• Ways and Means approves motion to use reconciliation in health reform legislation
• Insurers, government battle over health care

• Slow progress in improving children's access to dental care

• Costs for medical benefits to rise an average of 7% in 2010
• Health insurance reform rating ratio will affect affordability for older adults
• 28% of Americans have experienced cutbacks in their health care coverage in 2009

Ways and Means approves motion to use reconciliation in health reform legislation

On October 15, the House Committee on Ways and Means approved a procedural measure to send H.R. 3200, the America’s Affordable Health Choices Act of 2009, to the House Committee on the Budget with reconciliation instructions.

Ways and Means Chairman Rep. Charles Rangel (D-N.Y.) stated, “Today’s action was necessary because there is a possibility that a handful of Senate Republicans could choose to engage in partisan tactics to stall this important health reform bill. By sending the legislation to the Budget Committee, we simply preserve the option of advancing health reform legislation in a manner that would allow a majority of this Congress to answer the call of the American people and President Obama to address this growing crisis.”

In late April, Congress passed a resolution allowing the reconciliation process to be used if health reform legislation had not passed by October 15. According to an explanation prepared by the Center on Budget and Policy Priorities, a reconciliation bill is a single piece of legislation that typically includes multiple provisions (generally developed by several committees) all of which affect the federal budget—whether on the mandatory spending side, on the tax side, or on both. A reconciliation bill, as with a budget resolution, cannot be filibustered on the Senate floor, so it only requires a majority vote to pass.

If Congress decides to use the reconciliation process, language known as a “reconciliation directive” must be included in the budget resolution (the action Congress took in April).

The process then would require the Budget Committee to combine all the appropriate bills (including a final version of H.R. 3200) into one bill that goes to the floors of the House and the Senate for an up-or-down vote, with only limited opportunity for amendment. After the House and Senate resolve the differences between their competing bills, a final conference report is considered on the floor of each house and then goes to the President for his signature or veto.

For more information on the Center on Budget and Policy Priorities, visit http://www.cbpp.org/.

For more information on the procedural motion, visit http://waysandmeans.house.gov/.

Insurers, government battle over health care

Just as the insurance industry was releasing a report claiming that the health care reform proposal from the Senate Finance Committee would result in higher prices for health care, the Senate Judiciary Committee was holding a hearing to consider scaling back the 64-year-old insurance company exemption from antitrust laws known as the McCarran-Ferguson Act.

The October 14 hearing specifically addressed S.1681, the Health Insurance Industry Antitrust Enforcement Act, introduced in September by Sen. Patrick Leahy (Vt.), the chairman of the Judiciary Committee: The bill is intended to ensure that health insurance issuers and medical malpractice insurance issuers cannot engage in price-fixing, bid-rigging, or market allocations to the detriment of competition and consumers.

At the hearing, Mr. Leahy said “Insurers should not object to being subject to the same antitrust laws as everyone else. If they are operating in an appropriate way, they should have nothing to fear. It is time for Congress to stick up for consumers, rather than roll over for the insurance industry.”

In an October 13 statement on the Finance Committee approval of its health care reform, America’s Health Insurance Plans (AHIP) a national association representing nearly 1,300 health insurers, wrote. “The bill imposes hundreds of billions of dollars in new health care taxes and provides an incentive for people to wait until they are sick to purchase coverage. A recent analysis by PricewaterhouseCoopers found that these provisions will cause health care costs to increase far faster and higher than they would under the current system.”

The AHIP statement notes that the PricewaterhouseCoopers analysis predicts that “between 2010 and 2019 the cumulative increases in the cost of a typical family policy under this reform proposal will be approximately $20,700 more than it would be under the current system.”

The AHIP statement and the PricewaterhouseCoopers analysis can be found at http://www.ahip.org/.

Slow progress in improving children's access to dental care

State Medicaid programs (including the District of Columbia) have improved children's access to dental care since May 2007, but fell short of goals, according to a study by the Government Accountability Office (GAO). In a survey of all 51 state Medicaid programs, GAO examined the extent to which children on Medicaid received preventive dental care or any dental services at all, the actions that states took to improve access, the monitoring and maintenance of information needed to determine effectiveness and the barriers to further improvement. GAO also examined CMS' oversight of states' compliance with the goals and requirements for Medicaid dental services.

