Carter's Benefits

eNewsletter Volume 5, Issue 02 February 2012

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Health Care Reform
in 2012

2012 will be a relatively quiet year with regard to the "time-release" capsule aspects of the health care reform law. Many of the early-stage changes (the dependent age increase, appeals procedures, etc.) of HCR have already taken effect, and the next big batch of changes (e.g., the state "exchanges," etc.) are still to come.

Ppreparations will need to be made during the year for two major changes coming in 2013. First, beginning in 2013, health FSA participants will be limited to a $2,500 maximum for health FSA salary reductions, so 2012 will be the last year that health FSA participants will be able to enjoy higher limits. Second, 2012 will be the first year for which the value of certain employer-provided health care plans will have to be reported to the Internal Revenue Service, although this reporting will not have to take place until the W-2s for 2012 go out in January of 2013.

Otherwise, everyone should focus on the Untied States Supreme Court, which will consider the health care reform law this term with a case that has the potential to kill the law altogether, keep it intact or something in-between. The Supreme Court's decision will undoubtedly have a major effect on what is really the most important event affecting health care reform this year: the presidential election, the outcome of which (along with the congressional elections) will determine whether the anticipated future stages of the health care reform will ever come to fruition. We will have more specific analysis of these points in the coming months.

Recent News

  1. Groups Object To HHS' Essential Health Benefits Proposal.
  2. HHS Rejects Texas Request For Waiver.
  3. Consumer Groups Support Requirement For Simple Health Plan Summaries.
  4. Experimental Treatments Often Not Covered By Insurers.
  5. Thomson Reuters Releases List Of Top US Health Systems.
  6. Report Shows 1% Of Americans Account For 22% Of Healthcare Costs.
  7. CBO: Raising Medicare Eligibility Age Could Save $148 Billion.
  8. CMS Report Analyzes Trends In US Healthcare Spending.
  9. Insured Adults Increasingly Enrolled In High-Deductible Plans.
  10. Medicare's Future An Important Economic Issue For Baby Boomers.

Groups Object To HHS' Essential Health Benefits Proposal.
CQ (2/2, Norman, Subscription Publication) reports, "A tide of objections and worries rolled in just before Tuesday's deadline for health groups to react to a Department of Health and Human Services proposal on essential health benefits." While "input from health interests and consumers on the benefits 'bulletin' is not being made public by the Obama administration," several "groups - including hospitals, the AARP, a business and health insurers coalition, and patient advocacy groups - are distributing their comments to the media." For example, "the Essential Health Benefits Coalition told HHS it's worried about the cost of the benefit packages for small employers and individuals under the health care law."

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HHS Rejects Texas Request For Waiver.
The AP (1/28, Tomlinson) reports HHS "rejected a request by Texas to be excluded from a new law that limits how much health insurance companies can spend on overhead." HHS officials said Texas "did not prove that the state's insurance market would be destabilized by the new law. As a result, Texas health insurers will likely pay out $476 million in rebates over the next three years, said Gary Cohen, acting director of oversight at the agency."

The Austin (TX) American Statesman (1/30, Lindell) reports that officials with the Texas Department of Insurance "said the decision places an undue burden on insurers, particularly small and midsize firms that may have to write fewer policies or leave the individual market altogether." In turn, "consumer groups praised the federal ruling, saying an estimated $160 million will have to be repaid this summer."

The Fort Worth Star Telegram (1/30, Fuquay) reports, "The amount of money actually refunded will depend on 2011 results, which have not been reported." Bloomberg News (1/30, Wayne), CQ (1/30, Norman, Subscription Publication), and The Hill (1/30, Baker) "Healthwatch" blog also report this story.

