News

Differing Views on the Employment Effect of Healthcare Reform

February 15

This month, TMP Worldwide continues to explore the drivers behind health reform and their possible implications. Below are two emerging viewpoints: meaningful healthcare reform and how reform will impact costs.

The Meaningful Health Reform Imperative
Rep. Mike Honda
The Huffington Post
January 19, 2010

"...the health insurance industry has staved off the threat of real reform by pledging to control costs and make health insurance affordable. They have failed to deliver, however, and do not deserve another chance to play with the lives and pocketbooks of the American people."

"Passage of reform is critical to the economic health of our nation and for millions of chronically ill and low income Americans. It is the goal of the thousands of chronically ill Americans who come to Capitol Hill every year, and the millions unable to make the trip, who share their stories of struggling with insurance company bureaucracy, medically related personal bankruptcies, deaths, and financial ruin that result from our broken health care system. It is the goal of county and local health officials who struggle to deliver the services their communities need as the public health system across our nation struggles under the weight of the uninsured and underinsured. These voices are not the fringe of America; they are from the heart of our nation and represent the reality of our broken health care system."

"For the very poorest families in our communities, H.R. 3962 expands Medicaid to 150% of the federal poverty line, and it does so without substantially burdening the states. In fact, for the first three years, the expansion is fully funded by the Federal government and thereafter, states shoulder only 10% of the expansion."

"Our bill in the House ends the insurance industry practice of capping annual and lifetime payments for health care. In two years, pre-existing conditions will no longer be able to be used as the basis for coverage denials. Insurance companies will have to report and justify their rate increases and spend at least 85% of the premium dollars they collect directly on patient care rather than administrative costs."

"Finally, because so much of our focus is on strengthening prevention and coordination of patient care (more efficient, cost effective, and results in better health outcomes), the House bill contains a much stronger investment in primary care physician training and education than the current Senate bill."

For the full article, see: http://www.huffingtonpost.com/rep-mike-honda/meaningful-health-reform_b_425200.html

What About Costs?
Mark McClellan
The Wall Street Journal
January 20, 2010

"The legislation as it now stands doesn't include a fast, reliable way to figure out which of the pilot projects or proposals really work to improve care and reduce costs. Thus, we are in danger of continuing on our current course of soaring costs unless we get a fundamentally better capacity to figure out which provider-payment reforms really improve care and lower costs. In this area, the legislation doesn't go far enough."

"To slow the growth of Medicare payments, which is essential to reducing deficits under the reform legislation, the cycle for these pilot programs, from inception to finish, needs to fall to three or four years at most. That means the health-care bill must call for investments that will increase the capacity for doctors and patients to receive and share real-time information about the quality of care that every Medicare beneficiary—and ideally every American—is receiving. For example, Medicare records contain information on when beneficiaries visit emergency rooms, have imaging procedures or lab tests, and are following through on recommended tests and treatments. Making such information available to health-care providers in real time can prevent medical complications or unnecessary treatments, improving efficiency and bringing down costs."

"The legislation should also not retreat on what is perhaps the most powerful force for achieving health-care savings: the decisions that people make about their health, and the coverage and care they seek. Taxing high-cost health-insurance plans provides a strong incentive to choose plans that cost less, spend less and enable workers to save more money. This is the part of the legislation that has a real chance of "bending the cost curve," and the tax can be modified to address concerns about the impact on plans with more older or more costly workers. But exempting whole categories of plans and workers, as recent modifications to the Senate bill would do, will undermine the impact of such a tax."

For the full article, see: http://online.wsj.com/article/SB10001424052748703672104574655051903693412.html?mod=googlenews_wsj

Facts and Figures Driving the Reform Movement (http://www.healthreform.gov) - This month, South Carolina, Michigan and New Mexico:

South Carolina:

  • 764,000 residents who do not currently have insurance and 290,000 residents who have nongroup insurance could get affordable coverage through the health insurance exchange.
  • 477,000 residents could qualify for premium tax credits to help them purchase health coverage.
  • 714,000 seniors would receive free preventive services.
  • 127,000 seniors would have their brand-name drug costs in the Medicare Part D "doughnut hole" halved.
  • 49,300 small businesses could be helped by a small business tax credit to make premiums more affordable.

Health Insurance Reform Provides Early Relief and Health Security. Proposals implemented in 2010 and 2011 will produce real benefits for:

