What You Missed Over the Break…
In case you were out for some or all of the recess, I’ve compiled a “Dirty Dozen” list of important stories you may have missed since the Senate adjourned at the end of September:
Health Care Law an Election Loser for Democrats: This month’s Kaiser Family Foundation tracking poll found that a 56% majority of actual voters in the midterm elections supported full or partial repeal of the health care law – an advantage of 20 points over those who want the legislation maintained or strengthened (total of 36%). Last week House Majority Whip Jim Clyburn admitted the Democrats “got in the place that we’re in” – the smallest number of Democrat House Members in over 60 years – because of the health care law. However, President Obama in a post-election news conference said he did not want to “re-litigate arguments made over the last two years” despite the law’s continued unpopularity, and the self-described “shellacking” his party received.
Florida Lawsuit Moves Forward: In Florida, federal district judge Roger Vinson rejected the government’s motion to dismiss the multi-state lawsuit; numerous parties moved to file amicus curiae briefs last week, and arguments on the merits are expected to take place before year’s end. Vinson’s ruling explicitly rejected the notion of the individual mandate penalty as a tax, citing a textual analysis of the legislation; he rejected the “Alice in Wonderland” reasoning that would allow the mandate to be enforced by a “penalty” at the time the legislation was being voted on, only to retrospectively be characterized as a tax. This same issue prompted a Virginia judge in a separate lawsuit to question whether Democrats were “trying to deceive the people” by claiming both sides of the argument. A New York Times editorial however endorsed the mandate as constitutional under the taxing power – despite the President’s September 2009 comments “absolutely” rejecting the mandate as a tax increase – under the apparent belief that politicians’ claims “in the heat of political battle” can mislead the public.
More News on Higher Premiums: Stories about higher premiums continued to proliferate. One consulting firm found an average 8 percent increase this year, while in the Atlanta area, premium increases will hit a five-year high, as rates “are projected to spike 8.7 percent in 2011, compared with a 5.7 percent increase this year.” One large Atlanta employer found that the law “is expected to add about $25 million to the 1800-employee company’s health care costs by 2014”—an increase of nearly $3500 per employee per year. Another customer in Washington state complained his “rates went through the roof” as a result of the law after receiving notice of a near-tripling of his premiums. Meanwhile, an Administration official claimed that “If you have a premium increase of less than 5 percent, I don’t think that’s really a significant increase in premiums,” even though President Obama promised to lower premiums by $2,500 for an average family during his campaign.
More News on Job Losses: In Pennsylvania, the CEO of Mercy Hospital claimed on television that his organization was putting up their three hospital facilities for sale and that the new health law “absolutely” played a role in the decision. In Indiana, Memorial Hospital in South Bend announced it would be cutting about fifty jobs due to the health care overhaul, and specifically the low reimbursement rates included in the law’s Medicaid expansion. Over and above these direct job losses as a result of the legislation, the President of the New York Fed was quoted as saying the health law will cause “uncertainty” which will cause “people to be more cautious in terms of their behavior” – further dragging down a struggling economy.
Medicare Advantage Benefits to be Cut – Despite Administration’s Misinformation: Medicare actuary Rick Foster released a letter requested by Senate Republicans outlining the cuts to extra benefits in Medicare Advantage as a result of the health care law. The actuary predicted that for seniors in MA plans, out-of-pocket expenses will rise as a result of the law by $346 this year, and $873 in 2019. The analysis came shortly after CMS released data confirming that 1.2 million seniors will have to find a new Medicare Advantage or Part D plan for the coming year. Despite these facts, HHS Secretary Sebelius at first claimed – wrongly – that seniors will have more choices among Medicare Advantage plans this year; however, she was later forced to retract her statement following an inquiry from Sen. Grassley about alleged “misinformation” by the Administration.
Will Employers Drop Coverage? Outgoing Tennessee Governor Phil Bredesen, a Democrat, sparked controversy with a Wall Street Journal op-ed in which he argued that many employers would drop coverage once federal Exchanges and insurance subsidies are up and running – greatly raising the expected federal spending on the health care law. His article was followed by Associated Press has a story noting that “corporate number crunchers are looking at options that could lead to major changes” in health insurance plans for workers; one consultant was quoted in the AP piece as saying that “if the intent was to find an exit strategy for providing benefits…the bill as written provides the mechanism.” At the same time, the HR Policy Association released a survey in which nearly one in five (19%) chief HR officers said their firms were not likely to offer coverage in 2020, with another 47% unsure about their company’s continued involvement in health insurance.
Berwick to Testify – Finally: Finance Committee Chairman Baucus last week announced a hearing featuring Dr. Donald Berwick scheduled for this coming Wednesday – the first appearance for Berwick before Congress since President Obama gave him a controversial recess appointment to head the Centers for Medicare and Medicaid Services back in July. While for months House and Senate Republicans have sent Democrats numerous letters requesting Dr. Berwick’s testimony, the majority decided not to allow Dr. Berwick to appear before Congress until after the midterm elections.
Rationing within Medicare? The Washington Post included an article about an “unusual review to determine whether the government should pay for an expensive new vaccine for treating prostate cancer, rekindling debate over whether some therapies are too costly.” The review revolves around the life-extending drug Provenge, which some argue does not extend life long enough to be worth its cost. Several of the quotes in the story – explaining that the drug is effective in treating disease, but “too expensive” for Medicare to fund – closely resemble the arguments made by Britain’s National Health Service, whose rationing body last week rejected coverage of the cancer drug Avastin on cost grounds. (The FDA is still considering its own separate review of Avastin for treating breast cancer here in the States; a previous Washington Post article noted that the review should not consider cost issues – but if the FDA revokes its approval, Medicare will stop paying for the drug.)
AARP Employees to Have Buyer’s Remorse over Health Law? The Associated Press reported on how the health care overhaul will impact AARP’s employees – by raising their co-payments and deductibles. Specifically, AARP noted in an e-mail to employees that “plan changes were necessary…to ensure that AARP’s plans fall below the threshold for high-cost group plans under health care reform.” The organization also noted that “AARP intends to make similar changes as necessary in the future to avoid the [Cadillac] tax.” Some may question why the organization needed to protect its employees from the Cadillac tax on platinum insurance plans to begin with, and ask whether poor seniors are paying “kickbacks” to AARP so its employees can receive extravagant health benefits that seniors themselves cannot obtain through traditional Medicare.
NAIC Finishes MLR Recommendations; Employers to Get Waivers – For Now: The National Association of Insurance Commissioners submitted its recommendations regarding medical loss ratios to HHS. In its recommendations, the full NAIC left unchanged earlier determinations requiring carriers to meet MLR thresholds on a state-by-state basis, including broker fees as an administrative expense, and leaving intact a narrower flexibility adjustment for smaller insurers. HHS has not yet released its “certification” of the NAIC recommendations, but guidance released last week indicates that, in response to press reports that McDonald’s and other employers may drop their limited benefit coverage offerings next year absent an MLR waiver, HHS will consider requests for exemptions favorably – but will re-evaluate this policy after only one year, leaving open the question of whether these plans can continue after 2011. Also of note: Former NAIC Chair Sandy Praeger told Politico that as a result of the regulations, “There will be some companies that I think will decide, they have a very small book of business in a state and they’ll decide maybe it’s not worthwhile to stay in the state.”
Democrat Concerns about Medicaid Expansion: Last week, Montana’s Democrat Governor Brian Schweitzer made public his concerns about the health care law’s impact in his state, noting that “there are only three states that will increase the number of people on Medicaid at a faster rate than Montana, thanks to the new health care bill” and that he wanted to make sure his state would “not be like 48 other states – broke.” His comments came after Rory Reid – son of Majority Leader Harry Reid – noted in a Nevada gubernatorial debate that “there is potential for [the law] to put significant pressure on states because Medicaid rates could go up significantly” – at a time when many states, including Nevada, are struggling to maintain their existing Medicaid programs. Those ongoing fiscal pressures, which the health care law is likely to increase, have prompted reports that Texas may consider dropping out of the Medicaid program entirely.
Democrat Disarray on 1099 Reporting: Finance Committee Chairman Baucus announced late last week he would be introducing legislation providing for a full repeal of the new 1099 small business paperwork mandate included in the health care law; bill text has not been released, nor details regarding whether the repeal bill will be paid for by other new tax increases elsewhere. Most Senate Democrats had previously argued that the new paperwork mandate should be scaled back but not eliminated entirely. Separately, Speaker Pelosi claimed in a post-election interview that the 1099 paperwork mandate “was a Senate provision. We didn’t like it in the House” – even though she included a verbatim version of the mandate in Section 553 of the House-passed health care bill (H.R. 3962).