• Baucus makes his "mark" on health reform
• Public option would not increase federal subsidies: CBO

• Uninsured rate dropped from 13 percent to 4 percent in Massachusetts

• Almost 50 percent of Americans under 65 lack health insurance coverage
• Business leaders, health professionals call for health reform this year
• Family health care premiums increased to $13,375 annually In 2009
• Teamsters oppose Baucus Plan to tax health insurance companies

Baucus makes his "mark" on health reform

Senate Finance Committee Chairman Max Baucus (D-Mont.) on September16 issued his health care reform legislation that the full committee will consider in hearings starting Sept. 22. According to preliminary estimates from the Congressional Budget Office (CBO), under the Senate plan "the share of legal nonelderly residents with insurance coverage would rise from about 83 percent currently to about 94 percent" by 2019.

Senators on the Finance Committee have submitted over 500 amendments to the Baucus proposal, to be considered at the mark-up meetings.

The proposal, as expected, does not include a government run insurance option and its absence has cost the support of the more liberal Democrats on the Committee. The proposal does create nonprofit consumer-owned cooperatives. Several Democrats have also expressed concern over the mandate on health insurance coverage for individuals and the economic burden it would place on lower income households. Baucus remains confident, however, that those members will eventually come around and back the bill. So far, no Republican members have said they will support the measure.

Medicare and Medicaid changes. Under the legislation, Medicare beneficiaries would not pay any out-of-pocket costs for preventive services. It also would establish a value-based purchasing program for hospitals under which hospital payment would be tied to hospital performance on specific quality measures. Physicians would be required to participate in the Physician Quality Reporting Initiative program by 2011. Providers in different institutional settings could establish accountable care organizations as a means of coordinating care for patients.

Physicians, who face a 21 percent cut in reimbursement under the physician fee schedule in 2010, would instead receive a 0.5 percent increase in reimbursement.

CMS would be required to start tracking hospital readmission rates for potentially avoidable readmissions. Starting in 2012, hospitals with readmission rates above a certain threshold would face a 20 percent reduction in payments if a patient is readmitted for a selected treatment.

Annual payment increases to Part A and Part B providers would be reduced to reflect expected gains in productivity from other source such as additional insured individuals.

Medicare Advantage (MA) payments would be based on competitive bids, rather than statutory benchmarks. It also would eliminate overpayments to MA plans, but provide bonus payments to plans based on specific quality measures. Part D beneficiaries with low to moderate incomes would receive a 50 percent discount on certain prescription drugs if the beneficiaries fall into the “donut hole,” where ordinarily they would be responsible for paying 100 percent of the cost of their drugs.

The legislation would expand Medicaid eligibility for all parents, children, pregnant women, and childless adults with incomes at or below 133 percent of the federal poverty level ($14,400 for an individual and $30,000 for a family). States would receive extra funding for implementing programs that provide care for chronically ill individuals in a home setting as opposed to an institutional setting.

Insurance changes. The legislation includes a variety of health insurance market reforms that would make it easier for individuals to get insured and stay insured. There were would be a shared responsibility for individuals to purchase insurance and employers to offer insurance to their employees. Individuals or employers who did not follow the mandate would have to pay an excise tax.

Tax credit subsidies would be available for individuals with incomes below a specified level to help them purchase insurance. Also, the excise tax would not be levied against individuals below a certain income level.

The America’s Health Future Act provides a tax credit to small businesses that offer health insurance to their employees with eligible employers receiving a credit for up to 35 percent of their contribution in 2011 and 2012. Once insurance exchanges are up and running in 2013, qualified small employers purchasing insurance through the exchanges can receive a tax credit for two years that covers up to 50 percent of the employer’s contribution. The plan also proposes a refundable tax credit for low and middle-income individuals to subsidize the purchase of health insurance.

Financing. According to a release from the Senate Finance Committee, the package of insurance market and Medicare and Medicaid reforms will cost $856 billion over 10 years. The CBO breaks down the cost of the program slightly differently; its analysis shows that the expansion in private insurance and Medicaid and the Children’s Health Insurance Program (CHIP) would cost $774 billion over 10 years. These costs would be partly offset by $215 billion in revenues from an excise tax on high-premium insurance plans and $59 billion in revenues from other sources, for a net cost of $500 billion over 10 years. (The differences in the two cost estimates relate to different ways of computing the same underlying figures.)

