June 19, 2012

June 19, 2012

June 19, 2012

Industry Health Reform Update

(provided by Humana 6/20/2012)

1. Waiting for the Supremes

Odds are the Supreme Court will rule on the health reform law next week. It could be this week, or the Court could even decide to extend its current term – which is scheduled to end on June 30 – into early July and issue a decision then.

But conventional wisdom has always been that the health reform decision will be handed down at the very end of this Court term, probably on June 25 or 28. Of course, nobody outside of the Court really knows. As Justice Ruth Bader Ginsburg quipped at a recent conference hosted by the American Constitutional Society, "At the Supreme Court, those who know don't talk. And those who talk don't know."

Here are some perspectives Court watchers have shared:

• "The justices have already secretly voted.... They met privately as a group just days after the late March arguments, voting preliminarily. Individual justices were assigned to write the one or more opinions, as well as separate dissents.... The Court holds fast to an unofficial but self-imposed deadline to have all draft opinions finished by June 1. They are circulated to colleagues, and subsequent dissents and concurrences must be submitted by June 15. Nothing is final until the decision is released to the public. Votes can and do change at the last minute." (Tom Goldstein, SCOTUSblog)
  
  
• "The opinion could very well run several hundred pages. It could be exceptionally nuanced. And it could be a fractured opinion. Remember, the justices were asked to rule on four different parts of this case.... So expect news to break that the Supreme Court has handed down the decision. But it may not be immediately evident what the justices decided." (Chad Pergram, Foxnews.com)
  
  
• "The length and scope of the Affordable Care Act, the dozens of briefs by the parties with hundreds more from amici, and three days of oral arguments in late March have given members of the Court much to ponder and debate. Transcripts of those oral arguments reveal how thorny these issues are and how difficult it is to discern correct solutions." (The Health Affairs Blog)
  
  
• "Rarely in the high Court's history has a decision had so much riding on it, for the economy, for the vast health care industry and for the nation's body politic – from the White House race to the 435 House campaigns.... Groups on both sides have fallen back into a state of nervous anticipation. No one is certain how the Court will rule, or how the politics will shake out in the aftermath." (Jonathan Weisman and Michael Shear, New York Times)
  
  

The case itself
The case is significant not just because it will affect the future of health care and the health reform law, but because it concerns issues affecting the powers of Congress and the power balance between the federal government and the states.

Below are the four issues the Court is considering. Big picture, the Court is considering three possible scenarios: strike the entire law, partially strike the law, or uphold it as it was passed by Congress and signed by the President.

The response
Of course, after the Supreme Court rules, reactions will pour out from all over. Preparations already are being made. As New York Times writers Jonathan Weisman and Michael Shear said, "In the event that the law is crippled or eviscerated, the contest will be to ensure that the other party is held responsible, not only for the popular provisions that are lost but what comes next for the 46 million Americans still without health insurance."

• Decisions are handed down at 10 a.m. If this one comes Monday, June 25, neither the House nor Senate is expected to be in session, which could mute any immediate response.
  
  
• Unless the entire law is thrown out, Republican House leaders say they will quickly force a vote to repeal the law.
  
  
• House Democrats are carrying "pocket cards" (talking points) detailing how the reform law has already helped people (e.g.: 86 million have received free preventive care).
  
  
• If the entire law is thrown out, Democrats will try to force Republicans to say how they plan to handle the problem of the uninsured.
  
  
• House Speaker John Boehner says, "Republicans will not repeat the Democrats' mistakes. We won't rush to pass a massive bill the American people don't support."
  
  
• At the request of Families USA, groups that favor the law met in Washington last week to plan a coordinated response.
  
  
• The Romney campaign, the Republican National Committee and congressional campaign offices are assembling a war room.
  
  
• The Obama administration continues to say it remains "confident and optimistic" that the Supreme Court will uphold the reform law. "Having said that," says Health and Human Services Secretary Kathleen Sebelius, "we'll be ready for Court contingencies."
  
  

Meanwhile, if only the mandate to have health insurance is struck, the trade group America's Health Insurance Plans will continue its aggressive campaign focused on helping people understand the link between the coverage mandate and other insurance regulations such as guaranteed issue.

And the Business Roundtable sent a letter to congressional leaders requesting a "cooling-off" before Congress pursues any legislative response to the ruling.