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Consumer Groups Support Requirement For Simple Health Plan Summaries.The AP (1/26, Alonso-Zaldivar) reports, "Consumer groups are scrambling to salvage a popular provision of President Barack Obama's health care overhaul that suddenly seems to be in question." The measure is "a requirement that health plans provide simple, standard summaries of coverage and costs to help consumers pick benefits that are right for them." Supporters "say they fear the administration may heed industry complaints that the regulation as proposed last summer is too costly, burdensome and intrusive." Among the groups supporting the measure are the American Diabetes Association, the American Cancer Society, the American Heart Association, AARP and Consumers Union. In response to a letter from those groups, "administration officials said they can't comment on the specifics of regulations under review, but they sought to reassure the consumer groups."

The Hill (1/26, Pecquet) reports in its "Healthwatch" blog, "Groups representing seniors and consumers are urging the Obama administration to stick with the healthcare law's tough requirements for health plans to disclose coverage information to consumers." Specifically, "the groups wrote in a letter to the president, the final regulation should" be "be implemented as soon as possible," apply "to all plans in all markets," require "plans to give multiple coverage examples," and "include premium information." The letter was signed by AARP, Union, the American Heart Association, the American Diabetes Association and the American Cancer Society

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Experimental Treatments Often Not Covered By Insurers.
Reuters (1/24, Stroud) discusses patients running into insurance companies being unwilling to pay for experimental treatments. Hastings Center research scholar Dr. Michael K. Gusmano pointed out that sometimes, experimental drugs come at huge cost but for a small benefit. However, Dr. Nancy Berlinger at the Hastings Center pointed out that extending a life by six months may be valuable for the individual. Barby Ingle, who was denied coverage for radiofrequency ablations to treat Reflex Sympathetic Dystrophy, argues that companies should not be allowed to refuse paying for FDA-approved treatments.

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Thomson Reuters Releases List Of Top US Health Systems.
Healthcare IT News (1/18, Bouchard) reports, "The top healthcare systems in the United States have lower 30-day mortality rates finds Thomson Reuters' fourth annual study naming the top 15 health systems in the country. The measures used to score the top systems are underpinned by health information technology." The list, "released Jan. 16, singles out those hospital health systems that have achieved superior clinical outcomes."

The Windsor (CO) Beacon (1/18) reports that the "researchers looked at eight areas including mortality, medical complications, patient safety and average length of stay." The article points out that "Banner Health and Poudre Valley Health System were named to" the list.

The Asheville (NC) Citizen-Times (1/18) reports, "Mission Health has been named among the top 15 health systems in the US in the annual study done by Thomson Reuters."

The Carrollton (GA) Times-Georgian (1/18, Jones) reports that "Tanner Health System has been named one of the 15 Top Health Systems in the nation," according to the Thomson Reuters list.

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Report Shows 1% Of Americans Account For 22% Of Healthcare Costs.
USA Today (1/12, Kennedy) reports on an Agency for Healthcare Research and Quality report, which found that "just 1% of Americans accounted for 22% of health care costs in 2009." Meanwhile, "Five percent accounted for 50% of health care costs, about $36,000 each, the report said." Lead author Steven Cohen noted that "the report's findings can be used to predict which consumers are most likely to drive up health care costs and determine the best ways to save money."

NYT: Healthcare Reform Law Has Had Little Impact On Total Spending. The New York Times (1/12, A26, Subscription Publication) editorializes, "So far, the health care reform law has had little impact on total spending even though some of its provisions, like prescription drug rebates for Medicare beneficiaries, have already kicked in," and "the real impact will come in 2014 when there will be an expansion of Medicaid and a new federal subsidy program for low- and middle-income Americans." The Times argues that "as the population ages, controlling spending will require reforms that coordinate delivery of services, reduce unnecessary care and spur innovations that improve quality and curb medical costs."

Government Healthcare Spending Growing. The Washington Post (1/12, Kliff) reports in its "Wonkblog" that government spending on healthcare has not slowed. "A new analysis from the McKinsey Center for US Health System Reform shows that state and federal spending on health care has grown by 55 percent since 2003, nearly twice as fast as private spending growth." The Post notes, "The overall health care spending slowdown actually masks two divergent trends - one, private health care spending accounts for an increasingly smaller chunk of the $2.6 trillion that the United States spends on health care, and two, government programs foot a larger part of the tab."

