Carter's Benefits

eNewsletter Volume 3, Issue 10 October 2010

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Happy Birthday ACA

The "Affordable Care Act" turns 6 months old.

The six-month anniversary of the health care reform law is also the day many key provisions of the law begin to take effect, depending on plan-year start dates. Most companies won’t feel the effects until after January 1, 2011, when their new plan years begin.

“Up until now, the Patient Protection and Affordable Care Act (PPACA) was mainly words on pages of legislation,” said Jim O’Connell, Ceridian’s consultant for legislative affairs in Washington, D.C. “Starting September 23, however, employers must translate those words into real-world practice. In every sense of the word, this day represents the ‘beginning’ — the first of a series of dates for the phase-in of many provisions of health care reform."

Yet even as the historic passage of federal health care reform promises to dramatically change the way employers handle employee benefits, many employees have questions about exactly how it changes their benefits and precisely when these changes will occur.

A recent survey confirms that consumers remain confused and unsure of the timing for implementation of many provisions in PPACA, which was passed by Congress on March 23, 2010.

Only 14 percent correctly identified September 23, 2010, as the day first health care reform provisions officially begin to take effect, according to the survey, conducted by the National Association of Insurance Commissioners.

“Clearly, there’s a need for more communication in the workplace around health care reform,” said Charles Daye, Senior Vice President of Human Resources for Ceridian Benefits Services. “These changes present an opportunity for business to foster a sense of trust with their employees by promoting open and honest communications around the changes taking place to employer-sponsored health care.”

Communication is critical, especially if some of those changes are expected to initially raise health care costs for employees, Daye said. 

The Second Wave

The second wave of health care reform occurs from 2011 to 2013. This round of comprehensive changes will include medical loss ratio (MLR) requirements and the transition to a new exchange distribution model — perhaps the keystone of health insurance reform.

Medical Loss Ratio requirements under PPACA will require insurers to provide an annual rebate to each enrollee if more than 15 percent of premium revenue is expended on non-claims costs (excluding taxes) in the large group market, or 20 percent for insurers offering coverage in the small group and individual market. The impact will be widely felt. This represents a direct reduction to profit margins and will force health plans to aggressively reduce administrative costs — which may include broker sales commissions.

The Third Wave

In 2014 and beyond, the state insurance health exchanges will take center stage.
“A lot of what happens with health care reform will rely on the ability of the states to successfully create, implement and operate health insurance exchanges,” said Bart Valdez, President of Ceridian Exchange Services. “States face unprecedented pressure to make sure these exchanges can encourage marketplace competition and deliver affordable health care coverage, making it accessible through multiple channels and continuous outreach efforts.”

Described as virtual marketplaces, the exchanges will allow an estimated 24 million individuals and businesses to compare and purchase affordable health insurance coverage. Source: Ceridian Healthcare Compass 13: Riding Health Care Reform’s First Wave, September 23, 2010


Recent News

  1. Obama Administration Postpones Health Reform Tax Requirement For Employers
  2. Round One Goes to the Obama Administration
  3. Insurers Abandon Healthcare Market, Blame Reform Law
  4. BCBS Of Nebraska To Commence Pilot Program Aimed At Cutting Healthcare Costs
  5. More Employers Making Use Of Data On Healthcare Quality
  6. New Tools and Information arrive on HHS Health Care "WEB PORTAL"
  7. Healthcare Costs For Employers Expected To Rise Next Year
  8. Ron Paul: Problems In Healthcare Caused By "Government Intervention."
  9. Consumers Urged To Scrutinize, Negotiate Hospitals Bills
Obama Administration Postpones Health Reform Tax Requirement For Employers.