2. Continuing the anti-health reform battle

Despite the imminent ruling from the High Court, GOP members of the House continued their push to dismantle the health reform law one piece at a time. Their latest efforts took aim at the tax on medical devices, scheduled to take effect in January, along with some restrictions the law put on funding and using health savings accounts. Both provisions would be repealed under legislation that recently cleared the House by a vote of 270-146. Although some Democrats joined Republicans in approving this bill, it has little chance of passing the Democrat-controlled Senate.

The GOP's repeal message continued as Mitt Romney used a campaign stop in Florida to remind voters that one of his top priorities as president will be repealing and replacing the law. "If I'm the president at a time when the Supreme Court has left (the law) in place, I will repeal it on Day One by sending out a waiver for all 50 states.... Now, if we're able to repeal it, or if the Supreme Court is able to get that job done for us, we want to replace it," Romney said.

Meanwhile, the Congressional Budget Office released a report that makes it clear that the pressure to cut health care costs and deal with health care entitlement issues will not be going away anytime soon. According to CBO, the national debt will reach 73 percent of GDP by the end of this year – up from 40 percent at the end of 2008. A recent report from Centers for Medicare and Medicaid Services (CMS) also offered new projections on the growth in national health care spending over the next decade. The report, published annually by the CMS actuaries, predicted that health care spending would account for nearly one-fifth (19.6 percent) of the U.S. economy by 2021. Much of that increase would come in 2014 and after, when several of the health reform law's major provisions take effect.

In an interview with Kaiser Health News, former CMS Administrator Thomas Scully, who served under the first President George Bush, said he believes that these debt and cost issues will delay the 2014 implementation of the reform law. "The issue that I think is not going to be ready is the money," he said. "You've got to cut defense spending. You're going to have to massively cut Medicare and Medicaid." But he also believes that even if everyone wants to do "the right thing," which he defines as providing universal health care coverage, "Guess what – 2014 – we can't do it in this deficit environment."

3. Insurers pledge to maintain some protections regardless of Supreme Court ruling

Last week, three of the nation's largest health insurance providers – United, Aetna and Humana – pledged to continue important patient protections contained in the health care reform law, regardless of how the Supreme Court rules. In a statement announcing the decision, Humana said, "Health plan members should have the peace of mind of knowing the company embraces and will maintain these common-sense provisions that add stability and security to health care coverage."

Each of the three health insurers promised to maintain some or all of the following provisions:

• Lifetime limits – Plan members will not have dollar limitations on the amount of medical care they can receive over their lifetime.
  
  
• Rescission standards – Policies will not be retroactively canceled except in cases of fraud or intentional misrepresentation of material facts.
  
  
• Appeals and external review processes – Plan members will continue to have a streamlined process for appealing claims decisions, and an opportunity to have their cases inspected by independent review organizations.
  
  
• Preventive services with no cost sharing – Plan members will continue to have access to preventive health care services without co-payments or other out-of-pocket charges.
  
  
• Dependent coverage to age 26 – Dependent family members will be allowed to remain on their parents' policies up to age 26.
  
  

4. Health reform briefs

Higher cigarette tax could lead to higher deficits, CBO finds
A new study by the Congressional Budget Office (CBO) came to a surprising conclusion: Significantly increasing the tax on cigarettes could put a strain on federal entitlement programs. According to the CBO report, adding another 50 cents to the federal cigarette excise tax would shave $42 billion from the deficit by 2021. However, the savings reaped by Medicare and Medicaid thanks to a healthier population would be more than offset by the resulting drain on Social Security, as healthier individuals live longer and collect more benefits over the course of their lives. "Taken together, the health effects of the increase in the federal excise tax on cigarettes would produce very small net reductions in the deficit for about five decades and very small increases in the deficit thereafter," the report found.

Enrollment in Medicare Advantage jumps 10 percent
A new report from the Kaiser Family Foundation showed that participation in Medicare Advantage plans jumped 10 percent in the last year, reaching a record high of 13.1 million enrollees in March 2012. Every state except Alaska and New Hampshire saw increases during the period, pushing membership in Advantage plans to 27 percent of total Medicare enrollment. According to the report, lower monthly premiums, which fell by an average of $4 over the last year, enticed more people to sign up for Medicare Advantage plans.

