• CMS halts insurer dissemination of health care reform information
• Finance panel shows little progress on health reform
• Subsidies inadequate in Baucus plan: Center on Budget and Policy Priorities
• CBO examines effect of replacing tax exclusion for employment-based health insurance with tax credit

• Uninsured population grows in every state except Massachusetts
• States voice concerns over cost shifts, unfunded mandates in health care bills

• Nearly 45,000 adults die each year due to lack of health insurance
• Poll finds vast majority of employers expect healthcare reform to increase costs

CMS halts insurer dissemination of health care reform information

CMS has ordered all Medicare Advantage (MA) and Medicare prescription drug plans to immediately discontinue any mailings regarding current health care reform legislation to Medicare beneficiaries, as well as remove any related materials from their website, according to an order issued in a memorandum by CMS on September 21. The order followed CMS' discovery that an insurance company was contacting enrollees, alleging that current health care reform legislation could hurt seniors and disabled individuals causing them to lose important benefits and services as a result of the legislation.

"We are concerned that the materials sent to our beneficiaries may violate Medicare rules by appearing to contain Medicare Advantage and prescription drug benefit information, which must be submitted to CMS for review," said Jonathan Blum, acting director of CMS' Center for Drug and Health Plan Choices. "We also are asking that no other plan sponsors mail similar materials while we investigate whether a potential violation has occurred."

"We are concerned that, among other things, the information in the letter is misleading and confusing to beneficiaries, who may believe that it represents official communication about the Medicare Advantage program," said Blum. Specifically, CMS is investigating whether the company inappropriately used the lists of Medicare enrollees for unauthorized purposes.

House Republican Leader John Boehner (R-OH) responded to the Memorandum by criticizing actions of the Obama Administration to impose what he referred to as a gag order on critics of the $500 billion in Medicare cuts proposed by the congressional Democrats. He released a statement contending that "It is outrageous that the Obama Administration is trying to keep seniors in the dark about the consequences of congressional Democrats' costly government-run health care bills."

CMS is currently investigating the released information because the communications claim to convey legitimate Medicare program information about an individual's specific benefits or other plan information, but instead offer "misleading or confusing opinion and conjecture by the plan about the effect of health care reform legislation on the Medicare Advantage program and other information unrelated to a beneficiary's specific benefits," according to CMS. The communications ultimately urge enrollees to contact their congressional representatives to protest the proposals referenced in the letter. These communications are potentially contrary to federal regulations and guidance for the MA and prescription drug programs and other federal law, including the Health Insurance Portability and Accountability Act (HIPAA).

CMS Memorandum, Sept. 21, 2009.

Finance panel shows little progress on health reform

The Senate Finance Committee mark-up of health care reform legislation shut down early on Sept. 25 with little progress to show for its efforts. Sens. Charles E. Schumer, D-N.Y. and John D. Rockefeller, D-W.Va., had initially intended to offer amendments calling for a public option, or government sponsored insurance program, to the day's agenda but Chairman Max Baucus, D- Mont., decided to move the votes to Sept. 29. Baucus kept his message upbeat, releasing a statement indicating that the work to date had been productive and the ongoing amendment process would serve to improve the measure. "We will continue to make this a better bill. We will continue to move forward." stated Baucus.

During the third day of consideration of America's Healthy Futures Act of 2009, the Senate Finance Committee agreed by a vote of 15-3 to an amendment from Sen. Jay Rockefeller (W.Va.) to establish an independent commission that would be required, beginning in 2014, to implement policies that successfully reduce cost growth in Medicare by at least 1.5% annually. Actions by the commission would be subject to an annual review by Congress, and any modifications to the commission's actions would require a two-thirds majority vote.

Finance Committee chairman Max Baucus (Mont.) said that the Congressional Budget Office estimated that the commission's actions would save $23 billion.

The provision would replace the current Medicare Payment Advisory Commission (MedPac), which currently is a congressional agency with no authority to implement its Medicare recommendations.

Separately, Mr. Baucus released a preliminary estimate of the budgetary effects of modifications to the Chairman's Mark of the America's Healthy Future Act as introduced on September. These preliminary estimates were calculated by the majority staff of the Senate Finance Committee based on oral and written estimates provided by the Congressional Budget Office and the Joint Committee on Taxation. While the original proposal had an estimated cost of $856 billion over ten years, the cost with the modifications are put at $900 billion with a ten-year deficit reduction of $29 billion.

House Democrats are close to completing the merger of their respective health reform bills reported out of the House Ways and Means and Energy and Commerce Committees. House Speaker Nancy Pelosi, D-Calif., said Democratic members were now considering using a tax on high end insurance plans, similar to the Senate proposal, to help pay for their bill which has been estimated to cost nearly $1 trillion. "It's under consideration," said Pelosi on Sept. 25. "We just have to see how much money we need for what."

CCH Washington Bureau, Sept. 25, 2009.

