Kill The Bills. Do Health Reform Right.

The United States has the best health care in the world -- but because of its inefficiencies, also the most expensive. The fundamental problem with the 2,074-page Senate health-care bill (as with its 2,014-page House counterpart) is that it wildly compounds the complexity by adding hundreds of new provisions, regulations, mandates, committees and other arbitrary bureaucratic inventions.

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So why not allow interstate competition?
After all, you can buy oranges across state
lines. If you couldn't, oranges would be
extremely expensive in Wisconsin,
especially in winter.

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Worse, they are packed into a monstrous package without any regard to each other. The only thing linking these changes -- such as the 118 new boards, commissions and programs -- is political expediency. Each must be able to garner just enough votes to pass. There is not even a pretense of a unifying vision or conceptual harmony...

The bill is irredeemable. It should not only be defeated. It should be immolated, its ashes scattered over the Senate swimming pool.

Then do health care the right way -- one reform at a time, each simple and simplifying, aimed at reducing complexity, arbitrariness and inefficiency.

First, tort reform.
Second, even more simple and simplifying, abolish the prohibition against buying health insurance across state lines.
Third, tax employer-provided health insurance.
Read the rest of the article.

Charles Krauthammer

With HSAs, Mammogram Frequency Is A Non-Issue?

The NY Times blog has an article "The Uproar Over Mammography," which links to a WSJ op-ed "A Breast Cancer Preview: The mammogram decision is a sign of cost control to come."

In a world of consumer-driven health care that includes Health Savings Accounts (HSAs), wouldn't this "uproar" be a complete non-issue? In that world, patients spending their own money could make decisions on their own, in consultation with their physician, about the timing and frequency of their mammograms.

Think about oil changes for your car. If the manufacturer recommends oil changes every 5,000 miles, but you decide on a different frequency - say every 3,000 miles or every 10,000 - that's not a problem. Now if your car insurance covered routine oil changes, and then the government introduced "government car insurance reform" with a "public option," then the frequency of oil changes would become an issue and could lead to an "uproar."

But in a world of consumer-driven health or auto care where consumers pay for routine maintenance or health exams, there's no "uproar," since consumers make decisions on the frequency of their oil changes or mammograms, and are directly responsible for the cost.

Mark Perry

Southern Health To Drop HCA From Network?

In a letter to brokers on Monday, Southern Health indicated that effective January 4, 2010, HCA Health Systems may no longer be in their network. The letter is too long to go into detail here, but from the tone of the letter, it does not appear to be a case of “posturing” by one of the parties in a negotiation. We say that because
a) the date of the separation is so close, and that
b) the dispute involves three separate contracts.

Southern Health indicated that employer letters are scheduled to be mailed this week. If no resolution has been reached, member letters will be mailed on or about December 3, 2009. You can view the letters by using the links below:

* HCA Member Letter
* HCA Employer Letter

In additions, if you want to see the letter to brokers in its entirety, contact us and we will send it to you.

The following is a listing of HCA facilities that may no longer be participating as of January 4, 2010. In addition, we have provided a listing of facilities that will continue to be in the network. This list was prepared by Southern Health and included in its letter.

Richmond HCA Facilities
Henrico Doctors' Hospital
Chippenham and Johnston-Willis Hospital
John Randolph Hospital
Retreat Hospital

In-Network Richmond Facilities
MCV Hospital
St. Mary's Hospital
Children's Hospital
Richmond Community Hospital
Sheltering Arms Hospital
Bon Secours Memorial Regional Medical Center
Bon Secours St. Francis Medical Center
Southside Regional Medical Center
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Southwest Virginia HCA Facilities
Lewis Gale Medical Center
Montgomery Regional Hospital
Pulaski Community Hospital

In-Network Southwest Virginia Facilities
Carilion Roanoke Community Hospital
Carilion Roanoke Memorial Hospital
Carilion Franklin Memorial Hospital
Bedford Memorial Hospital
Carilion New River Valley Medical Center
Alleghany Regional Hospital
Carilion Giles Memorial Hospital
Memorial Hospital of Martinsville
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Northern Virginia HCA Facilities
Reston Hospital Center

In-Network Northern Virginia Facilities
Inova Fair Oaks Hospital
Inova Fairfax Hospital
Loudon Hospital Center

We will continue to monitor this situation and provide updates as necessary.

Independent Contractor Or Employee?

Remember that kids' game - Animal, Vegetable, or Mineral? Today in business, there is a similar question: Independent contractor or employee? But it's not a game. The misclassification of a worker can have serious financial consequences.

It's an issue that always comes to the forefront in an economic downturn. For every employee, employers must withhold income tax, withhold and pay Social Security and Medicare taxes, and pay unemployment tax. In addition, employees may be eligible to be included in benefit plans. However, employers generally do not have any of these obligations for an independent contractor.

The problem is that both penalties and interest can pile up if a worker is incorrectly treated as an independent contractor. In the case of a retirement plan, an employer who has misclassified an employee as an independent contractor eventually will be required to make up the benefits the individual would have received as an employee. That can end up being quite expensive.

For more information and a list of what the IRS considers when determining if someone should be a W2 employee or a 1099 employee, read the rest of the article here.

