How Is That Stimulus Plan Working?

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Heritage.org

237 Millionaires In Congress

"Talk about bad timing.

As Washington reels from the news of 10.2 percent unemployment, the Center for Responsive Politics is out with a new report describing the wealth of members of Congress.

Among the highlights: Two-hundred-and-thirty-seven members of Congress are millionaires. That’s 44 percent of the body – compared to about 1 percent of Americans overall.

CRP says California Republican Rep. Darrell Issa is the richest lawmaker on Capitol Hill, with a net worth estimated at about $251 million. Next in line:
Rep. Jane Harman (D-Calif.), worth about $244.7 million
Sen. Herb Kohl (D-Wis.), worth about $214.5 million
Sen. Mark Warner (D-Va.), worth about $209.7 million
Sen. John Kerry (D-Mass.), worth about $208.8 million

All told, at least seven lawmakers have net worths greater than $100 million."

Politico.com

Immoral Profits - Part II

One more thought from the article by Jeff Jacoby that was the topic of the last post:

"Still, the critics do have one thing right: More competition would bring down health-care premiums. But the way to increase competition is not by adding a government-run health plan to the 1,300 private firms already providing Americans with health insurance. After all, there's no public option for auto insurance and life insurance, yet they're sold in a highly competitive national market. There is no reason health insurance can't be sold the same way."

Immoral Profits?

On the Fortune 500 list of top industries, health insurance companies ranked 35th in profitability in 2008; their overall profit margin was a mere 2.2 percent. They lagged far behind such industries as pharmaceuticals (which showed a profit margin of 19.3 percent), railroads (12.6 percent), and mining (11.5 percent). Among health insurers, the best performer last year was HealthSpring, which had a profit of 5.4 percent. "That's a less profitable margin," AP noted, "that was achieved by the makers of Tupperware, Clorox bleach, and Molson and Coors beers."

_________________________

...the notion that health insurers
"make more money than any other
business in America today"
is preposterous.
_________________________

For the most recent quarter of 2009, health-insurance plans earned profits of only 3.3 percent, ranking them 86th on the expanded Yahoo! Finance list of US industries. The application-software industry, by contrast, is pulling in profits of nearly 22 percent. Why aren't MoveOn and the Democrats demanding a "public option" to compete with Microsoft and Adobe and drive down their "immoral" profits?

Jeff Jacoby

House Releases Merged Health Reform Bill

Below is a summary of the most recent House bill to emerge from Congress (thanks to UnitedHealthCare). This is one of the most concise summaries I have seen to date. It is all fact - no commentary. If you know anything about the health insurance industry, this should frighten you on many levels.

On October 29th , leadership in the House of Representatives released a bill entitled the “Affordable Health Care for America Act” that merges legislation passed in July by the three House committees (Education and Labor, Energy and Commerce, and Ways and Means) with jurisdiction over health reform. The CBO estimates that this bill will cost $894 billion over ten years and cover 36 million of the 54 million uninsured. To pay for the cost of the bill, the Committee places a 5.4% surcharge on adjusted gross income above $1 million for married couples and $500,000 for singles, reduces provider payment rates under Medicare, reduces spending for the Medicare Advantage program, obtains prescription drug rebates and discounts for Medicaid and Medicare Part D from pharmaceutical companies, places a 2.5% sales tax on medical devices, and makes changes to HSA and FSA rules. House leadership has stated that floor debate on the bill will likely start later this week or early next week. Details of the House bill include:

· Insurance Market Rules Effective in 2010: Several insurance market rules take effect in 2010, including government review of health plan premiums and a requirement that 85% of premiums be spent on medical care, prohibition of lifetime benefit limits for individual and group plans, a requirement that health plans cover children as dependents through the age of 26, and prohibition of coverage cancellation or rescission except in cases of fraud. Prior to the implementation of new market rules and the Exchange in 2013, the House bill also establishes interim provisions between 2010 and 2013 that extend COBRA eligibility, shorten the pre-existing condition “look back” period to one month and the benefit exclusion period to three months, and establish high risk pool provisions for individuals who can not obtain coverage due to health status or a pre-existing condition.