The bill is primarily paid for through a 35 percent excise tax on health coverage in excess of $8,000 for individuals and $21,000 for families which the Joint Committee on Taxation estimates will raise approximately $215 billion over 10 years. The other significant revenue raisers include limits to flexible spending accounts in cafeteria plans to $2,000 and changes to corporate information reporting requirements. Overall, the financing proposals would raise $259 billion over 10 years. Additional revenue would be derived from fees on pharmaceutical and medical device companies.

CCH Chicago Bureau, Sept. 17, 2009.

Public option would not increase federal subsidies: CBO

A public plan option “would not directly affect the amount of federal subsidies for health insurance under the legislation,” according to a recent letter from Douglas W. Elmendorf, the director of the Congressional Budget Office (CBO), to Sen. Mike Enzi (Wyo.) In July, Mr. Enzi asked the CBO director to respond to a number of questions regarding the Senate Health, Education, Labor, and Pensions health reform, including whether the federally administered “public plan” that would be offered under the legislation as introduced would have a substantial effect on federal spending for health care.

While noting that federal subsidies would not be affected because “CBO’s assessment is that premiums for the public plan would typically be roughly comparable to the average premiums of private plans,” Mr. Elmendorf did note that including a public plan “would probably have two small effects on the premiums of the private plans against which it is competing, both of which would tend to lower federal subsidy payments through the exchanges to some degree,” as follows:

First, a public plan as structured in the introduced bill would probably attract a substantial minority of enrollees (in part because it would include a relatively broad network of providers and would be likely to engage in only limited management of its health care benefits). As a result, it would add some competitive pressure in many insurance markets that currently are served by a limited number of private insurers. That competitive pressure probably would lower private premiums in the insurance exchanges to a small degree.

Second, a public plan also is apt to attract enrollees who, overall, are less healthy than average (again, because it would include a relatively broad network of providers and probably would engage in limited management of benefits). Although the payments that all plans in the exchanges receive would be adjusted to account for differences in the health of their enrollees, the methods used to make such adjustments would be imperfect. As a result, the higher costs of those less healthy enrollees in the public plan probably would be offset partially but not entirely; the rest of the added costs would have to be reflected in the public plan’s premiums. Correspondingly, the costs and premiums of competing private plans would, on average, be slightly lower than if no public plan was available.

In response to a question about the effects of the proposal on employment-based health insurance, Mr. Elmendorf said that the July proposal “would not have a major effect on the aggregate number of people obtaining coverage through an employer; we estimated that in 2016, for example, the total number of people covered by an employment-based plan would be about 163 million, or about 1 million more than is projected under current law.”

Uninsured rate dropped from 13 percent to 4 percent in Massachusetts

Between the fall of 2006 and the fall of 2008, the percentage of working-age adults without health insurance in Massachusetts dropped from 13 percent to 4 percent, according to a September 2009 report from Blue Cross and Blue Shield of Massachusetts, the Commonwealth Fund, and the Robert Wood Johnson Foundation. This compares with a national uninsurance rate of 19.7 percent for nonelderly adults. The report, Health Reform in Massachusetts: An Update on Insurance Coverage and Support for Reform as of Fall 2008, also found that support for the state health care reform law remains high—approximately 72 percent of adults reported that they support the reform.

The report estimated that only 4 percent, or about 162,000, working-age adults were uninsured in Massachusetts in the fall of 2008. The uninsurance rate was down to 7.6 percent among lower-income adults and 1.4 percent among higher-income adults. The remaining uninsured adults in Massachusetts are disproportionately young, male, single, and/or healthy (54.5 percent). The report noted that these groups can be difficult to convince about the need for insurance.

Uninsured adults in Massachusetts were much more likely to be from lower-income families than were insured adults, with about three-fourths from families with incomes below 300 percent of the poverty level, according to the report. Consistent with this, 83 percent of the uninsured reported that they would have difficulty acquiring the funds needed to obtain coverage.

The report also found that employer-sponsored coverage remains strong under the health care reform law in Massachusetts. Employer-sponsored coverage rose from 66.5 percent to 71.4 percent among all adults, and from 37.4 percent to 43.5 percent for lower-income adults. The report noted that “with [employer-sponsored insurance] coverage higher under health reform, there continues to be no evidence that any expansion in public insurance coverage under health reform is ‘crowding out’ or replacing [employer-sponsored insurance] coverage, as is often the case in reform efforts that focus on public expansions.”

For more information, visit http://www.rwjf.org/healthreform/product.jsp?id=48348.

Almost 50 percent of Americans under 65 lack health insurance coverage

In a study reported by the United States Treasury Department, an estimated 47.7 percent of Americans under age 65 (the non-elderly) did not have health insurance coverage at some time during a 10-year period from 1997 to 2006. The report suggests the number of uninsured Americans in the future would likely be underestimated based on these statistics, unless there is some type of health insurance reform, because the study was done during a time of prosperity and economic growth in the country.

