Health Care Reform News

Oregon’s insurance regulator has approved big premium increases sought by health plans for 2016 under the health law, and in some cases ordered higher raises than insurers requested, signaling that the cost of insurance for people who buy it on their own could jump after two years of relatively modest growth.

Around the U.S., the biggest insurers have proposed hefty premium increases for the year ahead, based on what they say they now know about the costs of covering people newly enrolled under the Affordable Care Act. Supporters of the law have been counting on state regulators to rein in hefty premium increases for the law’s third year in full effect.

But in Oregon, the first state to announce final 2016 rates, Insurance Commissioner Laura Cali approved an average 25.6% increase for Moda Health Plan Inc., the biggest plan on the state’s health exchange. She also gave a green light to average increases of 30% or more for four smaller companies. And she required plans that hadn’t attempted to raise rates to do so anyway, including Kaiser Foundation Health Plan of the Northwest, by an average of 8.3%.

Ms. Cali said the changes were necessary for plans to stay afloat. State actuaries had reviewed claims incurred in 2014 and concluded they exceeded premiums collected that year by $127 million, or an average of $624 a person who signed up for insurance on their own, she said.

WSJ July 06, 2015
The U.S. Food and Drug Administration approved Vertex Pharmaceuticals Inc.’s cystic-fibrosis drug Orkambi, which could treat as many as 8,500 patients in the U. S.—but at a whopping annual wholesale cost of $259,000 per patient.

The drug, a twice-daily oral tablet for patients 12 years and older, expands the company’s reach in the treatment of cystic fibrosis, the progressive lung disease that often kills patients in their 20s. Vertex said the new drug would be available within days. Orkambi is aimed at treating patients with a genetic mutation that is the leading cause of cystic fibrosis.

The U.S. Food and Drug Administration approved Orkambi Thursday. The Vertex pill, taken twice per day, is targeted at a genetic defect found in almost half of cystic fibrosis patients. Orkambi sales are expected to transform Vertex into a sustainably profitable company for the first time since its founding in 1989.

In approving Orkambi, the FDA concurred with the positive recommendation from a panel of outside experts who voted 12-1 in May that two large clinical trials conducted by Vertex provided sufficient evidence to support the efficacy and safety of the drug. European drug regulators are also reviewing Orkambi with an approval decision expected in the fourth quarter.

Enacted by the California legislature in 2014, the California Healthy Workplaces, Healthy Families Act takes effect July 1, 2015.

Under AB1522, California’s new paid sick leave law requires:

•All employers with one or more employees who work 30 or more days per year to give each employee at least 24 hours of paid sick leave annually

•One hour of sick leave be awarded for every 30 hours worked or employers can award 24 hours of paid sick leave as a lump sum at the beginning of each year

•Employers must permit employees to roll accrued sick leave over to the next year (Employers can cap accrued sick leave at 48 hours and may limit actual annual paid sick leave use to a maximum of 24 hours)

HOW IS LEAVE EARNED?

Effective July 1, 2015, employees who have worked 30 days in California within one year are eligible to accrue paid sick leave at a rate of one hour of sick leave for every 30 hours worked. For exempt employees, a workweek will be considered to be the lesser of 40 hours or the actual normal workweek. Workers must be allowed to roll accrued sick leave over to the next year, but employers can cap the amount of sick leave accrued at 48 hours and may limit the actual annual use of paid sick leave to a maximum of 24 hours.

Employers may, instead of using the accrual method described above, opt to provide a lump sum of 24 hours of sick leave at the beginning of each year. Provided that a new bank of 24 hours is immediately available in the new year, sick leave remaining from the end of the prior year from this lump sum bank does not need to carry over from the prior year.

Accrued paid sick time is not required to be paid out at termination unless it is part of a combined paid time off (PTO) plan. If an employee is rehired within a year, however, the previous paid sick leave balance must be restored

Employee Benefits News April 8, 2014

Even five years after its enactment, the Affordable Care Act continues to draw strong opposition. And while it’s still the early days for the ACA, so far “there’s no evidence of any major disruption to the existing employer-sponsored insurance market,” said Jonathan Gruber, an MIT economist and proponent of the law, during a recent event hosted by Sun Life Financial and Bloomberg.

He attributed widespread skepticism about the law to politics, saying “there’s a continued enormous lack of understanding about what the law does that I think is a direct result of the large level of [political] opposition to it.”

And while avoiding the ACA’s Cadillac tax is front-of-mind for many benefit decision-makers, Gruber maintained the tax is only a mechanism to offset the existing discount already provided to health insurance benefits in the tax code.

“Health insurance is compensation and wages are compensation. They should be taxed the same. And they’re not,” said Gruber. The result is a system that is expensive, unfair and encourages excessive consumption, he believes. “If the U.S. taxed health insurance like wages, we would raise $250 billion more a year in revenues,” he said. Moreover, “the richer you are, the bigger tax break you get because your tax rate is higher.” And, finally, he said, such as system encourages excessive consumption because people are buying health insurance with after-tax dollars.

But Michael Cannon, director of health policy studies at the Cato Institute, believes the still-on-the-horizon Cadillac tax is unlikely to remain in its current form. “A lot of employers are going to be hit by that tax, more and more over time, and more people are going to learn that promise of ‘if you like your health plan you can keep it’ was a false one,” he said.

“The question is how will Congress respond? There are going to be a lot of people who want to repeal that tax on its own, but I think a lot of proponents of the ACA will say to employers and others who want to get rid of the tax: ‘We’ll help you do that, but you have to go along with part of a broader effort to reopen the ACA and repeal parts of it.’”

The Cadillac tax, set to go into effect in 2018, is a 40% excise tax on health coverage that costs more than $10,200 for an individual or $27,500 for a family. About one-third of employers are currently at risk for triggering the tax in 2018 if they make no changes to their most costly plan, according to consulting firm Mercer’s National Survey of Employer-Sponsored Health Plans.

But the Cadillac tax, said Gruber, is merely a way to equalize the way wages and health insurance are taxed. “It’s essentially offsetting the existing discount in the tax code,” he said, emphasizing it’s not a new net tax. “It’s offsetting a benefit they really shouldn’t be getting in the first place.”

The intended goal of the Cadillac tax, said Gruber, “is for employers to make the most appropriate tradeoff between wages and health insurance for their employees. I think general economic theory and evidence suggests a number of employers are not doing that – they’re providing health insurance which is more generous and wages that are lower than what makes their employees the best off. … the Cadillac tax moves them in the right direction of more appropriately having that trade-off – maybe a little bit more limited network can save a lot of costs and not really impede much the preferences of their employees.”

The Internal Revenue Service and the Department of Treasury are seeking comments about the Cadillac tax, including what constitutes employer-sponsored coverage and different approaches for determining the cost of applicable coverage. Comments are due May 15.

Gruber and Cannon agreed the Cadillac tax is likely to become an issue in the 2016 presidential election, but differed on the reasons why.

“It will have more of an impact on Democrat candidates. Republicans will just say ‘we hate taxes, we hate the ACA, we want to get rid of this tax,’” said Cannon, adding the Cadillac tax will affect many union plans and unions tend to support Democrats more often than they support Republicans. “There’s going to be a lot of pressure on Democrats from one of their key constituencies to do something to provide them relief from this tax.”

But Gruber believes the Republicans will face their own challenges with the Cadillac tax. “A long-standing Republican position has been to get rid of the employer tax subsidy and put them on to individuals instead. The Cadillac tax is heading in that direction,” he said. “So the question is: How does the Republican Party resolve its opposition, in some sense, to the fundamental employer system with the fact that this is the biggest thing we’ve ever done to try to get rid of something they’ve wanted to get rid of?”

Companies of all sizes are embracing technology and using Human Resource Management Software (HRMS) to administrate the “people” part of business. It can create a quantum leap in efficiency by deploying.

Once new HRMS software has been selected and purchased, the next logical step is to just simply implement the software. As with most things, HRMS implementation isn’t as simple as one might expect. It’s essential to keep several things in mind before you begin to change your HRMS system.implementation

First, you must define your objectives of implementing your new system. A deep dive into the current HRMS system should be in order to determine which areas need to be upgraded and which are just ‘nice to have.’ HRMS applications are flexible and can be adapted to businesses of all sizes, so it is important to consider what needs to be upgraded or changed altogether prior to implementation. Changes of this nature need to be endorsed by management and a project manager should be assigned to help ensure successful and positive implementation.

An HRMS comparison should be conducted in order to recognize how the new system can benefit the organization, as well as how effortlessly users will be able to master it. Regardless of what HRMS system you choose, employees should be offered training, and also be able to explore the HRMS demo product in order to understand how the implementation will be completed.

Whether it’s an HRMS payroll system or a simple HRMS management system, careful consideration needs to be made in order to best understand how to effectively implement the new HRMS. It’s important to be aware of the impact the new system will have on your business as well, and how to best put it into place.

With management onboard and a training program in place for employees, businesses can save time and money over the long term by offering better management services to their employees

By Melinda Beck WSJ 12/26/2014
Updated Dec. 25, 2014 2:59 p.m. ET

Internist Douglas Olson has seen firsthand the impact—and the side effects—of the Affordable Care Act’s first year of expanded health-care coverage.

One patient at his clinic had lost her previous insurance after being diagnosed with lung cancer. This year, she was able to find an affordable policy that covered her treatments and follow-up scans.

Another woman needed an MRI for her chronic shoulder pain, but had to pay the $1,000 tab out-of-pocket, because she hadn’t satisfied her new plan’s deductible. She decided her $50 monthly premiums weren’t getting her much value and is giving up her coverage until she qualifies for Medicare in two years.

“You and I know that’s how insurance works—you pay a little bit now and if you get really sick, it pays for itself,” said Dr. Olson, 39 years old, chief medical officer of the Norwalk Community Health Center in Connecticut. “But for someone who’s never had insurance before, it’s easy to think, ‘What am I paying these premiums for?’ ”

Dr. Olson’s patients illustrate the trade-offs and lessons in the sweeping federal health law.

Overall, 6.7 million Americans have obtained and paid for private coverage on the insurance marketplaces for this year, according to federal officials. Almost 10 million more qualified for Medicaid due to provisions in the law. And the percentage of uninsured dropped from 17.7% to an estimated 12.4%, according to the Urban Institute.

In the second yearly enrollment, almost 6.4 million people selected a health-care plan on the federal marketplace or were automatically re-enrolled between Nov. 15 and Dec. 19, Health and Human Services Secretary Sylvia Mathews Burwell said Tuesday. The figures include about 1.9 million new consumers but don’t include enrollees from state-run exchanges. Enrollment on the federal exchange runs through Feb. 15.

How the Affordable Care Act has helped—and what it has cost—consumers, employers and care providers varies enormously. Some people with life-threatening illnesses found coverage. Some hospitals and doctors are seeing more patients with the ability to pay. But many families and businesses are facing higher costs. There is still confusion over how the new plans work and a palpable disconnect between near-term expenses and long-term public-health goals.

The public remains deeply divided. As of last month, more Americans viewed the law unfavorably (46%) than favorably (37%)—a shift from four years earlier, when respondents favored it 42% to 40%, according to a Kaiser Family Foundation poll.

“The fundamental impetus for the law was to lower the number of uninsured, and it has clearly done that,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation. “But simply getting people insured doesn’t mean health care is affordable.”

A Wall Street Journal project following 10 stories of people affected by the health law over the year shows the wide range of experiences.

The community health center where Dr. Olson works provides low-cost primary care. Many patients who signed up for coverage “have had tremendously positive experiences—they actually consider it a privilege to be insured, because they could never afford it before,” said Dr. Olson.

But others were frustrated that they had to pay premiums and pay for much of their care out-of-pocket because they chose cheaper plans with high deductibles.

Nationwide, the median deductible for individuals was $5,100 in bronze plans and $2,500 in silver plans, according to a McKinsey & Co. analysis.

To be sure, insured patients can get preventive care, including vaccinations and screenings for cancer, without any deductibles or copays under the law. But that has been a hard sell for some patients.

“Prevention, starting now, doesn’t pay off for a number of years,” said Dr. Olson.

All in all, Dr. Olson said he and his colleagues think even harder whether costly tests and procedures are necessary than they did before the ACA. “If you’d asked me a year ago, I wouldn’t have predicted that,” he said.

Some economists say the impact of high-deductible plans, prominent in employer-sponsored coverage as well, was a key driver in holding the growth of health-care costs to 3.6% in 2013—the lowest since the government started measuring it in 1960. At $2.9 trillion last year, the share of the nation’s gross domestic product devoted to health care remained 17.4%, unchanged since 2009.

Government actuaries expect to see a spurt in national health spending—rising by 5.6% in 2014, due to the ACA’s coverage expansion, and reaching 19.3% of GDP by 2023.

Some hospitals have already seen windfalls, with more paying patients boosting revenues. HCA Holdings Inc. —the largest hospital chain by revenue—reported a 41.9% increase in net income on revenue of $9.2 billion for the third quarter, compared with a year earlier.

But systems like Truman Medical Centers in Kansas City, Mo., one of the mostly Republican-leaning states that declined to participate in the law’s Medicaid expansion, face challenges. Truman cares for many uninsured patients and is desperate for Missouri to expand Medicaid. CEO Charlie Shields is also bracing for bigger financial problems in 2017, when federal payments that help provide that uncompensated care are set for cuts.

The impact on insurers has also been mixed. For actuary Mike Beuoy and his employer, Blue Shield of California, offering plans on the state’s marketplace turned out to be a good bet. The nonprofit made money because more people signed up than expected, and they were healthier than it projected when it set 2014 rates.

Several big companies warned they will post losses on their individual business. But for now, the industry seems willing to double down on the exchanges, with some companies, including giant UnitedHealth Group Inc., boosting their presence next year.