Monthly Archives: September 2010

For McDonald’s Employees — And Others — An Unhappy Meal?

The big story last night – beyond Congress’ pre-election adjournment – centered around the Wall Street Journal’s article indicating that McDonald’s may be dropping health coverage for its workers, given that the limited benefit plans it currently offers will likely be unable to meet the minimum medical loss ratio requirement to pay 85 percent of premiums back in medical claims (due in part to high turnover among employees, which raises administrative costs).  Reuters has a separate story on the Journal piece here.

It is of course ironic that this story came on a day when 59 Senate Democrats voted against legislation that would have permitted individuals to keep their current plan – as they were repeatedly promised by the President during the health reform debate.  But just as interesting is a paragraph suggesting that, when it comes to employers dropping coverage, McDonald’s may be the canary in the coal mine:

“Insurers say dozens of other employers could find themselves in the same situation as McDonald’s.  Aetna Inc., one of the largest sellers of mini-med plans, provides the plans to Home Depot Inc., Disney Worldwide Services, CVS Caremark Corp., Staples Inc. and Blockbuster Inc., among others, according to an Aetna client list obtained by the Journal.  Aetna also covers AmeriCorps teaching-program sponsors, who are required by law to make health coverage available.”

So not only could tens of thousands more private sector workers lose their health insurance coverage as a result of the new law and regulations, AmeriCorps’ government-paid volunteers could lose their current plan as well.

Some would argue – as the article itself references – that limited benefit plans “could be better.”  But while limited benefit plans may not necessarily constitute comprehensive coverage, it’s also clear that some coverage is better than no coverage at all – and yet the medical loss ratio requirements may have the perverse effect of RAISING the number of uninsured between now and 2014.

Fact Check on Insurance Premium Increases

Sen. Harkin claimed on the Senate floor recently that analysis of the new regulations taking effect this year would only raise premiums by 1-2 percent.  Despite multiple articles and studies finding that premiums will rise by more than 2% next year as a result of the law, whether premiums rise by 2 percent or 22 percent due to PPACA misses the point.  The real point is that President Obama repeatedly promised an average $2,500 reduction in family insurance premiums – and, by admitting that the law will raise premiums by *only* one or two percent, Democrats have implicitly admitted this promise will not be kept.

During the extensive health care debate, Democrats did not argue to the American people that they would be forced to buy new, more expensive coverage mandated by the government, but that the new coverage would be worthwhile or better than Americans’ current coverage.  Instead, as candidate Obama claimed, “If you already have health insurance, the only thing that will change for you under this plan is the amount of money you will spend on premiums.  That will be less….[My plan] brings down the cost of health care and reduces every family’s premiums by as much as $2500.”  Unfortunately, today’s debate illustrates how NEITHER promise will be kept as a result of the health care law.

Medicare Advantage Plan Cancelled

Wanted to pass on this article from this morning’s Boston Globe reporting that Harvard Pilgrim Health Care “will drop its Medicare Advantage health insurance program at the end of the year, forcing 22,000 senior citizens in Massachusetts, New Hampshire, and Maine to seek alternative supplemental coverage.”  The article notes that the change “was prompted by a freeze in federal reimbursements” prompted by the health care law; as a senior executive observed, “We became concerned by the long-term viability of Medicare Advantage programs in general….We know that cuts in Medicare are being used to fund national health care reform.”

The announcement comes two days after the Administration ran a full-page national advertisement featuring Andy Griffith in Parade magazine, claiming that “Medicare just got stronger” due to the health care law.  The tens of thousands of seniors about to lose coverage as a result of that law may beg to differ.

Enzi Resolution of Disapproval Regarding Grandfathered Plans

We expect Sen. Enzi’s resolution (S.J.Res. 39) disapproving of the Administration’s rules on grandfathered plans will be debated tomorrow morning.  We expect two hours of debate on the motion to proceed, followed by a vote on proceeding to the resolution.  If the motion to proceed is successful, we expect a further hour of debate on the resolution itself, followed by a vote on passage.  (Both votes would have majority, 51-vote thresholds.)

Further information about the grandfathered plan regulations can be found in previous documents available here and here.  We’ve also compiled a list of Barack Obama quotes over the past three years promising that Americans would be able to keep their own plan, which are listed below.