· Insurance Market Rules Effective in 2013: Beginning in 2013, the House bill makes additional insurance market changes that require guarantee issue and renewal of coverage, prohibit pre-existing condition exclusions and premium variation based on health status, and allow premium variation only for age, family size, and geographic area. The new market rules apply to all health plans inside and outside the Exchange. Starting in 2015, states could pass legislation to form “Health Care Choice Compacts” to allow the purchase of individual insurance across state lines.

· Public Plan and CO-OPs: The House bill establishes a national public plan in 2013 to compete with private insurers in the Exchange. Provider rates for the public plan would be negotiated and providers are presumed to participate unless they opt-out. The House bill also provides start-up funding to states to establish not-for-profit member-governed cooperative health plans (CO-OPs) to compete with private insurers and the public plan in the Exchange. CO-OPs and the public plan must comply with the same rules as other plans in the Exchange. States are not required to establish CO-OPs.

· Exchange: A national health insurance “Exchange” is established in 2013 and would be operated by a new federal agency, the “Health Choices Administration (HCA).” The Exchange is designed to serve as a facilitator of comparison shopping, enrollment, and subsidy administration, a regulator of plan standards and rules, and a negotiator of premiums and contracts with health plans. All individuals who purchase coverage outside the group market or whose premiums are more than 12% of income (and are not eligible for Medicare or Medicaid) are eligible to purchase coverage through the Exchange. Participation in the Exchange is voluntary, but no individual market exists outside the Exchange except for “grandfathered plans.” Employers can purchase coverage through the Exchange if they have up to 25 employees in 2013, up to 50 employees in 2014, and up to 100 employees in 2015 (with the potential to open participation to all groups starting in 2015).

· Benefit Plans: In 2013, individuals have a choice of four plan types including “Basic” (70% actuarial value), “Standard” (85% actuarial value), “Premium” (95% actuarial value), and “Premium Plus” (value over 95%). A new independent “Benefits Advisory Committee” is created to define and update the requirements for the minimum benefit plan or “Basic Plan.” Plans are prohibited from having annual or lifetime benefit limits or establishing cost sharing above $5,000 individual/$10,000 family. Plans are required to cover a list of specified mandated benefits, but states may establish additional benefit rules. Individuals may keep their current coverage (“grandfathered plans”) instead of enrolling in one of the four new plans, as long as no change is made in cost-sharing, contract terms, or benefit levels. Employers are required to at least meet the requirements of the “Basic Plan” by 2018.

· Coverage Mandates, Penalties, and Subsidies: Beginning in 2013, individuals are required to have health insurance coverage that is either a “grandfathered plan,” a government plan (Medicaid, Medicare, and the like), an employer-based plan (until 2018), or an individual or group plan that meets or exceeds the qualifications of the federally-defined minimum benefit plan (“Basic Plan”), or pay a 2.5% of income tax penalty. Waivers are allowed for Native Americans, those with religious objections, dependents, and individuals with a financial hardship defined as premiums over 12% of income. Individuals up to 400% of the federal poverty level ($88,000 for a family of four) are eligible for sliding scale premium and cost-sharing subsidies. In 2013, employers with an annual payroll over $500,000 are required to offer health insurance coverage to their employees or pay an 8% of payroll tax penalty. Employers must pay 72.5% for single and 65% for family coverage of the lowest cost qualified plan to avoid the penalty. Employers are also subject to the penalty for employees in the Exchange obtaining subsidies if the cost of employer-based coverage is higher than 12% of the employee’s income. Employers with an average wage below $40,000 and 25 or fewer employees are eligible for up to a 50% premium credit for two years.