The analysis indicates that for non-elderly Americans over this 10-year span: (1) 41 percent spent at least six months without coverage; (2) 36 percent went without coverage for at least one year; (3) 32 percent who had coverage for 12 months of a given year went without coverage at some point during the other nine years; (4) 57 percent of Americans under age 21 were insured at some time; (5) 53 percent of those living in rural areas had no insurance; and (6) 45 percent of those with household incomes between $50,000-$100,000, went without insurance at some point.

The risk of losing health coverage is not limited to individuals who have sporadic coverage but also affects those with apparently stable coverage. The experience of going without health insurance does not only affect families that have poor and moderate incomes but also families who are part of the middle class. A few of the consequences of losing health insurance coverage include: (1) reduced access to needed health care; (2) a negative impact on a person's overall health; and (3) increased risk of financial devastation due to illness. Without health insurance, people forgo needed physician visits, women forgo mammograms, and children have necessary care delayed. It was estimated that those without health insurance have a mortality rate 25 percent higher than those with insurance.

2008 Census. Although the 2008 U.S. Census Bureau estimated 15.4 percent of Americans have no health insurance coverage, the Treasury report highlighted the fact that considerably more Americans are doing without health insurance coverage. In 2008, the Census reported that the number of people without health insurance increased from 45.7 million people in 2007 to 46.3 million people in 2008.

The statistics have improved regarding the number of uninsured children in the country; however, in 2007 there were 8.1 million uninsured children or 11 percent. In 2008 the number of uninsured children declined to 9.9 percent or 7.3 million children, the lowest number since 1987, when the collection of data began. Unfortunately, children in poverty are more likely to be uninsured than all other children. In 2008 there were approximately 15.7 percent children in poverty who were uninsured, a slight improvement from the 17.6 percent in 2007.

Despite the fact that the 2008 Census estimate of uninsured people is widely reported, a study published on the Health Affairs web site calls into question the accuracy of that data. The study claims the Census overstated the number of uninsured people and underestimated how many people have Medicaid coverage. The report claimed that when the Current Population Survey (CPS) conducted by the Census Bureau asked respondents whether they had any health insurance coverage (including Medicaid) during the last year, the respondents did not accurately recall what type of coverage they had.

The study claimed that the CPS long recall period of 14 to 16 months, caused respondents to inaccurately recall coverage for those periods of Medicaid coverage that were relatively short and relatively early in the year. These recall problems may also affect other types of health insurance and the study suggests the unadjusted CPS estimates of the uninsured could be overstated by several million people. The study rejected competing interpretations of the CPS estimates and offered evidence that the interpretation of CPS data was inadequate.

Treasury Department Report, “The Risk of Losing Health Insurance Over a Decade: New Findings from Longitudinal Data,” Sept. 11, 2009; U.S. Census News Press Release, “Income, Poverty, and Health Insurance Coverage in the United States: 2008,” Sept. 10, 2009; Health Affairs, “Census Survey May Understate Medicaid Enrollment, Overstate the Uninsured Rank,” Sept. 11, 2009.

Business leaders, health professionals call for health reform this year

Two national groups with significantly different constituencies have called the current health system “unsustainable” and are urging Congress to enact significant reforms in 2009.

First, a new report from the Business Roundtable an association of chief executive officers of leading U.S. companies found that annual per-employee health care costs will triple to nearly $29,000 over the next decade without significant marketplace reforms that reduce costs, expand coverage, and improve delivery. These runaway costs, combined with a $56 billion cost shift to payers from uncompensated care, are threatening the employer-based system that currently provides coverage for the majority of Americans and their families, according to the report.

The report, Health Care Reform: The Perils of Inaction and the Promise of Effective Action, which was prepared by Hewitt Associates, states that health care costs “are unsustainable and would put millions of workers at risk.”

The report calls for these actions:

• Reform the delivery system by changing Medicare reimbursement, shifting away from a fee-for-service model to one where the incentives are aligned to reward providers for quality and value in the delivery of coordinated care.
• Address the rising cost of health care so that more Americans can afford coverage and so that the $56 billion cost shift from uncompensated care to payers can be eliminated.
• Reform insurance markets to create a competitive marketplace that guarantees that people can obtain coverage and that the coverage is without restrictions on preexisting condition coverage.

The full report is available at http://www.businessroundtable.org.