 

Remarks by the President on Health Insurance Reform in Portland, Maine

Portland Expo, Portland, Maine

April 01, 2010

http://www.whitehouse.gov/the-press-office/remarks-president-health-insurance-reform-portland-maine

“They’ll have to finally acknowledge that this isn’t a government takeover of our health care system.  They’ll see that if Americans like their doctor, they will keep their doctor.  And if you like your insurance plan, you will keep it.  No one will be able to take that away from you.  It hasn’t happened yet.  It won’t happen in the future.     

 

Remarks by the President on Health Insurance Reform s

University of Iowa Field House, Iowa City, Iowa.

March 25, 2010

http://www.whitehouse.gov/the-press-office/remarks-president-health-insurance-reform-university-iowa-field-house-iowa-city-iow

“From this day forward, all of the cynics, all the naysayers — they’re going to have to confront the reality of what this reform is and what it isn’t.  They’ll have to finally acknowledge this isn’t a government takeover of our health care system.  They’ll see that if Americans like their doctor, they’ll be keeping their doctor.  You like your plan?  You’ll be keeping your plan.  No one is taking that away from you.  Three months from now, six months from now you’re going to look around.  You’re going to be sitting in a doctor’s office reading through the old People magazines.  (Laughter.)  And you’ll say, hey, this is the same doctor, same plan.  It wasn’t Armageddon.”

 

Remarks by the President to the House Democratic Congress

Capitol Visitor Center Auditorium, Washington, D.C.

March 20, 2010

http://www.whitehouse.gov/the-press-office/remarks-president-house-democratic-congress

It turns out that in fact people who like their health insurance are going to be able to keep their health insurance; that there’s no government takeover.  People will discover that if they like their doctor, they’ll be keeping their doctor.  In fact, they’re more likely to keep their doctor because of a stronger system.”

 

Remarks by the President on Health Insurance Reform

George Mason University Patriot Center, Fairfax, Virginia

March 19, 2010

http://www.whitehouse.gov/the-press-office/remarks-president-health-insurance-reform-fairfax-virginia

If you like your doctor, you’re going to be able to keep your doctor.  If you like your plan, keep your plan.  I don’t believe we should give government or the insurance companies more control over health care in America.  I think it’s time to give you, the American people, more control over your health. “

 

Remarks by the President on Health Care Reform in Strongsville, Ohio

Strongsville, Ohio

March 15, 2010

http://www.whitehouse.gov/the-press-office/remarks-president-health-care-reform-strongsville-ohio

“Our proposal builds on the current system where most Americans get their health insurance from their employer.  So if you like your plan, you can keep your plan.  If you like your doctor, you can keep your doctor.  I don’t want to interfere with people’s relationships between them and their doctors.”

 

Remarks by the President on Health Insurance Reform in St. Charles, MO

St. Charles High School, St. Charles, Missouri

March 10, 2010

http://www.whitehouse.gov/the-press-office/remarks-president-health-insurance-reform-st-charles-mo

“So my proposal builds on the current system where most Americans get their health care from their employers.  If you like your plan, you can keep your plan.  If you like your doctor, you can keep your doctor. 

 

Remarks by the President on Health Care Reform

East Room

March 03, 2010

http://www.whitehouse.gov/the-press-office/remarks-president-health-care-reform

“It builds on the current system where most Americans get their health insurance from their employer.  If you like your plan, you can keep your plan.  If you like your doctor, you can keep your doctor.  I can tell you as the father of two young girls, I would not want any plan that interferes with the relationship between a family and their doctor. 

 

Remarks by the President in the State of the Union Address

U.S. Capitol

January 27, 2010

http://www.whitehouse.gov/the-press-office/remarks-president-state-union-address

Our approach would preserve the right of Americans who have insurance to keep their doctor and their plan. 

 

Remarks by the President on Small Businesses and Health Insurance Reform

South Court, Eisenhower Executive Office Building

October 29, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-small-businessess-and-health-insurance-reform  

“The first thing I want to make clear is that if you are happy with the insurance plan that you have right now, if the costs you’re paying and the benefits you’re getting are what you want them to be, then you can keep offering that same plan.  Nobody will make you change it.

 

Remarks by the President at Rally on Health Insurance Reform

University of Maryland, College Park, Maryland

September 17, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-rally-health-insurance-reform-college-park-md

“Let me say, if you already have health insurance, nothing in this plan will require you to change what you have. What this plan will do is make the insurance you have work better for you.”

