• House E&C committee requests health insurers' financial information
• As optimism for bipartisan health care bill wanes, reconciliation is considered

• Ending tax subsidy for employer-provided health insurance Is regressive
• Mayor, labor leaders tout success of San Francisco's public health care option
• Survey finds employers face 10.5 percent health care cost increases

House E&C committee requests health insurers' financial information

On August 17, Reps. Henry Waxman (Cal.) and Bart Stupak (Mich.), respectively chairmen of the House Energy and Commerce Committee and that committee's subcommittee on oversight and investigations, sent a letter to more than 50 health insurers seeking information on each company's financial operations. The House Energy and Commerce Committee is one of the three House committees crafting health care reform legislation (H.R. 3200).

The information sought includes, for each year from 2003 through 2008, tables listing each employee or officer with annual compensation exceeding $500,000; each individual's position; and the value of each specific element of compensation, including salary, bonuses, perquisites, stock grants, and other financial arrangements. Also sought is information on each company board member and that person's individual compensation, and details on all company conferences and retreats held or sponsored since Jan. 1, 2007, including expenses and reason for the events. Furthermore, the companies were requested to provide a table listing for each year from 2005 to 2008, total premium revenue, total claims payments, sales expenses, dividends paid, other expenses, and profits for all of their health insurance products. This last information is to be segmented by markets, including employers (self-insured and insured), individual coverage, and government plans.

Insurers that received requests include Aetna, several Blue Cross and Blue Shield plans across different regions, CIGNA, Group Health Cooperative, Harvard Pilgrim Health Care Group, Humana, Kaiser, and United Health Group. The companies were asked to provide the requested information by September 14.

For further information, visit http://energycommerce.house.gov/.

As optimism for bipartisan health care bill wanes, reconciliation is considered

Both Republican and Democratic Senate lawmakers say they are still hoping for a bipartisan health care reform bill, but Democrats are increasingly raising the possibility of using the reconciliation process, which would only require a simple majority for approval, instead of the 60 votes necessary to block a filibuster.

Senator Charles E. Schumer (D-NY) said on NBC's "Meet the Press" that Democratic leaders were less optimistic of chances to create a bipartisan health reform bill, especially if it included a public option, and were willing to use Senate procedural rules to overcome Republican opposition. "We are now looking at the alternatives because it's looking less and less likely that our - that certainly the Republican leadership in the House and Senate will want to go for a bipartisan bill," said Schumer. "We are considering alternatives... they include looking at reconciliation, which only needs 51."

The New York Lawmaker also maintained that the public option still remains a critical part of lowering costs and making health care more affordable. "Obviously, we are going to try to get a bipartisan bill. But a public option, to many, many objective observers, is essential to bringing those costs down because it provides competition," said Schumer.

Senator Orin G. Hatch (R-Idaho), said on CBS's "Face the Nation," that approaching the bill in a bipartisan way was needed but Democratic talk of using the reconciliation process was a "legislation killing" approach "that literally Republicans cannot go along with."

Senate Finance Committee ranking member Charles E. Grassley (R-Iowa) also backed continuing efforts for a bipartisan approach and chided Democrats for moving away from that principle. "It's a partisan approach... and you need consensus on something this important," he said on "Face the Nation."

Senate Budget Committee Chairman Kent Conrad (D-ND), one of six negotiators on the Senate Finance Committee, also speaking on CBS's "Face the Nation," said that using the reconciliation process would lead to "swiss cheese" for legislation. "So it's an option, but it's not a very good one," he said. He was also opposed to the idea of splitting the health care bill into two parts that could pass separately, saying it was "unlikely" to work given the heavy schedule of the Senate.

Ending tax subsidy for employer-provided health insurance Is regressive

Eliminating tax subsidies for employer-paid health insurance "would inflict a regressive tax increase, taking a larger share of income from insured near-poor and middle-class families than from the wealthy," according to David U. Himmelstein and Steffie Woolhandler, physicians and professors at the Harvard Medical School. Other experts claim that the tax subsidy for employer-provided health insurance encourages over insurance and is highly regressive, directed mainly to higher-income families. To lower health care costs and raise funds to expand health care coverage, some in Congress have considered taxing the value of health insurance benefits in excess of a certain limit..

In their article, "The Regressivity of Taxing Employer-Paid Health Insurance," posted in the August 19 issue of the New England Journal of Medicine, Drs. Himmelstein and Woolhandler argued that, viewed as a percentage of family income, "current federal health benefit tax expenditures are clearly progressive. An analysis of families that actually have employer-paid coverage shows that as income rises, the per-family tax subsidies plummet as a percentage of family income." Of course, the higher the family income, the likelier the family has employer-provided health insurance — 61% of families with income over $99,999, compared to 13.% of families with income between $10, 000 and $19,999.

"In other words, for families with employer-paid coverage, a move to tax health benefits would cost low-income families (with annual incomes below $10,000) 18.3% of their total income but high-income families (with annual incomes above $99,999) only 2.7%. And the tax rate would drop even lower for the super-rich. A Goldman Sachs executive who enjoyed the firm's infamous $40,543 health plan got a federal tax subsidy of about $15,367 last year. But that's only 0.13% of the bonuses received by the company's four top earners.

