Category: Benefits

The stage is set for the full House and Senate to take up health care reform legislation.

After months of work, House Democratic leaders last week finished cobbling together a 1,900-page reform bill, pulling provisions from measures that three House committees passed this summer while amending, dropping and adding others, including a cap on contributions to flexible spending accounts.

With that step, the full House is expected to begin debate on the bill later this week and likely pass it at the end of the week, Washington observers say.

The Senate is not quite as far along, with consideration of reform legislation possibly to begin this week.

But Senate Majority Leader Harry Reid, D-Nevada, last week announced a key decision: The reform bill he will send to the Senate floor will include a public option—a government-run health insurance plan.

A public option is part of the House reform bill, as well as an earlier bill passed by the Senate Health, Education, Labor and Pensions Committee, but is not in the measure approved by the Senate Finance Committee. Sen. Max Baucus, D-Montana, the chairman of the Finance Committee, kept a public option out, saying it lacked the votes to be approved by the full Senate.

Creation of a government-run plan has triggered enormous controversy. Its advocates say a public option is needed to inject competition into the health insurance market, while critics say a public plan would drive out private insurers and self-funded employers from the market and result in a single-payer health care system.

With both congressional branches moving ahead on reform measures, whose central features include health insurance premium subsidies for the low-income uninsured and penalties on employers that do not offer coverage, the odds of a final agreement being reached—either later this year or early next year—continue to improve, observers say.

“The Democrats control the House and Senate and the White House. They will make it happen,” said Frank McArdle, a consultant with Hewitt Associates in Washington.

Still, there are many battles to be fought and issues to be resolved.

“The last chapter certainly has not been written,” said Paul Dennett, senior vice president of health care reform with the American Benefits Council in Washington.

“We are nowhere near the end,” said Neil Trautwein, vice president and employee benefits counsel with the National Retail Federation in Washington.

In fact, a looming battle—perhaps the most important one to date—soon will play out on the Senate floor: whether a public option will be part of the reform legislation.

Reid has provided few details on how the public option would work beyond saying that states would have the right to opt out.

At the moment, though, observers doubt that Reid has the votes for a public option.

“He is giving it the old college try, but I don’t see 60 votes for it,” Trautwein said.

“I just don’t see where 60 votes would come from,” Dennett agreed.

In fact, Reid dodged answering questions at a news conference last week on whether he thought there was enough support for the full Senate to pass a public option, said James Gelfand, senior health care policy manager for the U.S. Chamber of Commerce in Washington.

If Sen. Reid sees that he lacks the 60 votes needed to stop a certain Republican-led filibuster on a public option, he might revamp the proposal to try to attract enough votes. One way the public option might be revamped, observers say, would be if it was triggered if health care costs exceed a certain level or if studies find there is insufficient competition among health insurers.

While the outcome of the public option battle won’t be known for some time, employers already may have lost a battle on another reform provision: curbing tax breaks for those who contribute to health care FSAs.

The House bill now includes a provision in which, starting in 2013, the maximum pretax contributions an employee could make to an FSA would be $2,500. That amount would be increased annually to match annual increases in the Consumer Price Index.

That cap is somewhat similar to one embedded in the Finance Committee bill. That panel also would cap FSA contributions at $2,500, though starting in 2011 and with no future indexing.

With an FSA tax cap expected to be included in the health care reform bill Reid will send to the Senate floor, and the House bill also including an FSA cap, the odds now are high that a cap will be part of the final bill.

Employers have embraced FSAs as a way for employees to pay for uncovered health care-related expenses on a pretax basis, significantly cutting the true cost for employees in higher tax brackets.

But employers prevailed on another issue: Excluded from the House bill is a provision that would have allowed states to set up their own single-payer health care systems.

Under current law, the Employee Retirement Income Security Act pre-empts states from passing measures that relate to employee benefit plans. The Education and Labor Committee provision, proposed by Rep. Dennis Kucinich, D-Ohio, would have exempted state single-payer laws from ERISA pre-emption.

Other provisions in the measures approved by the House panels and opposed by employers that made it in the bill that the full House will consider include:

● Preventing employers with retiree health care plans from reducing benefits unless they also cut benefits provided to employees. Experts previously said the effect of such a requirement would be to accelerate the exodus of employers from sponsoring retiree health care plans.

● Allowing COBRA beneficiaries to retain coverage far beyond what current law requires. Under the measure, COBRA beneficiaries could continue coverage until they become eligible for group coverage under a new employer’s plan or until they become eligible for coverage through new state health insurance exchanges, which the legislation would start in 2013.

Under current law, employees who terminate employment are entitled to up to 18 months of COBRA coverage, while employees’ dependents can obtain up to 36 months of coverage in situations involving death, divorce or marital separation.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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More than 23 million people in the U.S. have diabetes, the American Diabetes Association estimates. But another noteworthy figure may be the estimated number of people in that group who are unaware they have the disease: 5.7 million, or about 25 percent. The Wellness Council of America notes that November is American Diabetes Month, a good time for employers and employees alike to become aware of the disease and the toll it takes. Welcoa points out several other observances in November: National Adoption Month, Lung Cancer Awareness Month, National Alzheimer’s Disease Awareness Month and the Great American Smokeout (November 19).

Large-scale individual mandates aren’t necessarily the most effective way to get people to enroll in health insurance, a panel of experts said Monday, October 26, during a meeting of the Congressional Health Care Caucus.

Such a mandate, which is under consideration as a component of health care reform, “is problematic in a free society” and wouldn’t necessarily have a 100 percent success rate, said Rep. Michael Burgess, R-Texas, who chairs the caucus.

The Internal Revenue Service, for example, mandates that all citizens pay taxes, “but 15 percent of the population don’t comply,” he said.

To address the problem of people with pre-existing conditions, Douglas Holtz-Eakin, president of DHE Consulting, proposed the idea of portable insurance policies that would offer coverage regardless of employment or medical history, and carry over into an individual’s retirement.

A brief “open enrollment” period when individuals could sign up for guaranteed coverage would be another alternative to a “draconian mandate,” he said.

Janet Trautwein, CEO of the National Association of Health Underwriters, suggested that automatic enrollment, successfully used in 401(k) programs, could be made available through the proposed insurance exchanges in the respective health care reform bills, perhaps coupled with late enrollment penalties.

As a result, insurance pools would grow, “bringing down costs for employers,” she said.

Filed by Jennifer Lubell of Modern Healthcare, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Although “there are items that could be better and provisions that could be added,” Rep. Jan Schakowsky, D-Illinois, told a regional meeting of the American Medical Student Association on Saturday, October 24, that health care reform legislation in the House has the correct architecture that will allow lawmakers “to hang improvements on it as we go along.”

Schakowsky, who sits on the House Energy and Commerce Committee and serves in the House Democratic Party leadership position of “chief deputy whip,” predicted a bill will be introduced on the House floor by November 5 or 6.

She spoke at Northwestern University’s Feinberg School of Medicine in Chicago on Friday, giving a formal speech before being joined on stage by three white coat-wearing medical students—Shamie Das, Avash Kalra and Lakshman Swamy—from the Boonshoft School of Medicine at Wright State University in Dayton, Ohio, to record an interview with her for their “Radio Rounds” talk show that is broadcast on a Dayton station and over the Internet.

The four sat around a coffee table in what one student described as an “Oprah-like setting.”

The voice of medical students “couldn’t be more important” to the health care reform debate, Schakowsky said in her speech, because they know the shape of the health care system they want and they know the health care system their patients need.

“When you talk, we listen,” she said.

Saying that Congress was “in the final days of this great battle,” Schakowsky predicted a health care reform bill would pass.

“I am very optimistic at this very moment … that we are at long last going to have affordable, quality health care for all Americans—and isn’t it about time?” Schakowsky said. She also predicted that reform legislation will include a government-run health plan, which “three months ago no one in Washington thought we had a chance at passing.”

While acknowledging that the “public option” was “probably not the best name in the world,” Schakowsky said a government-run plan is needed to give both patients and doctors a choice, because—according to a letter from the American Medical Association—94 percent of the nation’s health insurance markets were noncompetitive.

“Doctors are often told they have to take what the insurance company pays or they won’t be in the network,” she said, adding later that insurers and other defenders of the status quo “are focused like a laser beam on killing a public option.”

The AMSA split from the AMA in 1967, partly because of the senior organization’s opposition to Medicare and lack of opposition to the Vietnam War, but Schakowsky noted that both organizations are now on the same page.

“We’re in a different situation now,” she said. “Doctors have been victimized by this health care system.”

Workforce issues related to reform also are important, Schakowsky said, and students applauded when she spoke of expanding the federal Health Services Corps program, which gives $50,000 to new doctors to use toward paying off medical school debt in exchange for practicing in an underserved area for two years.

She also called for new loan repayment plans, lower interest rates for students going into primary-care specialties, and pilot programs to test the medical-home and accountable-care organization concepts.

Filed by Andis Robeznieks of Modern Healthcare, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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The state of New York has reversed course on an earlier decision mandating that health care workers receive flu shots, as State Health Commissioner Richard Daines has suspended the requirement.

Earlier, the state’s health department had said all health care workers would need to be vaccinated by November 30.

But demand for the H1N1 vaccine by the state’s health care providers has exceeded supply. The Centers for Disease Control and Prevention has allowed New York to enter actual orders for 146,300 doses of vaccine, while the state’s health care providers have requested more than 1.48 million doses, according to the department.

“Over the last week, the Centers for Disease Control and Prevention acknowledged that New York would only receive approximately 23 percent of its anticipated vaccine supply by the end of the month,” Gov. David Paterson said in a news release. “As a result, we need to be as resourceful as we can with the limited supplies of vaccine currently coming into the state and make sure that those who are at the highest risk for complications for the H1N1 virus receive the first vaccine being distributed right now in the United States.”

After the mandate had been issued, some nurses in Albany County vowed to fight the rule.

Daines said in a news release that vaccination of health care workers continues to be an important safety measure, and he urged workers to receive both the seasonal and H1N1 vaccines.

Filed by Jessica Zigmond of Modern Healthcare, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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About one-third of group health care plans would be affected by a proposed 40 percent excise tax on insurers and third-party administrators offering the highest-cost health plans by 2019, according to a congressional analysis.

U.S. Rep. Joe Courtney, R-Connecticut, who requested that the Joint Committee on Taxation analyze the provision in health care reform legislation that the Senate Finance Committee passed last week, released the results Tuesday, October 20.

Under the provision, the excise tax would apply to that portion of a group health care plan premium that exceeds $8,000 for individual coverage and $21,000 for family coverage. For plans covering early retirees and employees in certain high-risk professions, the tax threshold would be $9,850 for individuals and $26,000 for families.

In 2013, the first year the tax would be imposed, the Joint Committee on Taxation estimates that 19 percent of plans offering single coverage and 14 percent of plans offering family coverage would be affected by the excise tax.

However, the analysis found that the percentage of plans affected would increase steadily in succeeding years. By 2019, 34 percent of plans offering single coverage and 31 percent of plans offering family coverage would be subject to the tax.

Under the measure, the tax thresholds would rise in tandem with the annual increase in the Consumer Price Index, plus one percentage point. However, the Joint Committee on Taxation noted that medical inflation is expected to increase even more and boost the percentage of plans affected.

While the tax would be paid by insurers and by third-party administrators in the case of self-funded plans, it is likely that costs would be passed on to buyers, according to the analysis.

“Generally, we expect the insurer to pass along the cost of the excise tax to consumers by increasing the price of health coverage,” the analysis said.

Of five congressional committees that have passed health care reform legislation this year, the Senate Finance Committee is the only one to include an excise tax based on cost of coverage.

The Congressional Budget Office estimated earlier that the provision would raise more than $200 billion over a 10-year period.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Sen. Charles Schumer, D-New York, urged his colleagues Wednesday, October 14, to add an amendment to health care reform legislation that would strip health insurers of their limited antitrust exemption.

Sen. Schumer, a co-sponsor of the Health Insurance Industry Antitrust Enforcement Act introduced last month, made his call one day after the Senate Finance Committee approved a health care reform bill. Insurers enjoy a limited antitrust exemption under the McCarran-Ferguson Act.

The health insurance industry’s “antitrust exemption is one of the worst accidents of American history,” Sen. Schumer said in a statement. “It deserves a lot of the blame for the huge rise in premiums that has made health insurance so unaffordable. It is time to end this special status and bring true competition to the health insurance industry.”

Sen. Schumer said the amendment to repeal the limited antitrust exemption should be attached to health reform legislation when it reaches the Senate floor later this year.

On a related front, a measure that would end health insurers’ antitrust exemption was introduced in the House last month.

Filed by Mark A. Hofmann of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Some nurses in New York state are preparing to fight a state mandate that requires health care workers to receive the flu vaccine this year.

Four nurses announced their plan after they were told they would lose their jobs in November if they did not get the vaccine, according to Terry Kindlon, an Albany, New York-area lawyer representing them.

The nurses expect to hold a rally and file their suit next week in Albany County, he said.

“The commissioner is attempting to enforce a rule that is in excess of his authority,” he said.

Organizations are also considering lawsuits, and the groups are considering consolidating their efforts, he added.

Last month State Health Commissioner Richard Daines, a physician, released an open letter to health workers in the state, saying the mandate would apply to the annual seasonal flu vaccine and the new H1N1 vaccine when it is available. Because of limited supply of the new vaccine, vulnerable patient populations have been targeted to receive it first, Daines said.

By ensuring that workers are vaccinated, health care providers can help protect all patients that do not have access to the H1N1 vaccine, Daines said in his letter.

“Safety lies in being treated in institutions and by health care personnel with the nearly 100 percent effective immunity rates seen with other long-mandated vaccinations for health care workers, such as measles and rubella,” he wrote.

Filed by Jean DerGurahian of Modern Health Care, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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The average 401(k) participant lost nearly one-third of his or her retirement account assets in 2008 because of the market downturn, according to a report released Tuesday, October 6, by the Investment Company Institute and the Employee Benefit Research Institute.

At the end of 2008, the average account balance was $45,519—a 30 percent decline compared with the $65,454 average account balance at the end of 2007. This substantial decline factors in contributions by workers and employers to 401(k) plans last year, which were handily offset by declines in most global equity and bond markets.

The Standard & Poor’s 500 stock index, for instance, fell 38.5 percent during 2008.

The ICI/EBRI report, “401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2008,” was based on a survey of 24 million 401(k) plan participants in 54,765 plans holding $1.1 trillion in assets.

“Retirement savers, like most investors, suffered during 2008, one of the deepest bear markets in modern history,” Sara Holden, the ICI’s senior director of retirement and investor research, said in a release. “But the growth in account balances among consistent participants over five years highlights the benefits of a regimen of disciplined saving in workplace retirement plans.”

Indeed, workers who invested in their 401(k) plans regularly during the five-year period from the end of 2003 through the end of 2008 experienced asset increases at an annual rate of 7.2 percent, even with the 2008 losses, according to the report. The average account balance of the “consistent” participants, as the report labeled them, rose to $86,513 at the end of 2008, from $61,106 at the end of 2003.

During the past 20 years, 401(k) plans have become the most widespread private-sector employer-sponsored retirement plan in the U.S., the report said. In 2008, 49.8 million Americans had the defined-contribution accounts, holding assets of $2.3 trillion.

Filed by Sara Hansard of InvestmentNews, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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