Health professionals. Meanwhile, in a letter already signed by more than 400 recognized health professionals, the advocacy group Health Reform USA tells Congress, “We know that no other nation spends the amount of money for health care and has such poor outcomes as we do. This is simply unsustainable. It is time to improve health care for all our citizens.”

The letter calls for the following reforms:

• provide coverage to 35-40 million additional U.S. citizens;
• increase competition in the private insurance market and eliminate discrimination based on preexisting conditions in the purchase of health insurance;
• cover essential preventive care and improve access to primary care;
• ensure affordability of health insurance for low- and moderate-income families through sufficient subsidies of families and small businesses;
• slow the rise in costs of health care and health insurance premiums for everyone;
• adopt a shared responsibility for achieving savings and financing the added coverage through contributions from employers, insurance companies, hospitals, doctors, drug companies and patients;
• support and disseminate the results of comparative effectiveness research to help practitioners and patients chose the best healthcare; and
• expand the federal, state, and private sector commitment to improving the quality of healthcare for all citizens.

Cosigners include Princeton University economist Uwe Reinhardt, president of the Federation of American Hospitals Charles N. Kahn III, and Brandeis University health economist Stuart Altman. For more information, visit http://www.HealthReformUSA.com.

Family health care premiums increased to $13,375 annually in 2009

Premiums for employer-sponsored health insurance rose to $13,375 annually for family coverage in 2009, according to recent research from the Kaiser Family Foundation and the Health Research & Educational Trust (HRET). The 2009 Employer Health Benefits Survey noted that family premiums increased 5 percent from 2008, which is much more than general inflation, which fell 0.7 percent. In 2009, the cost of individual coverage rose to $4,824 annually, which is not a statistically significant increase from the $4,704 reported in 2008. However, the survey noted that since 1999, premiums have increased by a total of 131 percent, more rapidly than workers’ wages (up 38 percent since 1999) and inflation (up 28 percent since 1999).

Kaiser/HRET found that in 2009, 60 percent of employers offered health care benefits to their workers. This varied by the employer’s size: 98 percent of large firms (those with 200 or more workers) offered health care benefits, compared with 59 percent of small firms (those with 3 to 199 workers). According to the survey, preferred provider organizations continue to dominate the employer market, enrolling six in ten covered workers, according to the survey. HMOs cover 20 percent of workers, with an additional 10 percent in point-of-service (POS) plans and 8 percent in consumer-driven health plans.

Employees contributed, on average, 17 percent of the premium for individual coverage and 27 percent of the premium for family coverage. This translates into $779 annually for individual coverage and $3,515 for family coverage. In addition, 21 percent of employers reported that they are “very likely” to raise employees’ premium contributions next year, and 16 percent indicated that they are “very likely” to raise deductibles.

In addition to premium contributions, Kaiser/HRET noted that a growing number of workers are facing high deductibles in their plans. In 2009, 22 percent of covered workers have a $1,000 deductible for individual coverage, up from 18 percent in 2008 and 10 percent in 2006. More small firms (40 percent) have implemented high-deductible health plans with $1,000 deductibles than large firms (13 percent). In addition, the survey noted that 16 percent of small firms have implemented plans with deductibles of $2,000.

The survey was conducted between January and May 2009 and included responses from 3,188 employers with three or more employees. For further information, visit http://ehbs.kff.org/pdf/2009/7936.pdf.

Teamsters oppose Baucus Plan to tax health insurance companies

Teamsters General President Jim Hoffa today said the proposal to impose a 35 percent tax on insurers for individual health insurance plans worth more than $8,000 is unfair and unnecessary. The proposal, introduced by Senate Finance Committee Chairman Max Baucus as part of his long-awaited health reform bill, would also levy the 35 percent tax for family plans worth $21,000.

"We're pleased that Sen. Baucus stopped short of taxing American workers directly, but we fear that ultimately they will pay the price in higher-cost insurance," Hoffa said. "Middle-class wage earners cannot afford to pay more for health insurance than they already do. We much prefer the House plan, which would pay for expanded coverage by imposing a surcharge on those who can afford it - the wealthiest Americans."

The health care reform bill most widely supported in the House includes the so-called public option, which would create a government run health plan that would compete in regions where one insurance company holds a monopoly. Baucus has said that such a program is unlikely to pass the Senate.

Hoffa said the insurance company tax proposal misses the point that many plans are expensive because insurers have too much market power, not because they offer more health care than cheaper plans. Hoffa did acknowledge that the plan includes some laudable proposals, and he welcomed the progress toward insurance-market reform that is so urgently needed.

Hoffa said the Teamsters support the House plan and the Senate Health, Education, Labor and Pensions Committee plan.

Source: International Brotherhood of Teamsters.