"So though taxing health benefits would spare the uninsured, the average poor family with employer-paid coverage would be taxed at a rate 140 times higher than Wall Street titans. In our book, that's a regressive tax."

The article post is available at http://healthcarereform.nejm.org/?p=1521.

Mayor, labor leaders tout success of San Francisco's public health care option

National AFL-CIO President John Sweeney joined San Francisco Mayor Gavin Newsom and state and local labor leaders to urge Congress to pass health care reform with a strong public option, touting the success of San Francisco's universal health care system. Leaders cited "Healthy San Francisco" as an example of how a public option can effectively cover the uninsured and create choice and competition in the insurance market without negatively impacting job growth.

The San Francisco program currently covers 75 percent of those in the city who were previously uninsured, Mayor Newsom announced.

"Even those who fight reform cannot deny that our present health care system is broken. It is inefficient, unfair, and enormously costly," said Mayor Newsom. "A public plan can work. San Francisco is proving it by driving down costs, improving access to care and creating competition."

Congress can gain valuable insight into what a future public health care option nationally might accomplish by looking at the example of San Francisco's first-in-the-nation program. Healthy San Francisco is, in essence, a one-of-a-kind example of a public option of health insurance. Low-income workers are able to access subsidized health insurance while those with higher incomes are given an option to buy into a public health insurance option at reduced costs than they would face in the private market.

A national public option is essential because it will create choice for workers and competition for private insurers, which will drive down costs and give more people access to quality care, Sweeney said.

"The bottom line is that people have to realize it's us against the giant insurance companies --we have to insist that Congress hold them accountable and put patients and our doctors in charge of health care," Sweeney said.

The need for health insurance reform is especially acute in California, said California Labor Federation Executive Secretary-Treasurer Art Pulaski, citing recent budget cuts that are likely to add significantly to the rolls of the uninsured and underinsured.

"What's currently a health care crisis in California is about to turn into a full-blown epidemic," Pulaski said. "The Governor's recent budget cuts decimate vital services for California families. Those who need care the most --seniors, the disabled, pregnant women and children --are even more vulnerable now."

Despite the rhetoric from some business groups that a public health care program would lead to job loss, San Francisco's experience with a public option shows otherwise, said Ken Jacobs of the UC Berkeley Labor Center. Based on the most recently available data, as of December 2008 there is no indication that San Francisco employment grew slower surrounding counties.

"The San Francisco experiment is working well," Jacobs said. "The public option has proved popular with individuals and employers alike, while not displacing the private market. And the employer requirement has not led to the job losses that many feared. These are important lessons for the national debate."

Source: San Francisco Mayor's Press Release, August 20, 2009.

Survey finds employers face 10.5 percent health care cost increases

Health care costs are expected to increase on average 10.5 percent in the next 12 months, according to Aon Consulting, which surveyed more than 60 leading health care insurers, representing more than 100 million insured individuals, and found that health care costs are projected to increase by 10.4 percent for HMOs, 10.4 percent for POS plans, 10.7 percent for PPOs and 10.5 percent for CDH plans. These are slightly lower than one year ago, when HMO cost increases were 10.6 percent and POS plans were 10.5 percent. PPOs and CDH plans remain steady at 10.7 percent and 10.5 percent, respectively.

"Aon Consulting conducts a health care trend survey twice a year to forecast the expected future increase in employer-provided health plan claims cost, before any plan changes, based on input from leading health plan actuaries," said John Zern, Aon Consulting's U.S. Health & Benefits Practice director. "While we're seeing a slight decrease in the trend rates, it's still at double digits, and this year, it's compounded by a struggling economy, lower wage increases, and in some cases, salary freezes."

Aon Consulting's U.S. Health & Benefits Chief Medical Officer, Dr. Paul Berger, acknowledges there has been progress in lowering the medical trend rate during the last several years, but emphasizes there's still significant work to be done. He suggests wellness and health promotion initiatives are critical in the next phase of lowering the medical trend rate.

"Approximately 30 percent of workers have chronic medical conditions, which account for 65 percent of this nation's medical spend," said Berger. "Wellness programs provide a strong platform for effectively managing chronic conditions and preventing future problems, but it's up to the individual to take advantage of the programs offered. Behavior change is never easy, but those willing to make changes in this capacity benefit from better health and lower health care costs."

Prescription drug costs are expected to increase 9.3 percent, which is slightly lower than the 9.4 percent trend rate one year ago. The specialty pharmacy trend rate is 13.2 percent, up from 12.4 percent one year ago. Aon Consulting points to the sluggish rate of drug adoption across the board, compounded by the FDA's reduced rate of drug approvals - especially for new molecular entities and biologic products - as the contributing factors leading to this decline.

In addition, health care rate increases for retirees over the age of 65 are projected to be 6.6 percent for Medicare Supplement plans and 7.3 percent for Medicare Advantage plans, down from 7.3 percent and 7.7 percent, respectively, one year ago.

Source: Aon Consulting.