· Medicaid and the Children’s Health Insurance Program (CHIP): Medicaid eligibility is expanded to 150% of the federal poverty level for all individuals in 2013 with full federal funding of the expansion in 2013 and 2014 and 91% federal funding to states starting in 2015. States are required to maintain existing Medicaid eligibility; states are also required to maintain CHIP eligibility, but only until 2013 when CHIP beneficiaries will get coverage through the Exchange. The bill also extends enhanced federal Medicaid funding from the stimulus bill (ARRA) to states until June 2011.

· Medicare: The House bill reduces payments for Medicare Advantage to 100% of Medicare fee-for-service spending by 2013 and establishes quality bonuses for plans with high quality scores in markets with low Medicare fee-for-service spending and high Medicare Advantage enrollment. By 2019, the “donut hole” or coverage gap under Part D is eliminated. Pharmaceutical manufacturers are to provide a 50% discount for brand name drugs purchased in the “donut hole” and HHS is required to negotiate directly with manufacturers for Part D drug pricing. The income subsidy exclusion for employers who maintain prescription drug plans for Part D eligible retirees is eliminated. The House bill also creates pilot programs for coordinated care delivery models, establishes a new “Center for Medicare and Medicaid Innovation” to test and implement new provider payment methods, and changes payment incentives to reduce hospital readmissions. Annual provider payment updates are reduced for Medicare Part A and Part B and the Institute of Medicine is instructed to study geographic variation in payment rates and recommend changes.


CMS Actuary Estimates Cost and Coverage Impact of House Health Reform Legislation
In late October, the Chief Actuary for the Centers for Medicare and Medicaid Services (CMS) released a report analyzing the cost and coverage impacts of health reform legislation debated in July by the three House committees with jurisdiction over health reform. The report states that total national health expenditures will increase under the House language and that “demand for health services could be difficult to meet initially with existing health provider resources and could lead to price increases, cost-shifting, and/or changes in providers’ willingness to treat patients with low-reimbursement health coverage.” The CMS Actuary also states that the language does little to contain health care cost growth, “With the exception of the proposed reductions in Medicare payment updates for institutional providers, the provisions of H.R. 3200 would not have a significant impact on future health care cost growth rates.” In addition to analyzing the impact of the House legislation on costs, the CMS actuary estimates the impact on coverage for Medicare beneficiaries, stating that the reduction in Medicare Advantage rates to 100% of Medicare fee-for-service would result in less generous benefit packages and enrollment in Medicare Advantage plans would decrease by 64%.

Thanks to UnitedHealthCare for the summary.

Real Competition - Part II

Regarding the graph in the previous post, Mark Perry commented;

"The chart... shows the wide variation in average annual insurance premiums among selected states... In other words, allowing interstate competition for health insurance would allow families in New York to save more than $8,000 by buying insurance from a provider in North Carolina. That seems like an attractive option for New York residents, even if they have to accept a lower level of medical coverage for the $8,000 savings.

Instead of new massive government interventions in the U.S. health care system, maybe the best cure is to simply allow interstate competition for health insurance."

Extending COBRA subsidy? Maybe

In September, House lawmakers approved a bill granting workers in 27 states another 13 weeks of unemployment insurance benefits. For employers, the move may signal that Congress is willing to extend the Dec. 31 eligibility date for the COBRA subsidy program if lawmakers fail to agree on health care legislation by the end of the year.

The sentiment is that the COBRA subsidy is working - providing health insurance to individuals when they need it most, says Karen Frost, Hewitt's health and welfare outsourcing leader. According to Frost, whether Congress extends the Dec. 31 eligibility date for the subsidy depends on health care reform.