  • Families: The 4.5 million residents of South Carolina will benefit as reform:
    • Ensures consumer protections in the insurance market. Insurance companies will no longer be able to place lifetime limits on the coverage they provide, use of annual limits will be restricted, and they will not be able to arbitrarily drop coverage.
    • Creates immediate options for people who can't get insurance today. 10 percent of people in South Carolina have diabetes2, and 30 percent have high blood pressure3 — two conditions that insurance companies could use as a reason to deny health insurance coverage. Reform will establish a high-risk pool to enable people who cannot get insurance today to find an affordable health plan.
    • Ensures free preventive services. 35 percent of South Carolina residents have not had a colorectal cancer screening, and 21 percent of women over 50 have not had a mammogram in the past two years.4 Health insurance reform will ensure that people can access preventive services for free through their health plans. It will also invest in a prevention and public health fund to encourage prevention and wellness programs.
    • Supports health coverage for early retirees. An estimated 61,700 people from South Carolina have early retiree coverage through their former employers, but early retiree coverage has eroded over time.5  A reinsurance program would stabilize early retiree coverage and provide premium relief to both early retirees and the workers in the firms that provide their health benefits.  This could save families up to $1,200 on premiums.
  • Seniors: South Carolina's 714,000 Medicare beneficiaries6 will benefit as reform:
    • Lowers premiums by reducing Medicare's overpayments to private plans.  All Medicare beneficiaries pay the price of excessive overpayments through higher premiums — even the 88 percent of seniors in South Carolina who are not enrolled in a Medicare Advantage plan.7 A typical couple in traditional Medicare will pay nearly $90 in additional Medicare premiums next year to subsidize these private plans.8 Health insurance reform clamps down on these excessive payments.
    • Reduces prescription drug spending.  Roughly 127,000 Medicare beneficiaries in South Carolina hit the "doughnut hole," or gap in Medicare Part D drug coverage that can cost some seniors an average of $4,080 per year.9 Reform legislation will provide a 50 percent discount for brand-name drugs in this coverage gap.
    • Covers free preventive services. Currently, seniors in Medicare must pay part of the cost of many preventive services on their own. For a colonoscopy that costs $691, this means that a senior must pay $16110  — a price that can be prohibitively expensive. Under reform, a senior will not pay anything for that colonoscopy, or for any other recommended preventive service. A senior will also get free annual wellness visits to his or her provider, with a personalized prevention plan to remain in good health.
  • Small businesses: While small businesses make up 72 percent of South Carolina's businesses, only 39 percent of them offered health coverage benefits in 2008;11  49,300 small businesses in South Carolina could be helped by a small businesses tax credit proposal that makes premiums more affordable.12 And these small businesses would be exempt from any employer responsibility provisions.
  • States: State budgets will be relieved from rising health care costs as reform:
    • Reduces state employee premiums. Coverage would immediately be expanded to the uninsured, decreasing the amount of uncompensated care costs that gets shifted to the premiums of state employees. For states that provide early retiree health benefits to their state employees, a reinsurance program would provide premium relief of up to $1,200 per family policy per year for all employees.
    • Reduces uncompensated care. Right now, providers in South Carolina lose $724 million in uncompensated care each year,13 which states subsidize, at least in part. Instead, under reform, uncompensated care would begin to be reduced immediately as more uninsured people gain coverage.
 

Michigan:

  • 1.3 million residents who do not currently have insurance and 459,000 residents who have nongroup insurance could get affordable coverage through the health insurance exchange.
  • 797,000 residents could qualify for premium tax credits to help them purchase health coverage.
  • 1.6 million seniors would receive free preventive services.
  • 279,000 seniors would have their brand-name drug costs in the Medicare Part D "doughnut hole" halved.
  • 109,000 small businesses could be helped by a small business tax credit to make premiums more affordable.

Health Insurance Reform Provides Early Relief and Health Security. Proposals implemented in 2010 and 2011 will produce real benefits for:

  • Families: The 10 million residents of Michigan will benefit as reform:
    • Ensures consumer protections in the insurance market. Insurance companies will no longer be able to place lifetime limits on the coverage they provide, use of annual limits will be restricted, and they will not be able to arbitrarily drop coverage.
    • Creates immediate options for people who can't get insurance today. 9 percent of people in Michigan have diabetes2, and 29 percent have high blood pressure3 — two conditions that insurance companies could use as a reason to deny health insurance coverage. Reform will establish a high-risk pool to enable people who cannot get insurance today to find an affordable health plan.
    • Ensures free preventive services. 31 percent of Michigan residents have not had a colorectal cancer screening, and 17 percent of women over 50 have not had a mammogram in the past two years.4 Health insurance reform will ensure that people can access preventive services for free through their health plans. It will also invest in a prevention and public health fund to encourage prevention and wellness programs.
    • Supports health coverage for early retirees. An estimated 192,000 people from Michigan have early retiree coverage through their former employers, but early retiree coverage has eroded over time.5  A reinsurance program would stabilize early retiree coverage and provide premium relief to both early retirees and the workers in the firms that provide their health benefits.  This could save families up to $1,200 on premiums.
  • Seniors: Michigan's 1.6 million Medicare beneficiaries6 will benefit as reform:
    • Lowers premiums by reducing Medicare's overpayments to private plans.  All Medicare beneficiaries pay the price of excessive overpayments through higher premiums — even the 76 percent of seniors in Michigan who are not enrolled in a Medicare Advantage plan.7 A typical couple in traditional Medicare will pay nearly $90 in additional Medicare premiums next year to subsidize these private plans.8 Health insurance reform clamps down on these excessive payments.
    • Reduces prescription drug spending.  Roughly 279,000 Medicare beneficiaries in Michigan hit the "doughnut hole," or gap in Medicare Part D drug coverage that can cost some seniors an average of $4,080 per year.9 Reform legislation will provide a 50 percent discount for brand-name drugs in this coverage gap.
    • Covers free preventive services. Currently, seniors in Medicare must pay part of the cost of many preventive services on their own. For a colonoscopy that costs $729, this means that a senior must pay $17010  — a price that can be prohibitively expensive. Under reform, a senior will not pay anything for that colonoscopy, or for any other recommended preventive service. A senior will also get free annual wellness visits to his or her provider, with a personalized prevention plan to remain in good health.
  • Small businesses: While small businesses make up 75 percent of Michigan's businesses, only 44 percent of them offered health coverage benefits in 2008.11  109,000 small businesses in Michigan could be helped by a small businesses tax credit proposal that makes premiums more affordable.12 And these small businesses would be exempt from any employer responsibility provisions.
  • States: State budgets will be relieved from rising health care costs as reform:
    • Reduces state employee premiums. Coverage would immediately be expanded to the uninsured, decreasing the amount of uncompensated care costs that gets shifted to the premiums of state employees. For states that provide early retiree health benefits to their state employees, a reinsurance program would provide premium relief of up to $1,200 per family policy per year for all employees.
    • Reduces uncompensated care. Right now, providers in Michigan lose $2 billion in uncompensated care each year,13 which states subsidize at least in part. Instead, under reform, uncompensated care would begin to be reduced immediately as more uninsured people gain coverage.