CongressDaily (10/13, McCarthy) reports, "The Obama administration today announced a one-year delay of a provision of the healthcare law requiring employers to report the cost of health insurance coverage on employees' W-2 tax forms, saying the extra time is necessary to give employers time to prepare to comply with the requirement." Notably, "instead of a mandatory reporting requirement, the IRS' draft 2011 W-2 tax form includes an optional line for employers to report the cost of employer-sponsored health insurance coverage." Stephanie Cutter, the White House's communications leader on implementing the health law, said that Americans "will absolutely not pay taxes on these benefits," even though "for months, opponents of health reform have falsely claimed that the Affordable Care Act would lead to the taxation of healthcare benefits."
        The Hill (10/13, Heflin) says in its On The Money blog, "Employers were originally required next year to include on workers' W2 forms what it cost to supply them healthcare coverage. That requirement is now optional in 2011, to give employers more time to adjust their payroll systems." In a press release, the IRS stated, "Although reporting the cost of coverage will be optional with respect to 2011, the IRS continues to stress that the amounts reportable are not taxable."

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Round One Goes to the Obama Administration

Round one of the health care reform legal battle went to the Obama Administration last week when a federal judge in Michigan dismissed a legal challenge to the new health reform law. The Federal District Court in Detroit found the Patient Protection and Affordable Care Act (PPACA) is constitutional (see details below). But at least 15 other legal challenges to the new health care law remain, including high profile cases in Florida and Virginia. And, last week's ruling is expected to be appealed. The issue is widely expected to make its way ultimately to the U.S. Supreme Court. The central question is whether the Commerce Clause of the U.S. Constitution gives Congress the authority to require citizens to obtain a commercial product. The question has huge health reform implications, since a strong individual insurance requirement is the fiscal foundation for many of the new law's best-known provisions, such as a prohibition on pre-existing condition exclusions and a ban on annual and lifetime limits. Source:  Aetna Reform Weekly, October 12, 2010.

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Insurers Abandon Healthcare Market, Blame Reform Law

The New York Times (10/1, Abelson) reports that the Principal Financial Group, which "provides coverage to about 840,000 people," has announced that it "planned to stop selling health insurance, another sign of upheaval emerging among insurers as the new federal health law starts to take effect." According to the Times, "Principal's decision closely tracks moves by other insurers that have indicated in recent weeks that they plan to drop out of certain segments of the market." State regulators "say some insurance companies are already threatening to leave particular markets because of the new law," and "some...have asked the Obama administration to give insurers more time to comply with some of the new rules." The Administration "has already issued dozens of such waivers," and Nancy-Ann DeParle, director of the White House Office of Health Reform, "emphasized that the administration had been working closely with insurers and employers to deal with their concerns and objections."
        The Wall Street Journal (10/1, Johnson, subscription required) reports that UnitedHealth Group, Inc. has said that it will pick up the policies of the 840,000 Principal customers as they expire. Notably, DeParle, saying that health reform will increase competition in the insurance industry, pointed out, "Having 30 million new people, many with tax credits to buy health insurance, is going to spur new entrants."

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BCBS Of Nebraska To Commence Pilot Program Aimed At Cutting Healthcare Costs

Nebraska's Lincoln Journal Star (9/30, Andersen) reported that "Nebraska's largest health insurer" Blue Cross and Blue Shield of Nebraska is kicking "off a six-month experiment Friday" aimed at "moving toward a system that rewards doctors for making patients healthier rather than paying per procedure." The Star added that the pilot program, which is a "patient-centered medical home concept," will enroll "about 1,200 diabetic patients in nine Nebraska cities, including Lincoln." The Star noted that "Blue Cross will invest as much as $1.5 million in support, rewards and clinic tools over the duration of the pilot" with the hopes that "costs will fall and people will get healthier if doctors walk into exam rooms with better patient information."

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More Employers Making Use Of Data On Healthcare Quality

McClatchy (10/12, Shideler) reports, "Information about quality is beginning to be considered by some employers as they make purchasing decisions about healthcare, particularly care provided in hospitals." That's because "the new federal healthcare act emphasizes data, and many employers now offer insurance that allows their employees to choose which hospital to use, so quality becomes more important." McClatchy notes that "in Pennsylvania, employers have been using hospital quality data from the Pennsylvania Health Care Cost Containment Council since the mid-'80s." And "a study also showed that patients in Pennsylvania had lower odds of dying in a hospital than patients in other states where hospital reporting wasn't as intensive."