Agents and brokers expect higher premiums for 2012
The Kaiser Family Foundation also released a new survey of agents and brokers examining their views on the health insurance market for individuals and small businesses. When asked to forecast the typical premium increase for 2012, 39 percent of respondents expected to see a jump of 11-20 percent, while 33 percent anticipated a more modest increase of 6-10 percent. Agents reported seeing higher deductibles as well, particularly in the individual market. The survey also looked at opinions on the health care reform law, revealing that an overwhelming majority of agents (73 percent) had an unfavorable view of the law.

Employers to continue providing coverage despite costs of health reform
A new survey from the International Foundation of Employee Benefit Plans found that nearly 70 percent of employers think the health care reform law will drive up their costs. Even so, 86 percent said they are likely to continue providing their employees with health coverage in 2014. "These employers recognize that offering health care coverage is an important benefit that helps retain current employees, attract future talent and increase employee satisfaction," said Michael Wilson, the foundation's CEO. The survey also found that nearly half of employers (47 percent) are bringing their businesses in compliance with the health reform law despite its uncertain future. Approximately one-third of employers, however, are waiting to hear the Court's decision before meeting the law's requirements.

Cost trumps invincibility for young adults without health insurance
Cost, not the feeling of being invincible, is a key reason why young adults forgo health insurance – this according to a recent report by the Commonwealth Fund. Approximately 6.6 million 19- to 25-year-olds gained coverage as a result of the health reform law's provision allowing young adults to remain on their parents' policies. Nevertheless, not all young adults have parents with health plans they can join. Nearly 40 percent between the ages of 19 and 29 were uninsured at one time or another in the past year, and about 36 percent had medical bill problems or were paying off medical debt.

Humana joins the primary care initiative
Starting this fall, Humana will be working with CMS on the Comprehensive Primary Care Initiative – a four-year program, explains Humana Chairman and CEO Mike McCallister, "to test changes in the delivery of primary care and to advance the concept of primary care medical homes." Participating practices in Colorado, Arkansas and Ohio will get additional financial support from Humana, but must agree to provide enhanced patient services, including offering longer and more flexible hours; using electronic health records; delivering preventive care; coordinating care with patients' other health care providers; and engaging patients and caregivers in managing their own care. "We know that when we support primary care, we get healthier patients and lower costs," said Acting CMS Administrator Marilyn Tavenner. "This initiative is another example of how the public and private sectors can work together to meet the critical need for these services."

Undoing health law could have messy ripple effects

WASHINGTON (AP) - It sounds like a silver lining. Even if the Supreme Court overturns President Barack Obama's health care law, employers can keep offering popular coverage for the young adult children of their workers.

But here's the catch: The parents' taxes would go up.

That's only one of the messy potential ripple effects when the Supreme Court delivers its verdict on the Affordable Care Act this month. The law affects most major components of the U.S. health care system in its effort to extend coverage to millions of uninsured people.

Because the legislation is so complicated, an orderly unwinding would prove difficult if it were overturned entirely or in part.

Better Medicare prescription benefits, currently saving hundreds of dollars for older people with high drug costs, would be suspended. Ditto for preventive care with no co-payments, now available to retirees and working families alike.

Partially overturning the law could leave hospitals, insurers and other service providers on the hook for tax increases and spending cuts without the law's promise of more paying customers to offset losses.

If the law is upheld, other kinds of complications could result.

The nation is so divided that states led by Republicans are largely unprepared to carry out critical requirements such as creating insurance markets. Things may not settle down.

"At the end of the day, I don't think any of the major players in the health insurance industry or the provider community really wants to see the whole thing overturned," said Christine Ferguson, a health policy expert who was commissioner of public health in Massachusetts when Mitt Romney was governor.

"Even though this is not the most ideal solution, at least it is moving us forward, and it does infuse some money into the system for coverage," said Ferguson, now at George Washington University. As the GOP presidential candidate, Romney has pledged to wipe Obama's law off the books. But he defends his Massachusetts law that served as a prototype for Obama's.

While it's unclear how the justices will rule, oral arguments did not go well for the Obama administration. The central issue is whether the government can require individuals to have health insurance and fine them if they don't.

That mandate takes effect in 2014, at the same time that the law would prohibit insurance companies from denying coverage to people with existing health problems. Most experts say the coverage guarantee would balloon costs unless virtually all people joined the insurance pool.