New Mexico:

  • 434,000 residents who do not currently have insurance and 98,000 residents who have nongroup insurance could get affordable coverage through the health insurance exchange.
  • 249,000 residents could qualify for premium tax credits to help them purchase health coverage.
  • 292,000 seniors would receive free preventive services.
  • 51,900 seniors would have their brand-name drug costs in the Medicare Part D "doughnut hole" halved.
  • 22,700 small businesses could be helped by a small business tax credit to make premiums more affordable.

Health Insurance Reform Provides Early Relief and Health Security. Proposals implemented in 2010 and 2011 will produce real benefits for:

  • Families: The 2.0 million residents of New Mexico will benefit as reform:
    • Ensures consumer protections in the insurance market. Insurance companies will no longer be able to place lifetime limits on the coverage they provide, use of annual limits will be restricted, and they will not be able to arbitrarily drop coverage.
    • Creates immediate options for people who can't get insurance today. 8 percent of people in New Mexico have diabetes2, and 26 percent have high blood pressure3 — two conditions that insurance companies could use as a reason to deny health insurance coverage. Reform will establish a high-risk pool to enable people who cannot get insurance today to find an affordable health plan.
    • Ensures free preventive services. 44 percent of New Mexico residents have not had a colorectal cancer screening, and 26 percent of women over 50 have not had a mammogram in the past two years.4 Health insurance reform will ensure that people can access preventive services for free through their health plans. It will also invest in a prevention and public health fund to encourage prevention and wellness programs.
    • Supports health coverage for early retirees. An estimated 27,800 people from New Mexico have early retiree coverage through their former employers, but early retiree coverage has eroded over time.5  A reinsurance program would stabilize early retiree coverage and provide premium relief to both early retirees and the workers in the firms that provide their health benefits.  This could save families up to $1,200 on premiums.
  • Seniors: New Mexico's 292,000 Medicare beneficiaries6 will benefit as reform:
    • Lowers premiums by reducing Medicare's overpayments to private plans.  All Medicare beneficiaries pay the price of excessive overpayments through higher premiums — even the 77 percent of seniors in New Mexico who are not enrolled in a Medicare Advantage plan.7 A typical couple in traditional Medicare will pay nearly $90 in additional Medicare premiums next year to subsidize these private plans.8 Health insurance reform clamps down on these excessive payments.
    • Reduces prescription drug spending.  Roughly 51,900 Medicare beneficiaries in New Mexico hit the "doughnut hole," or gap in Medicare Part D drug coverage that can cost some seniors an average of $4,080 per year.9 Reform legislation will provide a 50 percent discount for brand-name drugs in this coverage gap.
    • Covers free preventive services. Currently, seniors in Medicare must pay part of the cost of many preventive services on their own. For a colonoscopy that costs $716, this means that a senior must pay $16710  — a price that can be prohibitively expensive. Under reform, a senior will not pay anything for that colonoscopy, or for any other recommended preventive service. A senior will also get free annual wellness visits to his or her provider, with a personalized prevention plan to remain in good health.
  • Small businesses: While small businesses make up 74 percent of New Mexico's businesses, only 36 percent of them offered health coverage benefits in 2008.11  22,700 small businesses in New Mexico could be helped by a small businesses tax credit proposal that makes premiums more affordable.12 And these small businesses would be exempt from any employer responsibility provisions.
  • States: State budgets will be relieved from rising health care costs as reform:
    • Reduces state employee premiums. