UBP blog

11/24/2009

House health reform bill vs. Senate bill: what’s the same and what’s different

As many of you know, the health care reform bill just recently passed in the House of Representatives, but it still needs to pass through the Senate.

This next step could prove to be very difficult as the Senate and House only agree on a few things.

Among these are:

  • A pay or play mandate for individuals: The House bill, the Senate HELP Committee bill and the Senate Finance Committee bill all require individuals to pay an annual penalty if they do not have qualifying health insurance coverage.
  • Affordability credits to lower income individuals:These credits range from 10% of the individual’s adjusted gross income (AGI) for the Senate Finance Committee bill up to 12.5% of the individual’s AGI in the Senate HELP Committee bill.
  • Expanding Medicaid by way of lowering the threshold for eligibility

Beyond these three items, there isn’t much else that the House and Senate agree on. Below are three major points of difference between the two bills.

  1. Public Option: The House bill includes a public insurance option—a government-run plan that is intended to compete with private insurers’ plans. The Senate, however, is still in the process of combining two proposals from the Finance and HELP Committees into a final bill. This final bill is expected to include the public option as well but individual states may be able to opt out of it.
  2. Cost: The House’s bill is expected to cost $1.1 trillion over the course of 10 years (which is higher than the dollar amount at which President Obama hopes to cap health care reform–$900 billion). If the cost of the Senate bill comes out to $900 billion or less, it may have a better chance of passing as the final health care reform law than the House’s bill.
  3. How the reform will be funded: To pay for all of this health care reform, the House bill will impose a 5.4% income surcharge on individuals with an AGI that exceeds $500,000 and couples with an AGI exceeding $1 million. The Senate Finance committee, however, wants to do something entirely different.

What they’ve proposed is an excise tax on high-end health plans (or so-called “Cadillac Plans”) as well a $13 billion annual tax on health insurers, and manufacturers of both pharmaceuticals and medical devices.

The Senate Finance Committee’s proposed excise tax on “Cadillac Plans” will be a 40% tax on plans with a value above: 

  • $8,000 per-year for individual coverage ($9,850 for retirees and high-risk industries)
  • $21,000 per-year for family coverage  ($26,000 for retirees and high-risk industries)

These amounts will be indexed for inflation at the CPI-U (Consumer Price Index for all urban consumers) +1%. However, in areas where the cost of living is high, considerably more plans will be taxed (even in the first year the law is implemented). Employers are already moving to more consumer-driven plans to curb healthcare costs.

Could a 40% excise tax on “Cadillac” benefits on top of a double digit rate renewal push even more employers towards high deductible plans? If so, employers will need to clearly communicate to employees how deductible plans work and also make them more aware of their healthcare spending.

To help employees out with the sticker shock of deductibles, employers may also want to consider adding tax saving instruments such as HRAs or voluntary benefits such as accident plans to help employees with high and unexpected expenses subject to their deductibles.

We’d love to discuss some of these options with you to help you figure out the plan design that will work best for your employees. So contact us via our website or call us at 617-859-1777 to get the conversation going.

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11/10/2009

House of Representatives votes to pass the Affordable Health Care for America Act bill

By a vote of 220-215, the U.S. House of Representatives passed H.R. 3962, the Affordable Health Care for America Act bill.  This 1,990 page bill was created by merging separate health bills produced by the House Energy and Commerce, Education and Labor, and Ways and Means committees. It passed with the support of 219 Democrats and one Republican.

Here’s what the bill will do (among other things):

  • Require health insurers to sell coverage on a guaranteed issue, mostly community-rated basis.
  • Impose a 5.4% surtax on individuals with annual incomes over $500,000 and couples with annual incomes over $1 million. (This measure is designed to help the government pay for health insurance subsidies.)
  • Require all but the smallest businesses to choose between offering employees health insurance and paying an 8% payroll tax.
  • Set an annual cap of $2,500 to the amount employees can contribute to their FSAs (This cap will be adjusted for inflation as the years go on)
  • Cut Medicare provider reimbursement rates as well as support for Medicare Advantage plans

Now that the House of Representatives has passed their bill, the ball is in the Senate’s court for health care reform legislation.  The Senate is still in the process of combining drafts from the Finance Committee and Health, Education Labor and Pensions (HELP) Committee.