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CBO: Raising Medicare Eligibility Age Could Save $148 Billion.
The National Journal (1/11, McCarthy, O'Donnell, Subscription Publication) reports that the Congressional Budget Office has announced that "the federal government could save $148 billion over 10 years by increasing Medicare eligibility two years to age 67." While "the savings may not significantly cut the budget deficit...they could pay for a program such as the 'doc fix.'"

The Hill (1/11, Baker) reports in its "Healthwatch" blog, "CBO also said the effects of raising the Medicare eligibility age would be 'less onerous' if President Obama's healthcare reform law remains in place." CQ (1/11, Reichard) also reports this story.

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CMS Report Analyzes Trends In US Healthcare Spending.
Many print media sources covered a CMS report showing that US healthcare spending rose 3.9 percent in 2010, the lowest in many years.

The New York Times (1/10, A16, Pear, Subscription Publication) reports, "National health spending rose a slight 3.9 percent in 2010, as Americans delayed hospital care, doctor's visits and prescription drug purchases for the second year in a row, the Obama administration reported Monday. The recession, which lasted from December 2007 to June 2009, reined in the growth of health spending as many people lost jobs, income and health insurance, the government said in a report, published in the journal Health Affairs."

According to the Los Angeles Times (1/10, McGinley), "analysts said spending was likely to pick up as the economy improved and the healthcare law passed under President Obama begins to expand coverage to millions of people now uninsured."

The National Journal (1/10, McCarthy, Quinton, Subscription Publication) reports, "Health insurance companies saw the largest increase in spending, earning a net 8.4 percent more from insurance premiums in 2010 than 2009. ... 'Premiums grew faster than benefits for the first time in seven years, and benefits grew at their slowest rate in the history of the accounts,' Anne Martin, a CMS economist, said on a conference call. Martin said this was because private health insurance companies lost enrollees as people lost jobs, people moved to cheaper health insurance plans, and cost-sharing increased."

The AP (1/10, Alonso-Zaldivar) reports that the 3.9 percent increase is "the lowest measured in 51 years," and added that "health care as a share of the economy leveled off at 17.9 percent, the first time in a decade there's been no growth."

The Miami Herald (1/10, Newspapers) reports, "Retail prescription drug spending -- the third-largest share of health spending, behind hospital care and physician and clinical services -- grew only 1.2 percent in 2010, the lowest annual growth rate ever. Along with fewer drugs consumed, the continued use of cheaper generic medications and the loss of patent protection on certain brand-name drugs drove spending downward. In addition, fewer new drugs were introduced in 2010."

CQ (1/10, Bristol, Subscription Publication) reports, "The study says the health care overhaul...had little effect on growth figures. ... The act 'had a negligible impact on total spending or shifted the distribution of spending without affecting the overall rate of growth,' the analysis says." Rather, analysts believe that "lower spending for hospital care and physician and clinical services, as well as 'record low growth' in prescription drug costs" were behind the trend.

According to HealthDay (1/10, Preidt), the report "found that federal, state and local governments paid for about 45 percent of the nation's health bill in 2010, up from 41 percent in 2007. The federal government's share of health costs rose significantly between 2007 and 2010, from 23 percent in 2007 to 29 percent in 2010," while states' and local governments' share "decreased from 18 percent to 16 percent." In contrast, "the share of the nation's health costs paid by private business declined from 25 percent in 2001 to 21 2010," and the share "paid for by households reached a historic low of 28 2010."

MedPage Today (1/10, Walker) points out, "Despite the sluggish growth in healthcare spending, the US spends about one-sixth of the gross domestic product (GDP) on healthcare. ... Most of the nation's overall spending on healthcare goes toward hospitals (31%), physician and clinic services (20%), and prescription drugs (10%); the spending growth in all three areas slowed in 2010." In addition, "fewer people were admitted to the hospital in 2010 than in 2009, and growth slowed for emergency room visits, outpatient visits, and outpatient surgeries." Physician office visits also declined in 2010.