 

Remarks By The President at a Rally on Health Insurance Reform

Target Center, Minneapolis, Minnesota

September 12, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-rally-health-insurance-reform

“First of all, if you’re among the hundreds of millions of Americans who already have health insurance through your job, or you’ve got health insurance through Medicare or Medicaid or the VA, nothing — nothing in this plan will require you or your employer to change your coverage or your doc.  All right?  I want you to be clear about that.  Let me repeat:  Nothing in this plan requires you to change what you have if you’re happy with it.

 

Remarks by the President on Health Insurance Reform

Eisenhower Executive Office Building

September 10, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-health-insurance-reform

Now, for the hundreds of millions of Americans who have health insurance, nothing in this plan will require you, or your employer, to change the coverage or the doctor you have.  Nothing will change for you if you have insurance.  Nothing in the plan will require any changes.

 

Remarks by the President to a Joint Session of Congress on Health Care

U.S. Capitol, Washington, D.C.

September 9, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-a-joint-session-congress-health-care

“First, if you are among the hundreds of millions of Americans who already have health insurance through your job, or Medicare, or Medicaid, or the VA, nothing in this plan will require you or your employer to change the coverage or the doctor you have.  Let me repeat this:  Nothing in our plan requires you to change what you have. 

 

Remarks by the President in the Organizing for American National Health Care Forum

DNC Headquarters, Washington, D.C.

August 20, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-organizating-america-national-health-care-forum

First, no matter what you’ve heard, if you like your doctor, you can keep your doctor under the reform proposals that we’ve put forward.  If you like your private health insurance plan, you can keep it.  If your employer provides you health insurance on the job, nobody is talking about messing with that.

 

Remarks by the President in Town Hall on Health Care

Central High School, Grand Junction, Colorado

August 15, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-town-hall-health-care-grand-junction-colorado  

I just want to be completely clear about this; I keep on saying this but somehow folks aren’t listening – if you like your health care plan, you keep your health care plan.  Nobody is going to force you to leave your health care plan.  If you like your doctor, you keep seeing your doctor.  I don’t want government bureaucrats meddling in your health care.

 

Remarks by the President in Town Hall on Health Care

Gallatin Field Airport, Belgrade, Montana

August 14, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-town-hall-health-care-belgrade-montana

“And if you do have health insurance, we’ll help make sure that your insurance is more affordable and more secure. If you like your health care plan, you can keep your health care plan. This is not some government takeover. If you like your doctor, you can keep seeing your doctor. This is important. I don’t want government bureaucrats meddling in your health care, but I also don’t want insurance company bureaucrats meddling in your health care either.  That’s what reform is about.”

 

Remarks by the President in Health Insurance Reform Town Hall

Portsmouth High School, Portsmouth, New Hampshire

August 11, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-town-hall-health-insurance-reform-portsmouth-new-hampshire

“Now, the way we have approached it, is that if you’ve got health care under a private plan, if your employer provides you health care or you buy your own health care and you’re happy with it, you won’t have to change.

 

Remarks by the President at Town Hall

Broughton High School, Raleigh, North Carolina

July 29, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-town-hall-raleigh-north-carolina

“First of all, nobody is talking about some government takeover of health care.  I’m tired of hearing that.  I have been as clear as I can be.  Under the reform I’ve proposed, if you like your doctor, you keep your doctor.  If you like your health care plan, you keep your health care plan.  These folks need to stop scaring everybody.  Nobody is talking about you forcing — to have to change your plans.”

 

Remark by the President in an AARP Tele-Town Hall on Health Care Reform

AARP Headquarters, Washington, D.C.

July 28, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-aarp-tele-town-hall-health-care-reform

Here’s a guarantee that I’ve made: If you have insurance that you like, then you will be able to keep that insurance. If you’ve got a doctor that you like, you will be able to keep your doctor. Nobody is trying to change what works in the system. We are trying to change what doesn’t work in the system.”

 

Remarks by the President at Health Care Reform Town Hall

Shaker Heights High School, Shaker Heights, Ohio

July 23, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-health-care-reform-town-hall

“Reform will keep the government out of your health care decisions, giving you the option to keep your coverage if you’re happy with it.  So don’t let folks say that somehow we’re going to be forcing government-run health care.  It’s just not true.

 

Remarks by the President on Health Care and the Senate Vote on F-22 Funding

Rose Garden

July 21, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-health-care-and-senate-vote-f-22-funding

“America — Americans will be able to compare the price and quality of different plans, and pick the plan that they want. If you like your current plan, you will be able to keep it.  Let me repeat that:  If you like your plan, you’ll be able to keep it.