As overall progress towards a final health care reform bill moves along and the Senate works to pass their own bill, we’ll certainly keep you posted.

 

11/06/2009

Will the CLASS Act make long-term care affordable or just make people believe it is?

The CLASS (short for Community Living Services and Support) Act, if passedwould create government-run long term care insurance available to anyone (even those who are already disabled). Currently, more than 10 million Americans need long-term care, and this number is only expected to go up as the Baby Boomer generation ages.

Here’s how the proposed plan would work.

Individuals would be automatically enrolled unless they opted out. While still actively working, they’d pay premiums in exchange for a cash benefit of at least $50 per-day in the event that they become disabled. Individuals could use this benefit to cover home care  and  adult day care services as well as assisted living and nursing home care services.

The goal of this program is to save Medicaid money and also to help seniors in need of nursing home care afford it. as The cost of nursing homes average $70,000 per-year and Medicaid only covers temporary stays.

But can we afford this?

The Congressional Budget Office estimates that the CLASS Act’s program would be fiscally solvent over a 75 year period. This is based on initial monthly premium rates of $123 (which would be adjusted for inflation as time goes on) and a $75 per-day benefit.  Individuals would need to have been paying premiums for 5 years before they could access this benefit. 

The program would begin taking premiums immediately but would not pay out any benefits until2016. Because of this, congressional budget analysts forecast that over the program’s first 10 years, it would actually reduce the Federal budget deficit on paper by $73 billion. This makes it especially attractive for lawmakers concerned with the cost of President Obama’s massive healthcare overhaul. However, with Congress voting  in 1965 to use Social Security tax revenues for purposes other than making payments to  eligible SS recipients, there are those who worry that CLASS ACT revenues may be similarly diverted. The frightening prospect of Social Security  “running out of money”  and not paying those who have been paying their taxes for years,  feeds similar fears about the Class Act program.   

And is it really a good idea for our seniors?

Or will it just confuse them? The American Council of Life Insurers says this program would do the latter.

A spokesperson for the group cited that most people already believe Medicare will cover their long-term care needs. Having a new long-term care insurance option would only add tothis false sense of security and possibly leave them financially unprepared for the real costs of care.

Supporters of the plan say that elders can use it as a base policy and buy up by adding private long-term care coverage. Just like people don’t want to live on Social Security alone, people don’t want to finance their long-term care needs with a government plan alone.

If this plan is passed, will employees no longer see the need to purchase a richer, private long-term care plan? Do they know the costs of home care, nursing home care, etc. in your city (especially in the Boston area where everything costs more than the national average)?

One thing HR professionals can consider is educating employees on the future cost of care that they’ll incur in the event that they become disabled as they age. That way they’ll know how much they’ll either need to set aside or buy in insurance.

09/30/2009

Gross total of Baucus’ proposed health care reform bill estimated at $774 billion over 10 years: Where will all this money go?

Filed under: health care reform legislation — ubpblogger @ 10:12 am
Tags: ,

After their preliminary analysis of Senate Finance Committee Chairman Max Baucus’ proposed health care reform bill, the Congressional Budget Office (CBO) estimates its gross total cost to be $774 billion over 10 years. The CBO states that if enacted, this bill will increase the rate of insured non-elderly Americans from approximately 83 to 94 percent.

Also, although the CBO estimates 25 million Americans will purchase insurance under the newly established exchanges, the number of people purchasing health insurance outside of the exchanges (or getting it through an employer) will only decline slightly.

But where will the proposed $774 billion in Baucus’ bill go?

Here’s a breakdown of the bill’s costs:

  • $287 billion will go towards expanding Medicaid and the Children’s Health Insurance Program
  • $463 billion in subsidies will help low income people buy insurance 
  • $24 billion tax credits will go towards helping small employers insure their workers
  • $10.9 billion will go towards stopping payment cuts to physicians under Medicare for a year
  • $54 billion will go towards other costs such as bonus payments to encourage more primary care physicians and creating an innovation center within Medicare

How will we pay for it?

We all know money doesn’t grow on trees and our government is going to need some way to pay for all of these expansions, subsidies and tax credits.