Subsidies inadequate in Baucus plan: Center on Budget and Policy Priorities

The health reform proposal of Sen. Max Baucus (Mont.), falls short in the subsidies it provides to help low- and moderate-income people afford health coverage and out-of-pocket costs, according to the Center on Budget and Policy Priorities. A review of the proposal by the Center states that the subsidies "could leave many people who are eligible for subsidies facing fairly steep insurance premiums and cost-sharing charges they could have difficulty affording."

According to the Center, "The Baucus plan fully offsets the costs of extending coverage to the uninsured. It would redirect spending and tax subsidies from less productive uses elsewhere in the health sector, and several of the offsets should help slow the rate of growth of health care costs over time. Among other steps, the plan would impose an excise tax on insurance company offerings of high-cost plans, limit tax subsidies for flexible spending accounts, curb overpayments that private insurers receive through the Medicare Advantage program, and cut the cost of prescription drugs in Medicaid."

In addition to believing the subsidies are inadequate, the Center points out the problematic nature of the "free rider provision, which would require employers who do not offer health coverage to pay substantial amounts for low- and moderate-income employees who receive subsidies to buy coverage in a health insurance exchange - but not to pay anything for employees who do not get subsidies. And by requiring employers to pay extremely large amounts for hiring individuals who receive subsidies for family coverage in the exchange, the provision would make it harder for some lower-income parents with children to find jobs. This provision also would place significant administrative burdens and costs on employers because it would be complex to administer."

For more information, visit http://www.cbpp.org/.

CBO examines effect of replacing tax exclusion for employment-based health insurance with tax credit

Higher federal expenses and lower budget deficits would result by replacing the current income tax exclusion for employment-based health insurance premiums with a fixed-amount tax credit per person that would grow over time at a lower rate than health care inflation. Savings would be generated by applying the same principle to a conversion of Medicaid into a defined federal contribution program with federal "outlays" growing over time at a lower rate than health care inflation.

These were among the conclusions expressed in a Congressional Budget Office (CBO) letter from director Douglas W. Elmendorf to Rep. Paul Ryan (Wis.), ranking member of the House Budget Committee. Mr. Ryan had presented those two options and asked the CBO to determine how the options would affect the budget deficit over the long term.

Mr. Elmendorf believes that if the current tax exclusion is replaced with a tax credit, employment-based health insurance would be less comprehensive because "the effective after-tax price of a more comprehensive policy would be higher." He suggested that less comprehensive health insurance "could cover a narrower scope of benefits (for example, by reducing or eliminating vision insurance), or insurance could require greater cost sharing by beneficiaries through higher deductibles or copayments. If those changes occurred, then enrollees would face higher prices for certain types of health care and would spend less on such care. Alternatively, insurance policies might allow for closer management of the utilization of health care services, which would also reduce spending on health care."

Currently, the federal government's share (states are responsible for the balance) for Medicaid spending is on average 57%, but is higher for states with lower incomes. Medicaid spending represented 1.5% of the gross domestic product (GDP) in 2008, and would grow to 2.8% of GDP in 2035, if cost growth continues.

"How such a reduction in federal Medicaid spending [by putting in place a federal defined contribution structure] would affect the health care system is unclear," Mr. Elmendorf admitted. "If states did not make up for the full amount of reduced federal spending by increasing their spending on Medicaid enrollees, then combined federal and state spending on Medicaid would be lower than under current law. That reduction in spending could be accomplished by achieving efficiencies in the delivery of health care, covering fewer services, reducing the number of enrollees, increasing enrollees' copayments, paying less to providers of Medicaid services, or some combination of those changes."

For more information, visit http://www.cbo.gov/.

Uninsured population grows in every state except Massachusetts

Every state in the nation, except Massachusetts, has seen its uninsured population grow from 2001 to 2008, according to a state-by-state analysis of the latest U.S. Census Bureau numbers. Massachusetts is the exception because it enacted health insurance reform in 2006, which has decreased the state's uninsured population to only 4% . The state-by-state analysis, which was released by the Department of Health and Human Services (HHS), noted that these numbers do not include those who have lost their insurance in the recent recession or have had coverage gaps of shorter than one year.

"These numbers only serve to further confirm a reality that far too many American families live with every day," said HHS Secretary Kathleen Sebelius. "Our health care system has reached a breaking point. The status quo is unsustainable, and continuing to delay reform is not an option."

Some of the results of the state-by-state analysis are as follows:

• Colorado. The number of uninsured in the state increased from 658,000 in 2001 to 780,000 in 2008. The percentage of nonelderly adults without insurance increased from 18.1% to 19.4%.
• Mississippi. The percentage of state residents with employer-based coverage decreased from 61% of the population in 2001 to 56.6% in 2008.
• New York. Nearly one in five workers from the state did not have health insurance in 2008. This translates into 1.7 million workers without coverage.
• Texas. The new Census Bureau numbers found that the problem of the uninsured is a problem that crosses income brackets. In Texas, an additional 361,000 people from high-income households were uninsured.