Children seeking dental services continue to face the same obstacles; the most common major barrier continues to be difficulty finding a dentist who will accept new Medicaid patients. Forty-nine states reported that the lack of available providers was a barrier to children's access to care. Distance to the nearest available provider and difficulty obtaining transportation also were common problems.

State Medicaid programs have taken a variety of actions to recruit and retain more dentists, including raising reimbursement rates, streamlining the billing and payment process, easing prior authorization requirements and meeting with dental provider groups to encourage them to serve more children on Medicaid. Some states also work with other agencies that provide scholarships or loans in return for a commitment to serve low-income patients.

Dental providers report additional barriers that discourage their participation, particularly Medicaid patients missing appointments. The government's response is that Medicaid can only pay for services provided. Failure to follow a recommended treatment plan also was reported.

Medicaid agencies also have increased access by expanding services at other locations, for example, encouraging and paying for physicians to apply sealants, increasing funding for more staff positions at clinics and providing some dental services at schools.

State agencies reported that parents often did not seek dental care for their children because of a lack of awareness of oral health and the risks of untreated tooth decay. Forty-eight states engaged in some form of outreach and education to eligible children and their parents in order to address this problem. These actions included publishing literature on the importance of oral health, translating it into other languages and putting it on a web site, maintaining current lists of participating dentists, and providing incentives for parents to take their children to the dentist. States working with managed care organizations (MCOs) required the MCO to provide education and to assist in arranging for dental care.

GAO Report, No. GAO-09-723, Sept. 30, 2009; GAO Testimony, No. GAO-10-112T, Oct. 7, 2009.

Costs for medical benefits to rise an average of 7% in 2010

Employers’ medical benefits costs will rise an average of 7% in 2010, according to Towers Perrin’s annual Health Care Cost Survey. This latest increase, combined with the current economic climate, means record high costs and affordability challenges both for employers and employees, Towers Perrin said.

The average annual per-employee spending in 2010 will exceed $10,000, the study found, and even with employers’ typical 78% contribution, employees’ burden continues to rise for premiums and higher out-of-pocket costs. The survey includes data for approximately 300 of the nation’s largest employers covering 5.2 million employees and dependents, at an annual cost of $29.4 billion.

Employee premium contributions in 2010 will rise an average of 10%, or slightly more than $200, an increase from the 8% increase in 2009. Benefit design changes, including higher copayments, further add to employees’ cost burden. The average cost of coverage is $5,124 annually or $427 monthly for active employee-only coverage; $10,500 or $875 monthly for employee plus one dependent coverage; and $15,084 or $1,257 monthly for family coverage. Wages lag significantly behind health care cost increases, Towers Perrin noted.

“For employees, the affordability challenges associated with this year’s cost increases are even more acute than the general survey numbers suggest,” said Dave Guilmette, managing director of Towers Perrin’s health and welfare practice. “The cost-shifting actions employers are taking for 2010 are consistent with what’s been done in years past, which is surprising in an economy where bigger shifts might be expected. Nevertheless, employees are feeling the impact more keenly given that these actions come at a time when wages at some organizations are flat or declining.”

In addition, health care reform as currently proposed could potentially increase costs for employers; those cost increases would be passed on to employees, Towers Perrin suggested. As an example, Towers Perrin refers to the Senate Finance Committee’s proposal to tax plans with values exceeding a cap, but according to the survey, more than half of the companies responding will reach those caps within the next three years, before the cap would go into effect in 2013. Few companies, 11%, indicated a willingness to absorb those increased costs and instead would reduce benefits and increase costs for employees.

Another potential impact of health care reform would be to drive more employers and employees to adopt account-based high-deductible health plans (HDHPs) with health reimbursement arrangements or health savings accounts. “Because these plans have lower actuarial value than traditional health plans, they actually could help employers delay hitting excise tax cap limits by up to two years,” Towers Perrin explained. Employer adoption of HDHPs over the past five years has tripled from 20% of companies to 60%.