 

Remarks by the President in an Online Town Hall on Health Care

Northern Virginia Community College, Annandale, Virginia

July 1, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-online-town-hall-health-care-reform

“There’s no doubt that we have to preserve what’s best in the health care system, and that means allowing Americans who like their doctor and their health care plan to keep their plan.  And that’s going to be a priority for us. 

 

Remarks by the President in ABC “Prescription for America” Town Hall on Health Care

East Room

June 24, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-abc-prescription-america-town-hall-health-care-6-24-09

“So what we’re saying is, if you are happy with your plan and your doctor, you stick with it. 

 

Press Conference by the President

James S. Brady Press Briefing Room

June 23, 2009

http://www.whitehouse.gov/the-press-office/press-conference-president-6-23-09

There’s no doubt that we must preserve what’s best about our health care system, and that means allowing Americans who like their doctors and their health care plans to keep them.

 

Remarks by the President in Town Hall Meeting on Health Care

Southwest High School,  Green Bay, Wisconsin

June 11, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-town-hall-meeting-health-care-green-bay-wisconsin

If you’re happy with your plan, you keep it.

 

Remarks by the President on Reforming the Health Care System to Reduce Costs

State Dining Room

May 11, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-reforming-health-care-system-reduce-costs

“But I’m also committed to ensuring that whatever plan we design upholds three basic principles: First, the rising cost of health care must be brought down; second, Americans must have the freedom to keep whatever doctor and health care plan they have, or to choose a new doctor or health care plan if they want it; and third, all Americans must have quality, affordable health care.”

 

Remarks by the President at the Opening of the White House Forum on Health Reform

East Room

March 5, 2009

http://www.whitehouse.gov/the-press-office/remarks-president-opening-white-house-forum-health-reform

“I think most of us would agree that if we want to cover all Americans, we can’t make the mistake of trying to fix what isn’t broken.  So if somebody has insurance they like, they should be able to keep that insurance.  If they have a doctor that they like, they should be able to keep their doctor. 

 

Remarks of Senator Barack Obama

Jacksonville, FL

November 3, 2008

http://www.barackobama.com/2008/11/03/remarks_of_senator_barack_obam_155.php

“If you already have health insurance, the only thing that will change under my plan is that we will lower premiums.”

 

Remarks of Senator Barack Obama

Columbus, OH

November 02, 2008

http://www.barackobama.com/2008/11/02/remarks_of_senator_barack_obam_153.php

“If you already have health insurance, the only thing that will change under my plan is that we will lower premiums.”

 

Remarks of Senator Barack Obama

Des Moines, IA

October 31, 2008

http://www.barackobama.com/2008/10/31/remarks_of_senator_barack_obam_154.php

“If you already have health insurance, the only thing that will change under my plan is that we will lower premiums.”

 

Remarks of Senator Barack Obama

Sarasota, FL

October 30, 2008

http://www.barackobama.com/2008/10/30/remarks_of_senator_barack_obam_151.php

”If you already have health insurance, the only thing that will change under my plan is that we will lower premiums.”

 

Remarks of Senator Barack Obama

Raleigh, NC

October 29, 2008

http://www.barackobama.com/2008/10/29/remarks_of_senator_barack_obam_150.php

“If you already have health insurance, the only thing that will change under my plan is that we will lower premiums.”

 

Remarks of Senator Barack Obama

Chester, PA

October 28, 2008

http://www.barackobama.com/2008/10/28/remarks_of_senator_barack_obam_149.php

“If you already have health insurance, the only thing that will change under my plan is that we will lower premiums.”

 

Senator Barack Obama’s Closing Argument Speech: ‘One Week’

Canton, Ohio

October 27, 2008

http://www.barackobama.com/2008/10/27/senator_barack_obamas_closing.php

“If you already have health insurance, the only thing that will change under my plan is that we will lower premiums.”

 

Remarks of Senator Barack Obama

Reno, NV

October 25, 2008

http://www.barackobama.com/2008/10/25/remarks_of_senator_barack_obam_147.php

“If you have health insurance, the only thing that will change under my plan is that we will lower premiums.”

 

Remarks of Senator Barack Obama

Indianapolis, IN

October 23, 2008

http://www.barackobama.com/2008/10/23/remarks_of_senator_barack_obam_146.php

“If you have health insurance, the only thing that will change under my plan is that we will lower premiums.”

