UBP blog

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.

 

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10/16/2009

Premium discounts for meeting wellness goals: Great incentive or employee relations nightmare?

If employees had the opportunity to get a 20% premium discount for achieving certain health goals do you think they’d want it to end there? What if they were offered a 30 or 50% discount, would that be better?

Congress is considering provisions in the health care reform legislation that would allow employers and insurers both to offer employees who meet specific health targets (i.e. keeping body mass index, cholesterol, blood pressure, etc. within the healthy range) premium discounts up to 50%. Under the current law, these discounts are allowable but can be no greater than 20%.

The Senate Finance Committee recently passed an amendment that would raise the maximum premium discount to 30% and allow the secretaries of Health and Human Services, Labor and Treasury to up the cap to 50% at their discretion.

What does this mean for employers?

Many employers have already designed and implemented workplace wellness programs with goals of keeping employees’ weight, cholesterol and blood pressure within a healthy range, encouraging workers to quit smoking, etc.

In light of the fact that nearly 40% of deaths annually can be attributed to preventable causes (i.e. smoking, lack of exercise and poor nutrition) and health care cost growth significantly outpaces both wage and inflation growth, workplace wellness programs are rapidly growing in popularity.

This year’s Kaiser Family Foundation “Employer Health Benefits Survey” revealed that:

  • 58% of companies offering employee health benefits had wellness programs
  • 93% of companies offering employee health benefits with 200+ employees had wellness programs

However, not all wellness programs are created (and designed) equally and this proposed legislation could significantly add to the number of employers that tie wellness programs to premium discounts. The Kaiser Family Foundation reports that just 4 percent of employers offering wellness programs do this.

Following the lead of this 4% may sound wonderful in theory but in practice, employers can run into some issues.

The issues are…

In any given workplace, keeping weight, cholesterol and/or blood pressure within the levels deemed healthy by the medical community might not be within everyone’s control. For instance, some employees may have a genetic predisposition towards obesity. These employees could be enrolled in your company’s wellness program and could be working just as hard, if not harder, than the others who are able to reach the “normal weight”.

Should these employees be penalized by having to pay more for health insurance just because they can’t reach a target “normal weight” or is there a way that they can be rewarded for their hard work?

What about employees who live in lower-income neighborhoods where only convenience stores and fast food restaurants are readily accessible? They might not be able to eat as nutritiously as others and may have a harder time reaching the employer’s health targets as a result. Should they be penalized just because of where they live?

 What employers can do:

In order to avoid having wellness program incentives perceived as discriminatory or unfair to certain employee groups, employers should prepare themselves to change the rules of the game a bit.

Let’s go back to the example of employees who are genetically predisposed towards obesity and may have a harder time reaching “normal weight” than others do. One thing employers can consider doing is giving incentives for efforts and not meaningful outcomes. For instance, they could give incentives based on the amount of weight these employees lost or for being consistent in their weight loss, as apposed to giving incentives for whether or not these employees are able to reach a target weight in a given time frame.

10/07/2009

Quality Improvement and Market Reform top Employers’ health care wish list

In a recent survey done by HR consultancy firm Mercer, employers selected quality improvement and market reform as their top priorities for our nation’s health care overhaul.

First on the list of priorities was quality improvement. It was listed by 60 percent of respondents as a top priority and includes among other things:

  • Building more credible databases for evaluating provider performance and paying providers for outcomes
  • Adopting health information technology
  • Improving coordination of care for people with complex illnesses
  • Increasing primary care resources, especially in underserved locations

Linda Havlin, a Mercer worldwide partner stated that quality improvement is the number one option employers have for controlling rising health care costs. She suggested that the government can support this cost-control need “by aligning government-sponsored programs with private sector initiatives”.

The second item on employers’ wish list was the enactment of insurance market reforms. Fifty percent of employers cited market reforms such as elimination or pre-existing conditions exclusions and lifetime benefit caps as a high priority.

Two items that didn’t make the “wish list”

Within the healthcare reform proposals, two of the items employers oppose the most are:

  • Limits to the favorable tax-treatments of employer-sponsored health benefits (i.e. the proposed taxes on “Cadillac plans”)
  • Mandates for employers to offer coverage

Mercer’s survey results showed that 59 and 52% of employers respectively do not want these two items included in the final reform.

Massachusetts Senator John Kerry, who recently proposed a “play or pay” mandate for employers to offer health insurance coverage, recently stated his belief that more employers would terminate their offering of health care coverage if it wasn’t mandatory.

 As Massachusetts employers, has the statewide mandate for employers (with 11+ full-time equivalent employees) to offer (and pay at least 33% of) coverage or make a Fair Share Contribution to employees’ health insurance costs, affected your decision to offer insurance?

Also, how do you think lawmakers should define the so-called “Cadillac health plans”?

Should the upper limit for favorable tax treatment be the same in places with the highest costs of living as they are in places with the lowest or should there be no difference?

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