The Towers Perrin survey was conducted during August and September 2009. For further information, visit http://www.towersperrin.com.

Health insurance reform rating ratio will affect affordability for older adults

Americans ages 55 through 64 would pay 50% more for individual health insurance from an exchange under the Senate Finance Committee’s America’s Healthy Future Act than under the House health care reform proposal, according to a study from the Urban Institute and the Robert Wood Johnson Foundation.

The report compared the cost to different age groups for buying the same health insurance through proposed insurance exchanges using different age-rating rules proposed under the major bills in Congress and through community rating (all insureds with the same coverage would pay the same premium amount). At the time the Urban Institute was preparing the study, the Senate Finance Committee’s proposal included a 5:1 age rating provision (five times the rate for the youngest adults), but has since lowered the ratio to 4:1, still twice as high as the House bill age-rating provisions.

Using the 5:1 age-rating ratio, families with two people ages 45 to 64 could be charged an average of $12,500 under the Senate Finance bill, compared with $9,662 under other versions of the bill, according to the report. At the same time, younger people would pay less: single adults ages 18 to 24 would pay $2,163 per year on average under the Senate Finance bill, compared with $2,965 under the other major legislation.

However, because of the issue of affordability, not only of health insurance premiums but also other out-of-pocket costs for older people, the 5:1 rating ratio would end up costing the government and employers more than community rating—$349 billion for the government and $432 billion for employers, versus $345 billion and $420 billion, respectively. The 2:1 rating would cost employers $428 billion.

For employers, the higher cost associated with the higher rating ratio for older workers would be due to unaffordable premiums in the insurance exchange that would spur older workers to continue employment to be able to maintain their employer-sponsored health insurance. Affordability concerns would be substantially higher for older adults.

In contrast, regardless of the rating option used, more than 90% of those ages 18 to 24 and 80% of adults ages 25 to 34 getting coverage through the exchange would be eligible for an income-related subsidy because they typically have low incomes.

“The authors find that there is little difference in overall health insurance coverage or aggregate spending under reform, regardless of the premium rating option chosen,” the report continued. “Premium and out-of-pocket subsidies provided by the federal government under H.R. 3200 would go a significant distance in making access to medical care affordable for those individuals and families in the subsidized income range of 133% to 400% of the federal poverty level.

“However, practical affordability of total health care costs (premiums and out-of-pocket expenses) will be strongly related to premium rating rules for those individuals and families with incomes too high to qualify for federal subsidies, particularly those with incomes between 400% and 500% of the federal poverty level. For many older adults and older families, the higher out-of-pocket costs that come with greater medical use in older age, combined with high premiums due to steep age rating (such as 5:1 bands), would lead to a high burden of total health care costs relative to income. The majority of adults age 55 to 64 purchasing nongroup coverage through the exchange would face a burden of more than 20% of income for a single policy.”

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

28% of Americans have experienced cutbacks in their health care coverage in 2009

Twenty-eight percent of Americans have lost or experienced cutbacks in their health care coverage over the past year, according to a September 2009 report from the Consumer Reports National Research Center. The survey, Healthcare Experience and Concerns, which contained data from 1,002 adults, found that reported losses in health care coverage were most pronounced among those ages 35 to 64 (33% of the group) and among those earning less than $50,000 (34% of the group). However, even 21% of those making more than $100,000 reported a loss or cutback in health care coverage.

According to Consumer Reports, 51% of Americans have been confronted with difficult choices in health care over the past year. More than one-fourth (28%) have put off a doctor’s visit because of cost, and 25% have been unable to afford medical bills or medications. Those most affected were those younger than age 64, earning less than $50,000, or who have lost or have faced cutbacks in health care coverage.

The survey found that 59% of survey respondents believed that the cost of health care has increased much more or more than the other expenses that they encounter. In addition, the greatest concerns Americans have regarding health care are a major financial loss or setback from medical costs due to an illness or accident (73%), not being able to afford health care in the future (73%), or needed care being denied or rationed by health insurance companies (73%).

For more information, visit http://www.consumersunion.org/pdf/healthcarepoll-0909.pdf.