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New Tools and Information arrive on HHS Health Care "WEB PORTAL"

The second stage of the HHS Web Portal arrived on October 1, 2010. The first stage was to release the website by July 1, 2010. We find updates to the website portal to include price estimates for private insurance policies, as well as statistics about how many applicants have been denied coverage and how many were charged higher premiums because of health status.

More than 225 insurance companies have provided information about their individual and family plans for more than 4,400 policies, including policies in every state and the District of Columbia. Consumers can search for and compare information on plans available to them based on their age, gender, family size, tobacco use and location.

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Healthcare Costs For Employers Expected To Rise Next Year

The Los Angeles Times (9/28, Helfand) reports, "Healthcare premiums paid by large US employers have more than doubled over the last decade, but the costs to their employees more than tripled, a study released Monday found." And "next year companies can expect healthcare costs to rise nearly 9% on average -- the largest increase in five years -- as they confront an aging workforce, large medical claims and changes brought by healthcare reform." Employees "face higher costs as companies shift an ever-larger share of insurance premiums and healthcare costs to them." The "recently adopted healthcare reform package also is expected to drive up insurance rates and saddle employers with new costs," in particular the new rule that allows "adult children to remain on their parents' health insurance plans through age 26."
        The Dallas Morning News (9/28, Roberson) reports that Dallas, Texas, can also expect "its highest healthcare cost increase in more than nine years, according to Hewitt Associates, a human resources company in Lincolnshire, Ill." This past year "healthcare costs in Dallas increased 3.7 percent, compared with 4.2 percent in 2009." But in 2011, Hewitt "is projecting an 8.7 percent average rate increase, which is in line with the national average of 8.8 percent."
        The Milwaukee Journal Sentinel (9/28, Boulton) reports that in Milwaukee, Wisconsin, "health insurance premiums for large employers...are projected to increase 8.6% next year, to an average of $11,183 for each employee receiving health benefits," according to Hewitt. Hewitt's "analysis estimates that employees in the Milwaukee area will pay $2,235, or 20%, of the cost of the premium - up from $505, or 11%, in 2001. Employees also will incur an additional $2,860 on average in out-of-pocket costs, such as deductible and copayments, next year - up from $683 in 2001."

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Ron Paul: Problems In Healthcare Caused By "Government Intervention."

Rep. Ron Paul (R-TX) writes in The Hill's (9/28) Congress Blog, "This week marked six months since Congress passed the healthcare reform bill in what has become all-too-typical legislative chicanery. Those in power crafted a mammoth piece of legislation and rammed it through Congress under a dire sense of emergency." Yet, "now that Congress has had six months to read the new law, there is a significant amount of buyer's remorse on Capitol Hill," and the "more constituents learn about the law, the more angry they become." Paul says that when Americans "realize the problems we are trying to solve today were created by government intervention beginning in the 1960's, we can begin to put patients and doctors back in control of healthcare, rather than third party oligopolies and government bureaucrats."

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Consumers Urged To Scrutinize, Negotiate Hospitals Bills

Jane E. Brody writes in the New York Times (9/14, D7) Personal Health column, "There are reasons beyond greed that hospitals typically charge what look like outrageous prices for goods and services. Reimbursement rates are negotiated with insurers, and some are considerably less than what a patient without insurance would be charged. And hospitals rely on insured patients to make up for those who fail to pay their bills -- and for the rates paid by Medicaid, which may be considerably lower than actual hospital costs." Brody says that bills should be scrutinized thoroughly for possible errors, and that consumers, especially the elderly for whom Medicare may no longer cover all charges, should attempt to negotiate lower amounts with hospitals.

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How does Carter's Benefits help ?
We continue to stay on top of changes in this industry. In a consultative role, Eddie Carter has begun hosting live seminars to update employers and Human Resource Managers on these changes. If you would like to host a meeting with your local community or civic organization, please contact me for details.

Eddie Carter, Consultant Eddie Carter,
Benefit Consultant
If you have questions or would like more information please give us a call or send us an email.  Our email address is Questions@CartersBenefits.Com

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