 

Remarks of Senator Barack Obama

Richmond, VA

October 22, 2008

http://www.barackobama.com/2008/10/22/remarks_of_senator_barack_obam_145.php

“If you have health insurance, the only thing that will change under my plan is that we will lower premiums.”

 

Remarks of Senator Barack Obama

Miami, FL

October 21, 2008

http://www.barackobama.com/2008/10/21/remarks_of_senator_barack_obam_142.php

“If you have health insurance, the only thing that will change under my plan is that we will lower premiums.”

 

Remarks of Senator Barack Obama

Tampa Bay, FL

October 20, 2008

http://www.barackobama.com/2008/10/20/remarks_of_senator_barack_obam_140.php

“If you have health insurance, the only thing that will change under my plan is that we will lower premiums.”

 

Remarks of Senator Barack Obama

Fayetteville, NC

October 19, 2008

http://www.barackobama.com/2008/10/19/remarks_of_senator_barack_obam_143.php

“If you have health insurance, the only thing that will change under my plan is that we will lower premiums.”

 

Remarks of Senator Barack Obama

St. Louis, MO

October 18, 2008

http://www.barackobama.com/2008/10/18/remarks_of_senator_barack_obam_139.php

“If you have health insurance, the only thing that will change under my plan is that we will lower premiums.”

 

Remarks of Senator Barack Obama

Roanoke, VA

October 17, 2008

http://www.barackobama.com/2008/10/17/remarks_of_senator_barack_obam_138.php

“If you have health insurance, the only thing that will change under my plan is that we will lower premiums.”

 

Remarks of Senator Barack Obama

Londonderry, NH

October 15, 2008

http://www.barackobama.com/2008/10/15/remarks_of_senator_barack_obam_137.php

“If you have health insurance, the only thing that will change under my plan is that we will lower premiums.”

 

Remarks of Senator Barack Obama

Dayton, OH

October 09, 2008

http://www.barackobama.com/2008/10/09/remarks_of_senator_barack_obam_132.php

“If you have health insurance, the only thing that will change under my plan is the amount you pay in premiums. That will be less.”

 

Remarks of Senator Barack Obama

Indianapolis, IN

October 8, 2008

http://www.barackobama.com/2008/10/08/remarks_of_senator_barack_obam_133.php

“If you have health insurance, the only thing that will change under my plan is the amount you pay in premiums. That will be less.”

 

Remarks of Senator Barack Obama

Daytona Beach, FL

September 20, 2008

http://www.barackobama.com/2008/09/20/remarks_of_senator_barack_obam_116.php

“Under my plan, if you have health insurance, nothing changes for you, except that my plan will lower your health care costs.”

 

Cutting Costs and Covering America: A 21st Century Health Care System

University of Iowa

May 29, 2007

http://www.barackobama.com/2007/05/29/cutting_costs_and_covering_ame.php

“If you already have health insurance, the only thing that will change for you under this plan is the amount of money you will spend on premiums. That will be less.”

Hewitt Study: Highest Cost Increases in Five Years

Hewitt Associates released a study today projecting an 8.8 percent premium increase for employer-sponsored coverage in 2011 – up from 6.9 percent in 2010 and 6 percent in 2009.  According to the survey data, out-of-pocket premium costs for employees are projected to rise 12.4 percent next year compared to 2010, with coverage costing $2,209.  Likewise, other out-of-pocket costs (i.e., co-payments, deductibles, and co-insurance) are projected to rise by 12.5 percent in 2011.  The Hewitt study is consistent with an Aon Consulting survey predicting trend rates for the coming twelve months exceeding 10 percent for most employer-sponsored health insurance.

The White House released a blog posting claiming the Hewitt survey confirms that “health care has been rising by up to double digits for more than a decade,” and that premiums should only rise by 1-2 percent as a result of the health care law.  But a study claiming “rate increases reach highest levels in five years” undermines assertions that the health care law will reduce costs – and saying that premiums will “only” rise by 1-2 percent as a result of the law this year should not be considered an accomplishment in light of a campaign run on lowering premiums, not minimizing their increase.

As the below chart shows, while candidate Obama promised a $2,500 premium reduction for families as a result of his health care plan, premiums have risen by nearly $1,100 since his election.  That means average premiums for employer-sponsored coverage will have to fall by more than 26%, or nearly $3,600, for the President to fulfill his campaign pledge.

