpractice insurance, federal medical reimbursements cuts must wait for another day.
The President yesterday released with great anticipation his own version of the Reform Health Bill. This is the opening bid before Thursday’s Bipartisan Summit.
The proposed Bill for the most part is similar to the Senate Bill passed in December with a few minor changes anticipated to cost almost $1 trillion over 10 years. The comprehensive bill adds cost saving measures and more affordability for lower income Americans.
As expected and in step with both Houses the proposal eliminates pre-existing condition but raises the penalty for individuals not paying into a mandatory health plan to 2.5% of adjusted gross income by 2016. Included, also, is an increase in the tax credits for health insurance premiums a sort of carrot and the stick model.
Spurred by recent rate increases by insurers such as Anthem’s 39% planned rate hike in California there is a provision to establish a new Health Insurance Rate Authority to give guidance and oversight to states and monitor insurance market behavior. “If a rate increase is unreasonable and unjustified, health insurers must lower premiums, provide rebates, or take other actions to make premiums affordable.”
Also included is elimination of Nebraska’s politically wrangled special deal to help pay for a proposed Medicaid expansion, and would instead provide more help for all states to pay for their new Medicaid enrollees. It would delay enactment of a the Cadillac tax (40% tax in excess of $10,200/$27,500 for single/ families) on high-cost employer-sponsored insurance plans with no special exceptions to Union groups.
There is elimination of the Medicare Rx “doughnut hole” for Part D. There will be a 25% coinsurance fee instead for seniors in this gap. Currently, the gap starts after the first covered $2830 and continues on the next $4550 with only a 5% member responsibility thereafter.
Our small employer groups will be relieved to know that groups under 50 employees are exempt form the mandate. Under the Senate plan, employers with more than 50 employees that do not offer coverage would pay a $750 assessment for each full-time employee. The White House proposal would bump up that assessment to $2,000 for each full-time employee. However, in determining the assessment, an employer’s first 30 employees would be excluded from the calculation. Taking the case of an employer with 100 employees that did not offer coverage, for example, its assessment would be 70 times $2,000.
The proposal also is believed to retain a provision in the House and Senate bills that would impose a $2,500 annual cap, starting in 2011, on the maximum annual contributions that could be made to health care flexible spending accounts such as HRA and FSA.
Our position is that Health Care Reform done responsibly is important and inevitable for the sustainability of our country. While the current leaves millions uninsured it just as importantly leaves many who are already insured struggling to pay and possibly drop out going forward. Addressing the cost factors for those already insured is being understated.
Stay tuned till the end of the week for the Bipartisan Summit. We expect to see proposals on creating tax credits for employers who already offer benefits. Also allowing insurers to easily cross state lines and increase competition by creating a basic Federal health package. This will allow strong reputable companies like Humana to enter the NY/NJ/CT market and side step the choke full of mandates. NY already includes almost 20% of overall costs going to these add-ons.
http://www.crainsnewyork.com/article/20100126/FREE/100129916#
“Facing crushing cash flow crunch it seeks deal that could keep system from returning to bankruptcy court; Continuum Health Partners says it has entered discussions.”
Hospitals are obligated to accept all patients regardless if insured and yet face the free market alone. Is it any wonder Lenox Hill is the lone independent hospital left….for now.
Not surprisingly the Gallup Poll shows that Americans generally will trust their healthcare professional over the politicians. If Pharmacists have long been considered the #1 trusted profession than there is natural inverse relationship with Pharmaceutical Industry ranked slightly ahead of insurers and a bit higher than used car salesmen.
The American Resources and Recovery and Reinvestment Act of 2009 was signed into law by President Obama February 17th. Under the Act, certain individuals who are eligible for COBRA continuation health coverage, or similar coverage under State law, may receive a subsidy for 65 percent of the premiums for themselves and their families for up to nine months.
Click on the link below for detailed information on the American Recovery and Reinvestment Act of 2009 which went into effect February 17, 2009
http://www.dol.gov/ebsa/cobra.html
These individuals are required to pay only 35 percent of the premium.
The employer may recover the subsidy provided to assistance-eligible individuals by taking the subsidy amount as a credit on its quarterly employment tax return. The employer may provide the subsidy – and take the credit on its employment tax return – only after it has received the 35 percent premium payment from the individual.
To qualify, a worker must have been involuntarily separated between Sept. 1, 2008, and Dec. 31, 2009. Workers who lost their jobs between Sept. 1, 2008, and enactment, but failed to initially elect COBRA because it was unaffordable, get an additional 60 days to elect COBRA and receive the subsidy.
This subsidy phases out for individuals whose modified adjusted gross income exceeds $125,000, or $250,000 for those filing joint returns. Taxpayers with modified adjusted gross income exceeding $145,000, or $290,000 for those filing joint returns, do not qualify for the subsidy.
On February 26, the Internal Revenue Service released its first round of information for employers to use in administering the new subsidy program. Included are the subsidy reporting form, instructions and a very detailed questions-and-answers piece. The Department of Labor is still working on model notices and other guidance for release by March 17.