To pay for all of this, Baucus’ bill proposes the following, cuts, taxes and fees: 

  • An excise tax of 35% on insurance plans worth more than $8,000 a year per-person or $21,000 a year per-family (expected to generate $215 billion in revenues)
  • An annual maximum FSA contribution amount of $2,000 per-person (expected to generate $16.5 billion in revenues)
  • Fees imposed on drug and medical device manufacturers, health insurers and clinical laboratories (expected to generate $93.3 billion in revenues)
  • Paying for penalties incurred by employers for employees who enroll in government subsidized care (expected to generate $27 billion in revenues)
  • Payment cuts to private Medicare Advantage plans (expected to generate $125 billion in revenues)

Senator Baucus proposed a solution, but to what problem?

Whenever something is proposed as a “solution”, there needs to first be a clearly defined “problem” that it addresses. In the minds of employers and employees alike, what is the most pressing problem with U.S. health care?

With health insurance premiums skyrocketing at 2-3 times the rate of inflation and wage growth alike, the huge problem is clearly out-of-control costs.

Baucus’ bill is designed to help lower-income Americans afford health insurance through new exchanges, but most people will continue to purchase insurance outside of these exchanges (i.e. through their employers). So in the grand scheme of things, the bill only subsidizes the health insurance coverage of a few.

While the bill does have some plusses for employers, such as tax credits to help them insure their workers, it falls short of addressing the reason why they need these credits in the first place. Namely, health insurance is growing costlier by the year for employers to provide.

Is the health care crisis an issue of “health care for all” or is it a crisis in affordability?

Is it even possible to solve one issue without solving the other one? If so, which issue is most pressing for our government to tackle first?

07/28/2009

What the new healthcare reform bill means for you and your employees

Filed under: health care reform legislation — ubpblogger @ 2:07 pm
Tags: ,

On July 14th, The House of Representatives introduced America’s Affordable Health Choices Act of 2009 (HR 3200).

Legislators say that the bill will do these 2 things:

1.    Make quality, affordable health care accessible to all Americans

2.    Curb health care cost growth

If America’s Affordable Health Choices Act of 2009 is passed into law, here are a few things that would happen:

  • All Americans would be required to have health insurance or pay a penalty.
  • All businesses (except for those with annual payrolls of $40,000 or less) would be required to offer health insurance coverage to employees or pay a fee*.
  • Medicaid would be expanded to cover more of our nation’s poor.
  • New exchanges would be created for Americans to purchase insurance with the assistance of government subsidies.
  • A public plan option would be established.

This Act has an expected price tag of $1 trillion over the next 10 years; here’s how it will be paid for.

  • Reduced Medicare spending
  • Graduated income tax on the wealthiest Americans (Individuals with adjusted gross incomes of over $280,000 per-year and families making more than $350,000 per-year)

Opposition to the act:

The Congressional Budget Office (CBO) estimates that this Act will extend coverage to 37 million uninsured Americans by 2019. However, there’s still quite a healthy amount of opposition out there to this bill.

The National Federation of Independent Businesses spoke out against the bill—and its public insurance option—saying that it:

“threatens the viability of our nation’s job creators … destroys choice and competition for private insurance and fails to address the core challenge facing small business — cost.”

On the other side of the issue, President Obama advocated for a public insurance option stating that it would:

“make health care more affordable by increasing competition, providing more choices and keeping insurance companies honest.”

So, what do the people think?

Support for the bill among the general public is less than unanimous. 

A recent study conducted by Zogby International in conjunction with the University of Texas Health Science Center at Houston shows just 40% of voters are for it. Also, a national survey conducted in July by Rasmussen Reports revealed that only 35% of Americans support a government health insurance plan to compete with private insurers.

Are you for or against having a public plan compete against private insurers? Why?

Also, what are your thoughts on essentially taking Massachusetts’ mandate for businesses to offer insurance to employees nationwide?

*In the Senate HELP Committee’s proposal, employers would need to contribute at a minimum 60 percent to employee premiums or pay $725 for each full time employee and $325 for each part-time employee. The House of Representatives’ proposal would require employers to pay 72.5 percent of premiums for individual coverage and 65 percent for family coverage. The fee for noncompliance with this would equal 8 percent of payroll.

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