Some Healthcare Reform Measures Became Effective In 2010. Modern Healthcare (1/10, Zigmond, Subscription Publication) adds, "Analysts said that while the most prominent provisions of 2010's Patient Protection and Affordable Care Act will not be implemented until 2014, there were some measures that were effective in 2010, including changes to Medicare provider rates (effective Oct. 1, 2009), the Medicare prescription drug rebate for beneficiaries in the "doughnut hole," and small-business tax credits for offering employer-sponsored insurance (effective Jan. 1, 2010). Researchers concluded that the projected net effect of the law's provisions on health spending growth in 2010 was about 0.2 percentage points, because without the law's provisions, the growth rate would have been 3.7%." Modern Healthcare also notes that "the CMS' Office of the Actuary prepares the report each year."

White House Says Results Show Healthcare Costs May Be Contained, Touts Reform. According to the Wall Street Journal (1/10, A2, Radnofsky, Subscription Publication), White House official Nancy-Ann DeParle wrote in a blog post that these statistics demonstrate that "health-care cost growth can be kept down." However, former John McCain advisor Douglas Holtz-Eakin was quoted as countering that the White House "really can't claim any credit unless it's to say, 'We broke the economy and you can thank us for that.'"

The Hill (1/10, Pecquet) "Healthwatch" blog reports, "The Obama administration on Monday cheered new evidence that the President's healthcare reform law isn't making healthcare more expensive. ... 'The report released today found no spike in health care costs due to health reform,' White House Nancy Ann DeParle deputy chief of staff wrote in a blog post. DeParle added that the law's reforms -- including anti-fraud measures, care coordination and disease prevention -- are 'helping to keep health care cost growth low.'" DeParle also "points out that the law's medical loss ratio requirement will ensure that insurers give rebates back to their customers if they collect too much in premiums."

Also covering the story are Reuters (1/10, Morgan), the NPR (1/10, Rovner) "Shots" blog, Kaiser Health News (1/10, Serafini), and Medscape (1/10, Lowes).

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Insured Adults Increasingly Enrolled In High-Deductible Plans.
American Medical News (1/3, Berry) reports, "Enrollment in high-deductible plans rose from 14% of insured adults in 2010 to 16% in 2011, according to the Employee Benefits Research Institute, which surveyed 4,703 adults from age 21 to 64 who had employer-based insurance." In addition, research showed that "as of 2011, 38% of those with a high-deductible plan, or an estimated 7.3 million people, were eligible" for a paired health savings account, but did not open one. Teresa Gutierrez, president-elect of the Health Underwriters Association of North Carolina, noted that because employers can't open HSAs for employees, and "because employers don't want their workers to avoid preventive care, more are turning to health reimbursement arrangements, because those are opened and funded by the employer, but otherwise work like an HSA."

Employee-Based Plans Still Most Common Form Of Coverage. The Columbus (OH) Dispatch /McClatchy (1/3, Stafford) reports, "The Employee Benefit Research Institute said that employment-based health benefits remain the most common form of health insurance in the United States, with 59 percent of the under-65 population having that coverage." However, "seven percent of individuals last year had consumer-directed accounts -- up from five percent in 2010 and one percent in 2006." The survey also suggested that "individuals in these consumer-directed plans 'were more likely than those with traditional coverage to exhibit a number of cost-conscious behaviors,'" such as asking for generic medications and having to "budget to manage health-care expenses."

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Medicare's Future An Important Economic Issue For Baby Boomers.
The AP (1/2, Alonso-Zaldivar) reported, "With more than 1.5 million baby boomers a year signing up for Medicare, the program's future is one of the most important economic issues for anyone now 50 or older. Health care costs are the most unpredictable part of retirement, and Medicare remains an exceptional deal for retirees, who can reap benefits worth far more than the payroll taxes they paid in during their careers." However, "Medicare's giant trust fund for inpatient care is projected to run out of money in 2024." What's more, "researchers estimate that 20 to 30 percent of the more than $500 billion that Medicare now spends annually is wasted on treatments and procedures of little or no benefit to patients."

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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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