If the unemployment rate continues to rise, lawmakers will probably extend the eligibility date for the program, given that unemployed workers will have a difficult time finding a job and employer-provided health coverage. If Congress, however, passes a health care bill by the end of the year, then there is less reason to extend the COBRA program, given that new health care legislation will more likely carry provisions that will cover workers who have been involuntarily terminated. Read more

EmployeeBenefit News

Real Competition

"Rhetoric about monopoly notwithstanding, Congress's reform proposals are not designed to increase competition in private health insurance. The House bill proposes a government-run insurer. The Senate Finance Committee proposes creation of quasi-public cooperatives. Both bills (and the Senate HELP bill) include restrictions on health insurance underwriting, pricing, profitability and policy design that would essentially turn private health insurers into regulated public utilities.

If the goal were to promote robust competition in private health insurance, Congress would focus on reducing impediments to competition. It could do so by allowing consumers to buy insurance across state lines at terms that do not require them to subsidize other buyers or to buy coverage for state-mandated benefits they are unwilling to pay for. Congress could also eliminate tax and regulatory rules that favor employment-based coverage over individual coverage."

Scott Harrington

10 Reasons To Consider An HSA

We recently ran across an article that did a good job of listing out some the reasons to consider a Health Savings Account (HSA) medical plan. Here are the 10 reasons listed.

1. Premiums for HSA's are consistently lower than with an HMO, PPO or other indemnity plans
2. Renewal increases are lower
3. Consumers can fund a Health Savings Account with the premium savings
4. HSA savings accounts have terrific yearly tax benefits
5. HSA savings accounts earn tax deferred interest
6. They save money for those who are sick not just the very healthy
7. They work for the middle class as well as the wealthy
8. They give the insured better control over their own health care
9. They allow consumers to be better shoppers for medical services
10. Insured persons with HSAs are extremely satisfied with the costs and coverage

Go to Examiner.com to see the entire article.

Want more information about HSA's? Want to know if they are right for you, your family, or your company? Contact us. We would love to talk to you about them to help you determine if they are right for you.

Do you have (know of) a group or organization (civic group, association, etc.) that needs a speaker and you think an informational (not sales) session on HSA's would be appropriate? We would love to talk to you about that opportunity.

Whole Foods - Why Is It The Employees Are Not The Ones Protesting?

Recently, we posted about the Op-Ed article in the Wall Street Journal written by John Mackey. Mr. Mackey is the co-founder of Whole Foods. At the time, his ideas were lambasted by those in favor of the efforts in Congress to reform health care and they suggested a boycott of Whole Foods. Not surprisingly, the Food Workers Union jumped on the band wagon. Here is a short video which looks into the program oat Whole Foods and talks to some of the protestors.

1990-Page Health Care Reform Bill - Covers Vending Machines?

From page 1515 of the bill...

“(viii) VENDING MACHINES.—In the case of an article of food sold from a vending machine that—
“(I) does not permit a prospective purchaser to examine the Nutrition Facts Panel before purchasing the article or does not otherwise provide visible nutrition information at the point of purchase; and
“(II) is operated by a person who is engaged in the business of owning or operating 20 or more vending machines,
the vending machine operator shall provide a sign in close proximity to each article of food or the selection button that includes a clear and conspicuous statement disclosing the number of calories contained in the article.

What else is in there?

What They Really Think

After trying to 'work with Congress' and keep a 'place at the table', the insurance companies are FINALLY starting to say in public what they have been saying in private. Here is one example:

...the 39 Blue Cross and Blue Shield companies warned after the Thursday unveiling of "devastating consequences."

"Millions of people would lose their current private coverage they are happy with," the companies warned. "In addition, the government will underpay providers — even if negotiated rates are initially used — creating major access issues, including long waits for services, with some providers closing their doors."

The Blue Cross and Blue Shield Association also pointed out how any "government-run plan will use its built-in advantages — no matter how it is initially structured — to take over the market" through "price-setting based on Medicare" or by using "existing government programs as leverage for negotiations."

A government option would also enjoy "many financial advantages right from the start, including an exemption from federal and state taxes and other assessments that private plans must pay, immunity from state lawsuits, as well as a host of other state rules and regulations." Plus it will get "at least $2 billion in startup capital."