For more information, visit http://www.healthreform.gov/healthcarestatus.html.

States voice concerns over cost shifts, unfunded mandates in health care bill

As the debate over federal health care reform continues to unfold, the National Conference of State Legislatures (NCSL) has sent a letter urging the Senate Finance Committee to avoid passing the costs of health care reform on to the states. The committee, meeting this week, is making revisions to the health care overhaul legislation.

The draft legislation from the Senate Finance Committee proposes to expand Medicaid, the health program for low-income individuals and families. In the bipartisan letter, states are urging the federal government to provide 100-percent federal matching payments for new mandatory eligibility categories or services and for mandatory increases in provider reimbursements.

"Just when states need more money to meet the increased demand for Medicaid services, they have less, which is why any federal expansion of eligibility and provider reimbursements has to come with full funding," said Senator Don Balfour, a Georgia senator and president of the National Conference of State Legislatures. "A lesser commitment from the federal government would shift billions of dollars in costs to states."

Also, to assist states and Medicaid beneficiaries during an economic downturn, NCSL is calling for a provision that would trigger an automatic increase in the amount of federal Medicaid matching money provided to states. This "countercyclical assistance" would support increased demands placed on the state-federal Medicaid program in tough economic times and negate the need to pass legislation whenever the economy sinks. Massachusetts Senator Richard Moore, president-elect of NCSL, stated that "the automatic stabilizer is critical and is also an important provision for the future."

NCSL also supports:

• Federal and technical assistance to fund reimbursement and recruitment strategies that would increase the number of providers participating in the Medicaid program;
• Avoidance of financial penalties on states that have already passed and implemented major health care reform efforts;
• Development of innovative models of long-term care that would combine Medicaid and Medicare funding and incorporate care management, managed care, disease management and quality improvement programs;
• Retention of disproportionate share hospital payments, which traditionally treat high numbers of uninsured and the indigent population;
• Emphasis on prevention and wellness programs; and
• Funding for demonstration projects addressing issues regarding medical malpractice litigation.

Nearly 45,000 adults die each year due to lack of health insurance

Nearly 45,000 adults in the United States die each year due to lack of health insurance, according to the results of a study, Health Insurance and Mortality in U.S. Adults, published in the September 17 issue of the Journal of Public Health. More precisely, the study's estimate was "as many as 44,789 deaths." The Institute of Health and the Urban Institute previously estimated that approximately 20,000 people in the U.S. died each year due to lack of health insurance.

The authors, physicians from the Harvard University Medical School, conducted a survival analysis using data from the Third National Health and Nutrition Examination Survey conducted by the National Center for Health Statistics. They analyzed participants between the ages of 17 and 64 to determine whether lack of health insurance at the time of the interview predicted death.

Adjusting for age and gender, the researchers found that risk of mortality among the uninsured was 40% than that among the insured. After additional adjustment for race/ethnicity, income, education, self- and physician-rated health status, body mass index, leisure exercise, smoking, and regular alcohol use, the uninsured were more likely to die than the insured.

Consequently, the researchers concluded that uninsurance is associated with mortality. Despite changes in medical treatments and the demography of the uninsured since a similar study in the mid-1980s, these results seem consistent with the results of a study for the prior time period, the researchers noted. The researchers also observed that the Institute of Medicine identifies three factors that influence health outcomes: not getting care when needed, not having a regular source of care, and not getting continuity of coverage.

Poll finds vast majority of employers expect healthcare reform to increase costs

A vast majority of employers anticipate that, if enacted, healthcare reform will lead to higher healthcare costs and weaken their role in providing coverage to workers, according to a new poll by Watson Wyatt, a global consulting firm.

The Watson Wyatt poll of 160 employers conducted in mid-September found that 73 percent believe healthcare costs will increase if healthcare reform legislation is enacted. Even more (86 percent) think the healthcare proposals being considered would weaken the role employer-sponsored plans play in providing healthcare coverage.

"Both Congress and the White House have said repeatedly that healthcare reform should build on the employer-sponsored system," said Ted Nussbaum, North America director of group and healthcare consulting at Watson Wyatt. "However, most employers are apprehensive that the outcome will be quite different."

The poll also found little employer support for proposals that would tax benefits or mandate employer coverage: Fewer than three in 10 (29 percent) would support a tax on high-income employees with high-cost plans, while fewer than one in five (19 percent) would support a tax on insurers of high-cost plans. An even smaller percentage -11 percent - would support taxing employer contributions to healthcare as income.

On expanding access, the poll found that only 10 percent of respondents would support an employer mandate, while half (50 percent) would support an individual mandate. Ten percent would support both, and 30 percent would not support either.

"Escalating health costs have been top of mind for employers for years now, but the reform debate has pushed this issue to a critical point," said Nussbaum. "While the national debate centers on options for expanding coverage and ways to generate revenue to fund reform, employers are concerned that healthcare costs will rise even higher as a result of the new legislation."

Source: Watson Wyatt; www.watsonwyatt.com.