Premiums 2010

Health Care’s Polls and (Un)Popularity

In conjunction with yesterday’s six month benchmark since the health care bill was signed into law, several organizations released polls regarding the measure.  The American Action Forum released polling data indicating a majority of voters oppose the health care law – and when informed about the law’s tax increases and other onerous provisions, opposition only grows.  Likewise, the US Chamber of Commerce released a poll of small business leaders, which found that 55% of small business owners believe the law makes them less likely to hire new workers, and a whopping 78% of small business leaders believe the law will increase costs – as a result of which a majority of small business leaders are more likely to reduce health insurance benefits.

The continued negative turn of polling results was duly noted at the law’s six month mark.  Yesterday’s CongressDaily PM noted that Speaker Pelosi – she of the infamous “We have to pass the bill so that you can find out what is in it” – did not make a public appearance six months to the day after the massive overhaul passed. (Is it because she found out what was in the law?)  The Washington Post’s Chris Cilizza analyzed “Why Democrats Aren’t Running on Health Care,” stating that “sometimes a picture is really worth 1,000 words,” a reference to the Pollster.com summary of surveys on the health measure (reproduced below).  And Democrat pollster Peter Hart advised Democrats to “opt for avoiding the subject rather than wading into the subject.”  In perhaps the most interesting example of the backpedaling on health care, Nancy-Ann DeParle was interviewed by liberal blogger Ezra Klein yesterday, which included this exchange on the law’s continued unpopularity:

Finally, the bill isn’t popular, and it looks to have slipped a bit further in the last month. Why do you think that is?
I don’t look at polls that much but to the extent I have, it looks pretty stable.  There’s a certain number of people who’ve never liked it and their intensity has remained about the same.  There’ve been people who’ve always loved it and they’ve been stable.  And then there are people in the middle, who’ve been pretty stable…

In other words, Democrats have moved from claiming approval will go up “the minute the President signs the health care reform bill” to trumpeting the fact that polling “looks pretty stable” – which some may view as an example of the soft bigotry of low expectations.

Finally, I’ll note that Heritage has released a graphic interpretation of the health care law that you may find both interesting and useful.  Have a great weekend!

Polling Data September 2010

BNA: Employer Group Questions Provision of Insurance to Employees Over Long Term

Wanted to pass along this report from this morning’s BNA Daily Report for Executives (subscription required) featuring comments by the head of a key employer group questioning the long-term viability of group insurance coverage:

“There are huge administrative compliance and cost burdens on employer sponsors,” said Jim Klein, president of the American Benefits Council in Washington. Klein participated in a webcast sponsored by accounting firm Ernst & Young LLP titled Health Care Reform: It’s the Law. “The future of the employer-sponsored system as a result of a lot of that is very much sort of hanging in the balance, not in the short term, but clearly in the mid- to long term,” he said.

Over time employers may decide to stop offering coverage to employees because it will be cheaper to pay fines under the Patient Protection and Affordable Care Act (PPACA, Pub. L. No. 111-148) rather than pay for the cost of health insurance, Klein said.

Just looking at the numbers, the penalty is less than what it costs you to provide coverage to your employees,” Klein said. On the other hand, he added, “How long do you think that those penalties are going to remain at the level that they are?”

He added that “Many employers can, with a good conscience say, maybe I don’t need to be a sponsor of coverage.  There’s a good place, the exchange, where my employees can go” to obtain insurance.  This decision may well be driven by competitors’ actions—meaning that once one firm facing financial difficulties drops coverage, most competing firms will be forced to follow suit in short order.  Such a scenario would likely raise costs for federal premium subsidies on a scale not contemplated in the official Congressional Budget Office score of the law.

Mr. Klein observed there is “a great deal of skepticism” among employers that the health care law “is in any way going to reduce their costs,” that “I think it’s almost inevitable that virtually no one will have a grandfathered [insurance] plan,” and that changes in insurance rating requirements could mean that some younger employees decide to purchase coverage on Exchanges rather than through their employer—potentially raising premiums for those workers that remain in employer-sponsored insurance.  Finally, he noted that American Benefits Council’s survey of member companies found their premiums will rise an average of two percent next year just for the new insurance mandate to cover young adults; the Administration has repeatedly claimed that the total impact of all mandates should be 1-2 percent.