IRS Issues Long-Term Care Premium Deductibility Limits for 2010

The Internal Revenue Service announced that deductibility levels for LTC policies purchased in 2010 would increase just as they did in 2009.

Jesse Slome, executive director of the American Association for Long-Term Care Insurance, recently noted that “for the first time, the maximum deductible limit for an individual exceeds $4,000.” He called the development “a positive sign,” adding that the IRS did not do the same for pension contribution limits.

In addition, Slome says a number of states now offer tax credits for the purchase of LTC insurance that lower a participant’s tax bill, dollar for dollar.

The deductible limits for eligible LTC premiums includable in the term “medical care” under Section 213(d)(10) will rise to $4,110 next year, from $3,980 this year for policyholders who turn older than age 70 before the taxable year ends, according to IRS Revenue Procedure 2008-66 (for 2009 limits) and 2009-50 (for 2010 limits).

For those in their 60s, the deduction increases to $3,290 from $3,180, while the figure rises to $1,230 from $1,190 for those in their 50s. The gap narrows for all other age groups, rising to $620 from $600 for those in their 40s and to $330 from $320 for those who are age 40 or younger.

Does Congress Care What We Want?

A new opinion poll by the Galen Institute shows that 71% of Americans oppose an individual mandate to buy health insurance, despite a penalty of only $750 a year.

The Virginia-based organization, which focuses on free-market health care reform and tax policies, also found that 68% of surveyed respondents are against reducing Medicare benefits to pay for health reform and 58% oppose taxing the middle class to pay for health reforms. In addition, 71% of those surveyed are concerned that if Congress passes health care legislation, then their current health insurance will change.

Overheard

"Today, I got a note from a friend of mine who just had yet another heart attack. It seems his stent is now blocked by 50%. He is a vet, and his primary care is the Veterans Administration. The Veterans Hospital system will not do a procedure to unblock the stent until it is 70% blocked. He does not have any money, so he is simply waiting to have another heart attack. I am really looking forward to government-run health care."

John Mauldin

What Makes Them Think It Will Cost LESS?

Politician just don't seem to understand that if you force insurance companies to cover certain procedures/items and force them to accept everyone (regardless of health status) that it increases cost - significantly. And that is BEFORE you add in the waste inherent in government programs. Here is more proof from the state of New Jersey...

"State mandates make health insurance more comprehensive, but they also make it more expensive. A state can easily increase the cost of a basic health insurance policy by 25%, depending on the number of mandates it has and what they cover. The higher premiums drive some into the ranks of the uninsured.

_________________________

in Pennsylvania, for instance, a family
can buy a comparable insurance policy
for a quarter to half the price.
_________________________

New Jersey has arguably the highest health insurance premiums in the country, and health insurance mandates (the state currently has 45, about average for the country) are one reason.

In the early 1990s, New Jersey also passed legislation requiring insurers to accept all applicants, regardless of their health status (guaranteed issue) and charge them all the same price (community rating). President Barack Obama wants to do the same thing nationally.

There were repeated warnings that such legislation would drive up health insurance premiums. But New Jersey legislators ignored those warnings. Today, New Jersey residents have relatively few health insurance options, and coverage is significantly more expensive than in most other states. Just across the state line in Pennsylvania, for instance, a family can buy a comparable insurance policy for a quarter to half the price. Read more.

Wall Street Journal

$829 Billion Is Lowballing It — Just Look at History

"According to the preliminary analysis just released by the Congressional Budget Office and the Joint Committee on Taxation, the Senate Finance Committee’s health bill will cost American taxpayers $829 billion over ten years.

How much confidence should we have in that forecast of $829 billion? Not much. For example, in 1967 the House Ways and Means Committee predicted that the new Medicare program, introduced the previous year, would cost $12 billion in 1990. However, actual Medicare spending in 1990 was $110 billion—almost 10 times higher than the original estimate."

Here are other examples of missed estimates. All on the low side - imagine that...

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Mark Perry

Unconstitutional

While the idea of a "public health option" is flawed for a host of reasons, Sen. Orrin Hatch has written a piece explaining why a "requirement" to have health insurance, and the subsequent "fine" imposed on those who do not have insurance, is unconstitutional.

'The liberty we enjoy in America requires limits on government power, and those limits come primarily from the Constitution. Our written Constitution delegates only certain powers to the federal government and Congress must point to at least one of them as authority to pass legislation.

This means, of course, that the Constitution might not allow some things Congress might want to do. Some provisions of the Finance Committee's health care bill are in this category. It would, for example, require nearly everyone to purchase health care insurance. Failure to do so could result in an "excise tax" to be assessed through the tax code and collected by the IRS….

_________________________

if politics trumps the Constitution,
the Constitution cannot limit government
and, therefore, cannot protect liberty.
_________________________

For the first time, the federal government would be ordering Americans to buy a particular product or service they had not chosen to purchase. Rather than regulate an activity in which individuals chose to engage, Congress would be requiring an activity in which individuals had chosen not to engage.

The nonpartisan Congressional Research Service issued a report concluding this is a completely novel, unprecedented constitutional issue….

Another constitutional problem with the individual mandate is that the penalty for failing to purchase health insurance is, in fact, not the excise tax that the Finance Committee bill says it is. It is really not a tax at all, but a fine masquerading as a tax. An excise tax is a tax on the sale of goods or services, such as a gasoline tax. If you do not buy gas, however, you do not pay the gas tax." Read more.

Orrin G. Hatch, Utah Republican, is a senior member of the Senate Finance Committee.

Paid To Do Nothing

Remember, the ones responsible for bringing us the U.S.P.S want to run your health care, too. And they claim they can do it more efficiently than private enterprise?

"The U.S. Postal Service, struggling with a massive $7 billion deficit caused by plummeting mail volume, spends more than a million dollars each week to pay thousands of employees to sit in empty rooms and do nothing.

It’s a practice called “standby time,” and it has existed for years — but postal employees say it was rarely used until this year. Now, postal officials say, the agency is averaging about 45,000 hours of standby time every week — the equivalent of having 1,125 full-time employees sitting idle, at a cost of more than $50 million per year.

Mail volume is down 12.6 percent compared with last year, and many postal supervisors simply don’t have enough work to keep all employees busy. But a thicket of union rules prevents managers from laying off excess employees; a recent agreement with the unions, in fact, temporarily prevents the Postal Service from even reassigning them to other facilities that could use them. So they sit — some for a few hours, others for entire shifts. Postal union officials estimate some 15,000 employees have spent time on standby this year. Read More.

Federal Times

Some Choose Not to Have Health Insurance

"I learned a lot about the cost of health care when I had a hybrid general surgery practice in California's rural San Joaquin Valley. My practice consisted of uninsured women with breast cancer combined with a smaller percentage of cosmetic patients whose cash payments for "vanity care" subsidized the treatment of women unable to pay for needed medical treatment.

I encountered patients who gladly paid upward of $1,000 in cash for laser hair removal treatments. The paperwork filled out during their initial consultation asked them to indicate whether or not they had health insurance. Several hair-removal patients reported being covered by Medi-Cal, the government-funded health coverage for California's low-income population.

A friend of mine sells private health insurance plans. He told me of the 39-year-old father of two whose family was quoted a monthly insurance premium of $250.

"Are you kidding?" he said, refusing the coverage. "That's almost as much as my boat payment!"

Individuals in this country have a right to decide how — and how not — to spend their money. But that right does not include accepting entitlements without sharing responsibility. Doing so contributes to the high cost of care that burdens every unsubsidized patient.

If individuals prefer to buy luxury items rather than pay for their health needs, that preference should not be rewarded while taxpayers struggle to pay their own bills." Read more.

Linda Halderman, M.D.