Opponents say Congress overstepped its constitutional authority by issuing the insurance mandate. The administration says the requirement is permissible because it serves to regulate interstate commerce. Most people already are insured. The law provides subsidies to help uninsured middle-class households pay premiums and expands Medicaid to pick up more low-income people.

The coverage for young adults up to age 26 on a parent's health insurance is a popular provision that no one's arguing about. A report last week from the Commonwealth Fund estimated that 6.6 million young adults have taken advantage of the benefit, while a new Gallup survey showed the uninsured rate for people age 18-25 continues to decline, down to 23 percent from 28 percent when the law took effect.

Families will be watching to see if their 20-somethings transitioning to the work world will get to keep that newfound security.

Because the benefit is a winner with consumers, experts say many employers and insurers would look for ways to keep offering it even if there's no legal requirement to do so. On Monday, UnitedHealth Group Inc., the nation's largest insurer, is announcing that it will continue to offer coverage to young adults even if the health care law is struck down.

But economist Paul Fronstin of the Employee Benefit Research Institute says many parents would pay higher taxes as a result because they would have to pay for the young adult's coverage with after-tax dollars. Under the health care law, that coverage now comes out of pre-tax dollars.

Fronstin says there's no way to tell exactly how much that tax increase might be, but a couple of hundred dollars a year or more is a reasonable ballpark estimate. Upper-income taxpayers would have a greater liability.

"Adult children aren't necessarily dependents for tax purposes, but an employer can allow anyone to be on a plan, just like they now allow domestic partners," said Fronstin. "If your employer said, 'I'm going to let you keep this,' it would become a taxable benefit for certain people."

Advocates for the elderly are also worried about untoward ripple effects.

If the entire law is overturned, seniors with high prescription costs in Medicare's "donut hole" coverage gap could lose annual discounts averaging about $600. AARP policy director David Certner says he would hope the discounts could remain in place at least through the end of this year.

Yet that might not be possible. Lacking legal authority, Medicare would have to take away the discounts. Drugmakers, now bearing the cost, could decide they want to keep offering discounts voluntarily. But then they'd risk running afoul of other federal rules that bar medical providers from offering financial inducements to Medicare recipients.

"I don't think anyone has any idea," said Certner.

A mixed verdict from the high court would be the most confusing outcome. Some parts of the law would be struck down while others lurch ahead.

That kind of result would seem to call for Congress to step in and smooth any necessary adjustments. Yet partisan divisions on Capitol Hill are so intense that hardly anyone sees a chance that would happen this year.

Big Changes in College Health Plans

Nearly all health insurance plans offered in the United States will be required to offer more coverage to their enrollees under the new health care reform law.  Perhaps an unintended consequence, however, will be the law's effect on colleges throughout the country, many of which previously offered low-cost, low-coverage plans to their students, says the Wall Street Journal.

Bethany College in Lindsborg, Kansas, for example, has decided to discontinue its school-run health insurance offering entirely, arguing that it could no longer justify the financial expense it would be imposing on students.

• This last year, the school offered a 12-month plan that cost students $445, while capping payouts at $10,000.
• The Obama administration, however, requires that the payout cap be set at a minimum of $100,000.
• The college said that students would have had to pay more than $2,000 to get that new level of coverage.
• Lenoir-Rhyne University in Hickory, North Carolina, the University of Puget Sound in Tacoma, Washington, and Cornell College in Mount Vernon, Iowa, are all following a similar policy.

Other schools will not be so merciful to their students.  The State University of New York at Plattsburgh, for example, will offer its health care plan to students for between $1,300 and $1,600.  It will also require students to have health insurance, either through the school or not.

Importantly, this impact of the law is not isolated to only a few small colleges.  Rather, many students across the country will encounter similar issues at their own institutions.

• According to a 2008 study by the Government Accountability Office (GAO), roughly two-thirds of college students in that year received health insurance from the plans of their parents.
• Around 600,000 students, however, bought their own insurance in that year, and many of these students purchased that insurance through their school.
• This represents approximately 7 percent of all college students ages 18 to 23.
• The GAO found that roughly 60 percent of schools' health insurance plans maintained coverage of $50,000 or less for specific conditions, and almost all of the rest had some sort of payout caps that will have to be done away with by 2014, according to the health care law.

Source: Louise Radnofsky, "Big Changes in College Health Plans," Wall Street Journal, June 4, 2012.

For text:

http://online.wsj.com/article/SB10001424052702303506404577444410947791758.html