Update on Medical Loss Ratio Requirements

As you may have seen, the National Association of Insurance Commissioners (NAIC) released their draft medical loss ratio (MLR) regulation yesterday.  The draft regulation fleshes out the requirement that individual health insurance policies spend 80 percent of their premium dollars on medical claims, and group health insurance policies spend 85 percent.  Three key points to be aware of:

  • The draft regulations exempt most taxes paid by insurers from the formula use to calculate the MLR – a development consistent with the statute, but one that goes contrary to the stated wishes of some Democrats, who previously wrote NAIC offering a retrospective re-interpretation of this section of the law.
  • The regulations would define MLRs by state and type of insurance product being sold.  Thus a carrier with an MLR of 90% in one state and 75% in another would need to meet the new 80/85% standards in each state – rather than aggregating the effects nationwide.
  • NAIC did not make a determination about whether to allow a phase-in period for the requirements to take effect, leaving that decision to HHS officials.  This week Iowa wrote to HHS asking to delay implementation of the MLR requirements in that state, on the grounds that “without such a waiver provision…the federal standard will disrupt our individual health insurance market” because carriers may exit the state.  Iowa is the second state to make such an explicit request of HHS, following Maine’s earlier lead.

The draft regulation will be open for comment, and needs to be approved by other NAIC sub-committees, and eventually the full association itself.  Following that process – expected to be completed in October – HHS will “certify” the NAIC recommendations, as provided for in the statute.  A helpful article from this morning’s Wall Street Journal summarizing the state of play can be found here.

AP: Double Digit Hikes for Medicare Drug Plans

Wanted to pass along this Associated Press article summarizing a new study from Avalere Health indicating that “premiums will go up an average of 10 percent among the top plans that have signed up some 70 percent of seniors.”  You may recall that Avalere also published a study earlier this month indicating that 3 million seniors could lose their current prescription drug plan as a result of changes made by Medicare; today’s article notes that “There are a lot of plans that are shutting down.”

Six Months Later…

As expected, there’s quite a bit of media coverage this morning of the September 23 festivities marking six months since the health care bill was signed into law.  A couple of key points to keep in mind:

  • In his town hall meeting in Virginia yesterday, the President claimed that “We feel pretty confident that over the long term…premiums are going to be lower than they would be otherwise, health care costs are going to be lower than they would be otherwise.”  That’s not however what the experts have claimed – the Congressional Budget Office confirmed that individual market premiums will go up by an average $2,100 per family more than they would have had the law not passed, and the Administration’s own actuary found that health costs will rise by an extra $310,800,000,000 over the next ten years as a result of the law.
  • While the President said yesterday his health care bill would reduce premiums “over the long term,” he promised immediate relief to struggling families during his presidential campaign.  Here’s what campaign advisor Jason Furman – one of the candidates to replace Larry Summers as the head of the President’s National Economic Council – said in July 2008: “We think we could get to $2,500 in savings by the end of the first term, or be very close to it.”
  • All the benefits being promoted today may be helpful or worthwhile to some – but because they are passed along to all consumers in the form of higher premium costs, everyone will pay for the benefits, regardless of whether or not individuals need, or want, that coverage.  And they are fundamentally inconsistent with the President’s promises – on the campaign and elsewhere – that the law will reduce health costs and lower premiums by $2,500 per family.  The Heritage Foundation has a great new one-pager providing a “Dirty Dozen” list of reasons why the health care law will raise premiums – it’s worth a look.
  • The President was quoted yesterday as saying Republicans should “look you in the eye” and tell a woman with Hodgkin’s disease that she shouldn’t have insurance.  This statement amounts to pure rhetoric on the President’s part, for Republicans have consistently supported high-risk pools for individuals with pre-existing conditions.  In fact, the House Republican health care alternative provided MORE funding for high-risk pools than the health care law itself—and didn’t require individuals with pre-existing conditions to go without insurance for six months before becoming eligible for coverage, as the health care law does.
  • Conversely, John Goodman writes in this morning’s Wall Street Journal about how enrollment in Medicare Advantage will fall by a projected 7.4 million seniors, according to the Medicare actuary, and how seniors will lose billions of dollars in Medicare Advantage benefits, as outlined in a Heritage Foundation study released last week.  Will the President look those seniors in the eye and tell them why they should be forced off their current health plan, or pay hundreds of dollars more a year in out-of-pocket expenses?

A wrap-up of this morning’s coverage of the September 23 events: