Thursday, September 23, 2021

Your Vaccine Mandate Penalty Could Trigger Obamacare Fines

One thing employers need to keep in mind as they ponder the addition of a vaccine mandate on employees and the implementation surcharges/penalties against employees who refuse the jab is that additional penalties assessed against the employee could push the employer's plan over PPACA's affordability limits.  This would trigger a $4,060 fine back against the employer for each impacted employee.  Kyle Scott, writing over at Benefits Pro summarizes this nicely here:  

The Affordable Care Act (ACA) requires Applicable Large Employers (ALEs) to offer affordable health care benefits to eligible employees or pay a penalty. Within the ACA law lie very specific rules governing the design of wellness programs, especially regarding incentives and penalties (premium surcharges). ...

In 2021, affordability is achieved when an employee’s cost for health insurance benefits is no more than 9.83% of that employee’s household income. This percent is adjusted each year and safe harbors apply. ...

If the cost including the surcharge renders the plan as unaffordable, and the employee goes to the exchange and receives a premium tax credit, the employer may be subject to Penalty B. The $4,060 penalty per year can be multiplied by the total number of full-time employees who did not have an offer of affordable coverage and who also receive a premium tax credit. ...

While there is an exception for tobacco, there’s nothing currently in the ACA rules that similarly applies to a surcharge or penalty for non-COVID-19 vaccinated employees. ...

Thursday, August 26, 2021

Why U.S. Healthcare Prices Are All Over the Map with Armstrong and Getty

I visited with Jack and Joe this morning to discuss the latest NYT article on how the Trump Administration's transparency regulations are starting to shed some light on the absolute absurdity of American healthcare pricing.  We originally discussed these regulations in 2019 here and here.  As the NYT notes, this is a very rare bipartisan effort for regulators and legislators - at least on the surface.  But we have a long way to go to make these rules more effective.  

Our discussion was cut off before I could answer that last question. The answer is yes. We are still on a path toward some sort of socialized medicine by the end of the 2020s. We cannot sustain this present system much longer. 

Here are my show notes
  • U.S. Debt is not solely $28.7T. Debt plus unfunded liability is $155T which is $465,000 per citizen (not family).
  • Yet Medicare, the US’s largest single government-funded program only increases its payment by less than 1% per year.
  • This leaves large medical systems highly pressured to increase what they negotiate as reimbursement from BUCA (Blues, UHC, Cigna & Aetna – Big 4).
  • In 2010 Obamacare added a price control to healthcare mandating that insurers like the Big 4 may not keep more than 15% as profit and overhead. I.e., Insurers must prove that they are spending 85% of every dollar we give them on claims as opposed to overhead and profit.
    • This is called the “MLR” Mandate (Medical Loss Ratio).
    • The impact of this was to relax insurers’ incentive to keep claim costs down. Why? Because the only way for an insurer to increase revenue is to glow the claims pie. 15% of a $4,000 MRI pays better than 15% of a $1,000 MRI.
    • So now when giant hospital systems want to inflate prices for any given set of procedures, insurers have a reduced incentive to naturally fight against that inclination because of the bureaucracy.

"Since many of the administrative costs in health insurance are hard to cut out—costs like fraud prevention—insurers will be forced to resort to another option to meet Obamacare’s MLR mandates: premium hikes.

Think of it this way: let’s say you’re charging $10,000 for a health plan, and have $7,000 of health costs associated with that plan (and $3,000 of administrative costs), for an MLR of 70 percent. If you want to increase your MLR to 80%, there are two ways to do it. First, you can cut administrative costs and premiums (if administrative costs were $1,750, and premiums $8,750, $7,000 of health costs would equal an 80% MLR). Second, you can keep your administrative costs the same ($3,000 per person), and find ways to spend more money on health-care, passing on the costs in the form of premium hikes ($15,000 in premiums, and $12,000 in health expenses, would also yield an MLR of 80%).

To put this another way: if an insurer is forced to choose between cutting administrative costs by 42 percent, or not firing its employees and instead hiking premiums by 50 percent, which is it going to choose? After all the fat is trimmed, the insurer is going to choose to increase premiums, and increase them significantly. It will spend money on wasteful health expenditures, the kind that liberal health wonks are always complaining about, just to meet an arbitrary MLR target."
  • In addition to this, the excessive regulation and government involvement have made it increasingly difficult to have smaller, nimble, price-competitive medical systems and insurers.
    • This leaves us with four large national insurers.
    • And about 16 enormous hospital chains. We’ve moved from a “free market” to a highly bureaucratized oligopoly.
    • Doctors are not the problem. Individual practitioners are being overrun by this government-healthcare industrial complex nearly as quickly as patients are. Our largest challenges in this area are:
      • The government;
      • Insurers;
      • The pharmaceutical industry; and
      • Large hospital chains and medical groups

What can we do
  • Encourage your congressman to: 
  • Employers must look to use smaller, local insurers.  Employers with more than 300 to 500 employees should look to self-fund their health plans and remove insurers from the equation entirely.  Reference base price your plan if you can.  

Friday, July 23, 2021

High Blood Sugar Levels 'Reprogram' Stem Cells

Yet another data point on the horrors of sugar and processed carbohydrates from MedicalXPress

University of Oxford researchers found that high blood glucose, a hallmark of diabetes, alters stem cells in the bone marrow that go on to become white blood cells called macrophages. As a result, these macrophages become inflammatory and contribute to the development of atherosclerotic plaques that can cause heart attacks.

This finding explains why people with diabetes are at increased risk of heart attack, even after their blood glucose levels are brought back under control, a paradox that has troubled doctors for years.

Nearly five million people in the UK have diabetes, and adults with the condition have double the risk of having a heart attack. These findings open new possibilities for treatments that could reduce the risk of heart and circulatory disease in people with diabetes.

The team investigated the differences in white blood cells in people with and without type 2 diabetes. They removed the white blood cells from blood samples and grew them in an environment with normal glucose levels. Those from people with type 2 diabetes showed a greatly exaggerated inflammatory response compared to the cells from people without the condition.

Researchers also extracted stem cells from the bone marrow of mice with and without diabetes and transplanted these into mice with normal blood glucose levels. The bone marrow taken from diabetic mice 'remembered' its exposure to high levels of glucose and as a result the mice receiving this bone marrow developed almost double the amount of atherosclerotic plaques.

When the team looked at the mouse macrophages in more detail they found that those that had developed from stem cells in the bone marrow of diabetic mice had been permanently altered to become more inflammatory.

The team now want to explore new avenues for treatments based on this finding. They also want to find out whether short periods of increased blood glucose in people without diabetes have this damaging effect.

 

Friday, May 21, 2021

Benefit Compliance Update: Employer Vax Tracking; Mask Rules; COBRA Q&A & Waste in Healthcare

 Templates, Tools & Legal Notices

Santa Clara County’s New COVID-19 Rules: Employers Must Obtain Vaccination Status, Report Positive Test Results, and Enforce Mask Use - "On May 18, 2021, Santa Clara County, California, issued a health order that both relieves employers of some earlier COVID-19–related requirements and imposes new obligations on employers, particularly with respect to employees’ vaccination status. Santa Clara County also issued the 'Mandatory Directive on Use of Face Coverings' and the 'Mandatory Directive For Unvaccinated Personnel.' The health order and mandatory directives take effect on May 19, 2021. ... All employers are required to obtain and record the vaccination status of all employees by June 1, 2021. The records may consist of an employee’s vaccination card or self-certification of full vaccination. Employers must ask unvaccinated employees about their status every 14 days. Employees who decline to respond 'must … be treated as unvaccinated.'"

Compliance

IRS Issues Guidance Regarding American Rescue Plan Act COBRA Subsidy - “The Notice clarifies that an individual who experiences a special enrollment opportunity that is suspended pursuant to the EBSA Disaster Relief Notice is not eligible for the COBRA premium subsidy if that special enrollment period continues to remain suspended during the ARPA COBRA premium subsidy period. Practically, plan sponsors do not know if an individual is eligible for a special enrollment opportunity for other group health plan coverage, making the need for an opt-in and attestation even more critical to being able to claim the tax credit.”

HHS to Enforce Section 1557 of the Affordable Care Act to Prohibit Discrimination Based on Sexual Orientation and Gender Identity - “The U.S. Department of Health and Human Services (HHS) announced on May 10 that its Office for Civil Rights (OCR) will begin enforcing Section 1557 of the Affordable Care Act to prohibit discrimination based on sexual orientation and gender identity.”

Employers Have 3 Options in Light of OSHA’s Unmasking Announcement - “Responding to a huge looming question for employers, the Occupational Safety and Health Administration (OSHA) just issued an announcement referring businesses to the CDC’s new guidance advising that fully vaccinated people no longer need to wear a mask or social distance in non-healthcare settings. But neither OSHA’s May 17 announcement nor the CDC’s May 13…”

CDC Says Fully Vaccinated Individuals Don’t Need Masks; But Should Employers Change Their Face Covering Requirements? - “CDC issues guidance and not law. While many state and local orders and laws are crafted based on CDC guidance, changes to these orders and laws are often executed days or weeks after CDC guidance is issued, and often feature nuances not seen in the initial CDC guidance…In jurisdictions where COVID-19 health and safety laws no longer require masking or social distancing for fully vaccinated individuals, employers are faced with employment law and practical considerations, including the following…”

ERISA Cybersecurity Lessons for Employers - “The DOL’s best practices guidance includes many specific action points. Several of the DOL’s recommendations are highlighted below…The DOL’s publication of the guidance may indicate that the agency will pay more attention to cybersecurity in future plan audits.”

Have You Been Vaccinated? Your Employer (and Everyone Else) Wants to Know - “We provide some guidance below regarding vaccine verification and some considerations for employers thinking about instituting vaccine policies.”

Potential ERISA Fiduciary Duty Issues with BCBSA $2.67 Billion Settlement - “Under ERISA, any portion of the settlement proceeds that are considered to be “plan assets” must be used for the exclusive benefit of participants in the plan (and their beneficiaries), or to defray the reasonable administrative expenses of the plan. Given the size of the settlement, we are hopeful that the Department of Labor (“DOL”) will issue guidance on these fiduciary duty issues.”

Gifts and bonuses in exchange for vaccination could violate the law - “Employers considering a vaccine incentive program should use caution, delaying if possible, for clearer guidance. However, if a program is moving forward, employers must make the program voluntary, should keep any incentives small in value, offer accommodations for medical exceptions and religious beliefs, and offer non-monetary or in-kind incentives to avoid violations.”

California OSHA Issues Frequently Asked Questions to Clarify Guidance for Vaccinated Employees - “The new guidance provides that employers can now follow the California Department of Public Health (CDPH) COVID-19 Public Health Recommendations for Fully Vaccinated Individuals. CDPH guidance states that fully vaccinated employees must be excluded from the workplace only when there have been COVID-19 cases at the worksite (or they have had a COVID-19 exposure) and they show symptoms of COVID-19.”

Benefit News

25% of Healthcare is Wasted in the U.S. - "A review of articles published in the New England Journal of Medicine determined that one-third of 'established medical practices … are found to be no better than a less expensive, simpler, or easier therapy or approach.' Another study estimated that 25% of all healthcare spending from 2012 to 2019 was wasted."

Are Employer-Sponsored Health Plans on Their Way Out? - The history of why we get our benefits from employers dates back to WWII, when companies began using healthcare as a means to attract talent, particularly women. While employer-sponsored health insurance has been the norm ever since, it is clear that consumers’ needs have shifted. One-size-fits-many coverage may no longer cut it for Americans with heightened expectations and diverse health concerns. Going forward, we may see employer-sponsored health insurance going the way of pension plans. Consumers are showing they’re ready for the change, with data revealing that 41% of consumers say they think health insurance should be decoupled from employment. As business leaders look ahead to the next couple of years, we have an opportunity to meet the moment and reimagine what health insurance looks like, and what incentives companies should offer to attract the best talent.

On Armstrong & Getty re: Congress' Rampant Dishonesty in Budgeting and Medicare

Medicare for All?  

Medicare for More?  

We can't even afford Medicare for some ...  

 For more on this topic see Stupid Budget Tricks - Government Healthcare Edition.


Friday, May 14, 2021

Benefit News Clips, Week of May 14th

The Littler® Annual Employer Survey Report

May 12, 2021 – Littler Mendelson P.C.

Excerpt: “While 71 percent of employers surveyed believe that most of their employees who can work remotely prefer a hybrid model and that only 4 percent prefer full-time in-person work, 28 percent of those employers plan to have most employees return full time and in person, and 55 percent will offer a hybrid model (i.e., a mix of remote and in-person work). Only 7 percent say their employees who are able to work remotely full time can continue to do so if they wish, despite 16 percent saying they believe most would prefer this option.”

 

Potential ERISA Fiduciary Duty Issues with BCBSA $2.67 Billion Settlement

May 12, 2021 – Miller, Johnson, Snell & Cummiskey, P.L.C.

Excerpt: “Employers that file a claim and receive settlement proceeds may need to determine what portion of the settlement proceeds are considered plan assets under ERISA, especially since we anticipate that only a minority of employees will make an individual claim. With a settlement fund of $2.67 billon, some employers may receive a significant amount from the settlement fund. As a result, we are hopeful that the DOL will provide guidance on the proper use of the settlement funds received by employers under ERISA in this specific lawsuit.”

 

Gifts and bonuses in exchange for vaccination could violate the law

May 11, 2021 – The Hill

Excerpt: “Employers considering a vaccine incentive program should use caution, delaying if possible, for clearer guidance. However, if a program is moving forward, employers must make the program voluntary, should keep any incentives small in value, offer accommodations for medical exceptions and religious beliefs, and offer non-monetary or in-kind incentives to avoid violations.”

 

IRS Announces 2022 Limits for Health Savings Accounts, High-Deductible Health Plans and Excepted Benefit HRAs

May 11, 2021 – McDermott Will & Emery

Excerpt: “The table below compares the applicable dollar limits for HSAs, HDHPs and excepted benefit HRAs for 2021 and 2022.”

 

Your State No Longer Requires Face Coverings in the Workplace – But Should You Continue To Mandate Them?

May 10, 2021 – Fisher & Phillips LLP

Excerpt: “This is a particular concern in states like Texas, Florida, Georgia, and Mississippi, where the state has eased COVID-19 related restrictions, but the federal government has jurisdiction over workplace safety through OSHA. Other states where the state government has jurisdiction over workplace safety – like Virginia, Michigan, Oregon and California – have adopted their own COVID-19 OSHA standards, which include additional heightened mandates for employers in the workplace.”

 

Looming Federal Paid Leave Legislation Raises Important Questions for Employers Over Funding

May 7, 2021 – HR Policy Association

Excerpt: “With Congress mulling multiple paid family leave legislative proposals and a federal paid leave program seemingly on the horizon, questions remain regarding the best approach to how such a program—likely to be a UI-type insurance program—would be funded: through a payroll tax or general revenue?”


California OSHA Issues Frequently Asked Questions to Clarify Guidance for Vaccinated Employees

On May 5, 2021, California’s Occupational Safety and Health Administration (Cal/OSHA) issued answers to frequently asked questions (FAQs) to address employer concerns about what to do with fully vaccinated employees during a COVID-19 exposure incident at the workplace. This guidance reconciles differences between the emergency temporary standard (ETS) and guidance published by the U. S. Centers for Disease Control and Prevention (CDC) concerning fully vaccinated employees. Prior to this guidance, the ETS required employers to remove and quarantine fully vaccinated employees from the workplace whenever there was a confirmed positive COVID case at the worksite. In contrast, the CDC guidance provided if the fully vaccinated employee was asymptomatic there was no need for removal or quarantine.

New Guidance

The new guidance provides that employers can now follow the California Department of Public Health (CDPH) COVID-19 Public Health Recommendations for Fully Vaccinated Individuals. CDPH guidance states that fully vaccinated employees must be excluded from the workplace only when there have been COVID-19 cases at the worksite (or they have had a COVID-19 exposure) and they show symptoms of COVID-19.

Employers should follow Executive Order N-84-20 and the CDPH guidance when excluding or quarantining fully vaccinated employees from work.

Impact on Employers

Employers should become familiar with the new FAQs, the CDPH recommendations and all applicable executive orders before they exclude or quarantine fully vaccinated employees from the workplace. 

In addition, an employer should note that while CDPH guidance provides specific guidelines for workplace settings, employers must still follow the ETS requirements related to other COVID-19 issues, such as employee face coverings, social distancing and testing parameters.  

This post is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.  

HSA/HDHP Limits Increase for 2022

The following chart shows the HSA and HDHP limits for 2022 as compared to 2021. It also includes the catch-up contribution limit that applies to HSA-eligible individuals who are age 55 or older, which is not adjusted for inflation and stays the same from year to year.  


Friday, May 7, 2021

Friday's Benefit and Compliance Clips


Compliance

Blue Cross Blue Shield Settlement: “If your company had an administrative services agreement with a Blue Cross Blue Shield (BCBS) licensee in the past six years or a health insurance policy with a BCBS licensee in the past 13 years, your company may benefit from the settlement of a court case…”

COBRA Subsidy: You’ve Got Questions … We’ve Got Answers: “Q2 - An employee was fired for poor performance last year. The employee went to another company, but his employment was recently terminated for poor performance. Which company is required to send COBRA notices and offer fully subsidized COBRA?”

American Rescue Plan: How to Navigate New Continuation Coverage Standards for COBRA: “Should the tax credit exceed the relevant tax liability, the excess is refundable to the employer. Additionally, the whole credit (including the refundable portion) may be advanced to the employer.”

Understanding Time Off From Work Obligations For COVID-19 Vaccinations: “Employers considering pay obligations for time off from work for COVID-19 vaccination should also consider state and local paid sick leave laws which may cover time off for preventative care that would include vaccinations.”

Your Employees Are Vaccinated – Now What? “May we disclose the vaccination status of my workforce?...What should we do if clients or customers demand they receive service from only vaccinated employees?...What safety measures can be adjusted now that employees are vaccinated? Can we relax masking requirements?”

Benefit News

California Mulls Letting Adults Add Parents To Health Plans: "California could become the only state to let adult children add their parents as dependents to their health insurance plans, a policy proposal aimed at increasing insurance coverage among low-income people living in the country illegally who aren’t eligible for government-funded coverage. ... But business groups say adding lots of older people to their large group insurance plans will just drive up their already skyrocketing premium costs. Employer premiums would increase between $200 million and $800 million per year, depending on how many people sign up. The result, they say, would be higher health care costs for everyone."

Woman's Insane Hospital Bill Goes Viral on Twitter: "her surgery [to remove fibrous tumor cells from a particularly fragile region of the brain] plus her hospital stay—cost an eye-popping, jaw-dropping $476,025.98. While her insurance mercifully covered $475,365.98 of the bill, she was on the hook for the remaining $660, much to her frustration."

The Health Problem Congress Created And Cannot Solve: "For the past 70 years, premiums paid by an employer have been tax-free to the employee. From time to time, individual purchases have benefited from one tax break or another, but they have never been treated as generously as insurance obtained at work. Even though Blue Cross group insurance might be identical to Blue Cross individual insurance, the tax law encourages us all to prefer the former to the latter. All we need is an accommodating employer to pay non-taxed premiums instead of additional taxable wages. Competition for labor ensures that virtually all employers of any size are more than willing to do that – even though most employers these days would rather not be involved in health care matters at all."

The One Itty-Bitty, Teeny-Weeny Problem with the Plan to Expand Medicare. It'll Be Very Expensive. "A male worker who made the median income his entire working career and retired at age 65 in 2020 can expect to receive from Social Security just about what he paid in. However, while he paid $81,000 in Medicare (Part A) payroll taxes, he is likely to receive $240,000 (net of premiums) in lifetime Medicare benefits. Lowering the enrollment age to 60 adds perhaps another $25,000 to $30,000 to that deficit. And that's just for a single person. Consider a married couple with only one low-wage earner. That worker retiring at age 65 in 2020 paid about $36,000 in Medicare taxes, which qualifies both of them to participate in Medicare. But the couple can expect to receive about $522,000 in Medicare benefits." 


Thursday, April 15, 2021

Pandemic Brain Fog: How Life's Repetition, Uncertainty and Isolation Impact Our Minds and Memory

This is a fascinating read on the poor cognitive function or the "brain fog" people may feel during the pandemic.  From the Guardian

One powerful factor [leading to our poor cognitive function or "brain fog" during the pandemic] could be the fact that everything is so samey. [Catherine Loveday, professor of cognitive neuroscience at the University of Westminster] explains that the brain is stimulated by the new, the different, and this is known as the orienting response: “From the minute we’re born – in fact, from before we’re born – when there is a new stimulus, a baby will turn its head towards it. And if as adults we are watching a boring lecture and someone walks into the room, it will stir our brain back into action.”

Most of us are likely to feel that nobody new has walked into our room for quite some time, which might help to explain this sluggish feeling neurologically: “We have effectively evolved to stop paying attention when nothing changes, but to pay particular attention when things do change,” she says. Loveday suggests that if we can attend a work meeting by phone while walking in a park, we might find we are more awake and better able to concentrate, thanks to the changing scenery and the exercise; she is recording some lectures as podcasts, rather than videos, so students can walk while listening. She also suggests spending time in different rooms at home – or if you only have one room, try “changing what the room looks like. I’m not saying redecorate – but you could change the pictures on the walls or move things around for variety, even in the smallest space.”

The blending of one day into the next with no commute, no change of scene, no change of cast, could also have an important impact on the way the brain processes memories, [Jon Simons, professor of cognitive neuroscience at the University of Cambridge] explains. Experiences under lockdown lack “distinctiveness” – a crucial factor in “pattern separation”. This process, which takes place in the hippocampus, at the centre of the brain, allows individual memories to be successfully encoded, ensuring there are few overlapping features, so we can distinguish one memory from another and retrieve them efficiently. The fuggy, confused sensation that many of us will recognise, of not being able to remember whether something happened last week or last month, may well be with us for a while, Simons says: “Our memories are going to be so difficult to differentiate. It’s highly likely that in a year or two, we’re still going to look back on some particular event from this last year and say, when on earth did that happen?”

Full story here.  

Wednesday, April 14, 2021

Stupid Budget Tricks - Government Healthcare Edition

If you think the federal budget situation in the United States is bad, and it is, you needn’t look any further than the remarkably inefficient and miserably managed systems of Medicare and Medicaid in order to get an idea of just how bad.  As of today, our national debt is over $28 Trillion or $225,000 per taxpayer.  But of course, that doesn’t take into account America’s unfunded liabilities.  You know, how big that debt is when you factor in what we owe and have not set aside for Medicare, Medicaid and Social Security.  After factoring that in, the real U.S. debt is $162 Trillion and each citizen owes $492,000.   

 

This trick has actually been going on since the 1990s.  Yup ... the 90s.     

 

What is the problem?  One-third of all government healthcare payments are wasted on fraud and abuse.  

 

See CATO: In 2005, the New York Times reported that New York’s Medicaid program “has become so huge, so complex and so lightly policed that it is easily exploited,” and that “a chief state investigator of Medicaid fraud and abuse in New York City said he and his colleagues believed that at least 10 percent of state Medicaid dollars were spent on fraudulent claims, while 20 or 30 percent more were siphoned off by what they termed abuse, meaning unnecessary spending that might not be criminal.“

 

Nevertheless, Medicare pays less than half of what employer-based plans pay in the U.S.  So, increasingly providers decline to take new Medicare patients.  More providers decline to take Medicaid (for low income folks) which pays, on average, 28% less than Medicare.  

 

Medicare is now set to run out of money by 2023 or 2024. 

 

See Kaiser Health News: "The Committee for a Responsible Federal Budget, a nonpartisan group of budget experts focused on fiscal policy, estimates that the pandemic will cause the Part A Trust Fund to be unable to pay all of its bills starting in late 2023 or early 2024. “But we’re still very close,” said Marc Goldwein, the group’s senior vice president." 

 

Even more problematic, healthcare expenditures continue to grow at 6% annually.  Federal legislators look at this quandary and don't know what to do.  Obviously the fraud can't be removed or it would have been over the last 30+ years.  Yet, House and Senate members must still "bring home the bacon" to cement reelection.  So how do they pass new legislation, particularly as it relates to healthcare, without totally blowing up the Congressional Budget Office's (CBO's) financial projections?  Two tricks:  

  1. They write a provision into their favorite federal spending laws, like Obamacare, that provide that part of the way they will "fund" the new entitlements will be to cut the Medicare reimbursements to doctors by 2% per year.  That way the "law" is in the books and the CBO must score the law assuming the cuts will happen.  

  2. Then, as those cuts come due, congress delays or suspends them.  Every.  Single. Time.  Below is the latest story on this topic.  

To reiterate the whole-scale financial negligence of the situation: one-third of U.S. government healthcare is waste, fraud and abuse.  That same system compensates doctors less than half of what private plans do.  But when congress is faced with how to make it more efficient or to save money, its answer is to bluntly cut the reimbursement to doctors even further because they know that the federal bureaucracies simply cannot get a handle on waste, fraud and abuse.  

 

Of course when Medicare is paying less than half of what employer-based plans pay and Medicaid pays 28% less than Medicare, nobody who wants to be re-elected will actually further reduce those reimbursements.  Doing so would be political suicide.  

 

This is from The HIll:  

The House on Tuesday approved a bill that would put off automatic cuts to Medicare provider payments until the end of the year.

The bill passed with a strong bipartisan majority of 384-38. 

Technically, the House vote comes nearly two weeks after the cuts were set to take effect, but the delay came with knowledge that action could be postponed until Congress returned from recess and passed the legislation.

The automatic cuts were originally put into place by the 2011 Budget Control Act, which set up an annual 2 percent reduction in Medicare payments as one of its mechanisms for reducing the debt. Congress has never allowed the cuts to take place, however, voting to overturn them regularly over the past decade.

When Congress passed the CARES Act, its $2.2 trillion emergency COVID-19 bill, last March, it pushed the cuts off until April 1 as a way of countering some of the bill's costs, at least on paper. ...

Saturday, April 3, 2021

The Final 12 States That Refused to Expand Medicaid Now Face Additional Federal Enticements

This hardly comes as a surprise. Medicaid was originally passed to cover the lowest 2% of American earners. It now covers 23%; and 1 in 3 babies is born into the program.  Over the last ten years the federal government is slinging money at states as fast as it can print and borrow it in order to further the addiction to taxpayer funded healthcare.   The fact that there are still 12 holdout states is the real story here.  From the Wall Street Journal:  

Some GOP-led states that previously declined to expand Medicaid are reconsidering that decision now that the $1.9 trillion pandemic-relief package has made billions of dollars available to enlarge the program.


The legislation passed by Congress last month boosts federal funding for two years to states that expand Medicaid, more than covering a state’s cost for increasing eligibility for the program, which is currently used by almost 79 million low-income and disabled people.


The availability of more federal funds is putting pressure on Republican leaders in some of the 12 states that haven’t expanded the program.

 

Friday, April 2, 2021

Who Will Really Pay for the Proposed Corporate Income Tax Hike?

 From Dr. John Goodman writing at Forbes:   

If there is one thing that virtually all economists are united about, it is this: corporations don’t pay the corporate income tax.  


Why is that? A corporation is not a person. It is a relationship ­– a relationship between workers, managers, stockholders, consumers and others. You can tax relationships. But relationships don’t pay taxes. 


The sales tax, for example, taxes a relationship between buyer and seller. But sales don’t pay taxes. People do. The burden of the sales tax must fall on the buyer, the seller or both. In competitive markets, economists think the full burden falls on the buyer. This conclusion makes sense to most people because they see the tax nominally added to the prices of the goods they buy at the cash register.


But what we see with our own eyes isn’t necessarily good economics. Take the payroll tax. This is a tax on wages. But wages don’t pay taxes. The burden must fall on the buyer (the employer) or the seller (the worker) or both. In practice (and by law), half the tax is deducted from the worker’s wages and the employer sends a check for the whole amount to the government. So, it looks like the worker is paying half and the employer is paying half.


However, careful studies by economists over many years show this is not the case. The burden of the tax is not determined by who writes the check to the government. It is determined by how the market adjusts to the tax. In this case the evidence is quite convincing: the full burden falls on the workers. That means that for every dollar of payroll tax the government collects, workers’ pay will be a dollar lower than it otherwise would be.


Full post here.  

The One Itty-Bitty, Teeny-Weeny Problem with the Plan to Expand Medicare

From Merrill Matthews writing at The Hill:  

It will be very expensive.

All workers have deducted from their paychecks a 2.9 percent Medicare payroll tax - split equally between the employer and employee. But those funds only pay for Medicare Part A, which covers hospital expenses. 

Retirees must pay out of their own pockets Part B and Part D premiums - which cover physicians' fees and prescription drug costs, respectively. But those premiums cover only about 25 percent of the cost of the programs. Taxpayers foot the other 75 percent.

And those costs add up quickly. 

Eugene Steuerle and Erald Kolasi of the Urban Institute track the average amount of money workers at various income levels pay into Social Security and Medicare and how much they can expect on average to receive in benefits. 

A male worker who made the median income his entire working career and retired at age 65 in 2020 can expect to receive from Social Security just about what he paid in. However, while he paid $81,000 in Medicare (Part A) payroll taxes, he is likely to receive $240,000 (net of premiums) in lifetime Medicare benefits. 

Lowering the enrollment age to 60 adds perhaps another $25,000 to $30,000 to that deficit.

And that's just for a single person. Consider a married couple with only one low-wage earner. That worker retiring at age 65 in 2020 paid about $36,000 in Medicare taxes, which qualifies both of them to participate in Medicare. But the couple can expect to receive about $522,000 in Medicare benefits. 


Thursday, April 1, 2021

In the Name of COVID Relief: People Making $350,000 a Year Can Now Claim $20,000 from Taxpayers to Buy a PPACA Exchange Plan (with Armstrong & Getty)


People who make $350k can now get $20k from taxpayers so they can afford a $51k exchange plan. That looks like this:
  • $51,059 is the cost of the benchmark PPACA Premium in Prescott, AZ for a family of 5 with a 60-year-old household head; 
  • $37,874 is the amount of subsidy they qualify for if they make $150,000 a year; 
  • $20,294 is the amount of subsidy of subsidy they qualify for if they make $350,000; 
  • $8,559 is the amount of subsidy they qualify for if they make $500,000; and 
  • $580,876 is the annual income at which this family no longer qualifies for a subsidy. 
Thank you to Brian Blase and Michael Cannon for doing the heavy lifting on most of the above numbers and pointing me to them, respectively.   

This is because, as Shepard Mullen explains
The [American Rescue Plan Act of 2021] provides for premium subsidies for the 2021 and 2022 calendar years. It completely subsidizes health insurance premiums for individuals who earn up to 150% of the federal poverty level for the second cheapest silver plan by area – a change from before where individuals up to 150% were only partially subsidized.... Premium tax credits also apply to, and provide considerable changes in premium contributions by higher earners. For example, individuals making 400% of the federal poverty level previously paid up to $5,017.  Under the Act, such individuals will max out at $4,338 for premiums. Individuals who earn more than 400% above the federal poverty levels will also receive premium subsidies, such that they will pay no more than 8.5% of their annual incomes for their marketplace health insurance premiums in total. These subsidies are retroactive, and thus may be claimed by individuals who have already enrolled....

Lastly, while typically individuals must repay any excess premium tax credits if their annual income exceeds 400% of the federal poverty level, the Act waives this repayment requirement for 2020.
And yes, these newly added subsidies are supposed to phase out after two years, but, as our President might say, "c'mon man."  We all know that will never happen.  These will become permanent as eloquently explained by healthcare expert Bob Laszewski in "The Democrats Are About to Set a Whopper of an Obamacare Political Time Bomb for Republicans."   

Keep in mind that back in 2016 before these latest changes happened, 70% of all healthcare in California (and about 64% nationally) was paid for by taxpayers.

Also keep in mind that folks paying for healthcare privately, such as on an employer plan, pay 240% more than those on government plans for hospital services.

And now, Hospitals Using Computer Coding Tricks to Evade Transparency Rules: WSJ Investigation. Hospitals and insurers are horrified at the thought of people starting to see the true prices are for procedures.  

What this means:
  1. As more are funneled into taxpayer funded plans, fewer care what healthcare actually costs.
  2. As hospitals are further squeezed by taxpayer-funded plans, they will require increasingly higher reimbursement rates from private/employer plans. 
  3. Reference Based Pricing (RBP) will become more popular for large employers wishing to keep health insurance.  Yes, this is a contentious route for employers as hospitals detest RBP, it confuses employees and can result in costly and time-consuming litigation.  Nevertheless, once RBP is in place, employers will only see 1.7% trend numbers as their plans can only inflate at the same pace as Medicare.  In RBP, large, self-funded employer plans eliminate their hospital networks entirely and agree to reimburse for hospital procedures at a fixed percentage above Medicare; for example, 140% of what Medicare pays.  This represents huge savings under the 240% employers pay now.  Often the first year in RBP saves an employer plan 20% to 30% overall.  I've written on this extensively here in "America Will Dramatically Change the Way It Provides Health Care by 2030"  
  4. The practical solution for many employers, especially those with less than 250 to 500 employees, will be to join into that 70%, drop health insurance and push employees to the exchanges. In fact, it will not surprise me if we see members of both political parties craft legislation that will eliminate PPACA's employer mandate paving the way for this to occur.  Democrats could support the concept as it would work to acclimate more people to government subsidies to buy healthcare.  Republicans could support it because they see the writing on the wall and realize that more government spending and greater deficits are a federal inevitability.  Hence, the GOP could see this as a way to, at least, launder those taxpayer funds through the enormous insurance lobby before doling it out to enrollees.  

Tuesday, March 30, 2021

Hospitals Using Computer Coding Tricks to Evade Transparency Rules: WSJ Investigation

A new January 1, 2021 regulation requires hospitals to disclose price information that they have long kept secret as part of a federal effort to increase transparency in health-care pricing. For the first time, the rule should be revealing the prices that insurers negotiate for many hospital services and the substantial differences in those prices. The data will help consumers find better pricing and help doctors and employers select the hospitals where they direct patients for the more cost-effective service. 

“Hospitals are evading the spirit of new price transparency regulations while technically following the letter of the law, a ‘Wall Street Journal’ investigation has found.

Hospitals that have published their previously confidential prices also have blocked that information from web searches with special coding embedded on their websites. The information must be disclosed under a federal rule aimed at making the $1 trillion sector more consumer-friendly. However, hundreds of hospitals embedded code in their websites that prevented Google and other search engines from displaying pages with the price lists, according to an examination of more than 3,100 sites.”

Source: BenefitsPro

By February, a different study illustrated that 65 of the top 100 hospitals hadn’t complied with the regulation. (Modern Healthcare).