Small Group Claims Data

One of the carrier's provides some claims data from their pool of small groups in Virginia with certain size group renewals. We thought you might find some of the information interesting:

22% of Claims: Inpatient Services

• Surgery accounted for 52% of inpatient costs. Top “drivers” (as they called them) were cardiovascular and orthopedic procedures (including spine, knee and hip surgeries)

21% of Claims: Outpatient Services

• Surgery accounted for 23% of outpatient costs – Top driver was orthopedic surgery
• Emergency room accounted for 30% of outpatient costs
• Diagnostic procedures accounted for 37% of outpatient costs

36% of Claims: Professional Services

• Office and outpatient visits accounted for 30% of professional services
• Surgery accounted for 9% of professional services

21% of Claims: Prescriptions Drugs

• Brand name drugs account for 76% of total cost of prescription drugs
• Generic drugs are being dispensed at higher and higher rates
• People are asking for generic drugs and that is showing up in the data. Here is look at the percentage of drugs that are being dispensed as generic drugs over the last 4 years:

2005……………….51%
2006……………….57%
2007……………….62%
2008……………….67%

Despite What We Want, Congress Barrels Ahead...

Just 38% of voters now favor the health care plan proposed by President Obama and congressional Democrats. That’s the lowest level of support measured for the plan in nearly two dozen tracking polls conducted since June.

The latest Rasmussen Reports national telephone survey finds that 56% now oppose the plan.

Only 16% now believe passage of the plan will lead to lower health care costs. Nearly four times as many (60%) believe the plan will increase health care costs. Most (54%) also believe passage of the plan will hurt the quality of care.

Rasmussen Reports

IRS and SSA Announce New Contribution, Benefit, and Compensation Limits

The Internal Revenue Service and the Social Security Administration have announced 2010 cost-of-­living adjustments to limitations applicable to qualified retirement plans. Here is a summary of the new 2010 limitations:

The social security taxable wage base is unchanged at $108,800.

The limitation for defined contribution plans under Section 415(c)(1)(A) is unchanged for 2010 at $49,000.

The limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) remains unchanged at $195,000.

The annual compensation limit under Sections 401(a)(17) for qualified plans, 404(l) for deduction purposes, 408(k)(3)(C) for SEPs, and 408(k)(6)(D)(ii) for SARSEPs remains unchanged at $245,000.

The threshold used in the definition of highly compensated employee under Section 414(q)(1)(B) remains unchanged at $110,000.

The threshold concerning the definition of “Key Employee” in a top-heavy plan under Section 416(i)(1)(A)(i) remains unchanged at $160,000.

2010 year limitations mandated by the provisions of EGTRRA.

The limitation under Sections 402(g) for 401(k) plans, SARSEPs, and 403(b) plans, and 457(e) for 457 plans, for elective salary deferrals remains unchanged at $16,500.

The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts remains unchanged at $11,500.

The limitation for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $5,500.

The dollar limitation under Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $2,500

For more details, see the announcement on the IRS website.

Soak The Uninsured

"Here's a dirty little secret about health care reform that Democrats in Washington would prefer you didn't know: They're counting on people to stay uninsured.

The financing for House Speaker Nancy Pelosi includes $167 billion in penalty payments to the federal government. About $135 billion of that money would come from private employers who don't offer insurance to their workers; those employers would have to pay a tax equal to 8 percent of payroll.

The rest would come from individuals who decline to buy under the new individual mandate. Such individuals would have to pay a fine equal to 2.5 percent of gross income.

Of course, it's possible that the bean-counters are wrong, and both employers and individuals would pony up for insurance coverage in greater numbers than anticipated. But in that case, the total bill for Pelosicare would rise accordingly.

So the options are: bigger deficits, higher taxes -- or lots of companies and individuals paying hefty fines. Do the members of Virginia's congressional delegation like those choices?"

Richmond Times-Dispatch

Sally Hampton Is Out Of Touch

In an article about Whole Foods health plan, Sally Hampton, an advocate of the single-payer system (universal health care), shows the mental giant she is. Before you read her comments below, understand that the workers PAY NOTHING in the way of premiums if they work 30 hours per week, and that 89% of the workers work enough hours to qualify for the FREE health care. With that as a backdrop…

“They do not provide good health care benefits for their employees,” she explains, describing the coverage as a “self-rationing” type program and noting how the Personal Wellness Account can be quickly depleted even for those who earn double minimum wage. “If one of these employees gets sick, they’re in trouble.”

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Every decision we make is self-rationing...
It goes back to personal responsibility
and accountability.
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Duh. Every decision we make is self-rationing. We have limited funds so we need to make decisions as to how we spend our money. It goes back to personal responsibility and accountability. But that is the essence of the problem with people like Sally Hampton. They want to take all decisions away from you and give them over to ‘those who know better.’

Really?

The health care plan that Whole Foods has is one model of what we can do in this country to reform health care. If anyone, disagrees with that and believes in the universal health coverage being proposed in Congress, PLEASE contact me. I would love to have a conversation with someone who truly believes that type of care is better. We may agree to disagree, but I think the conversation would be fascinating.

How Is That Stimulus Plan Working?

(Click on image to enlarge)

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."

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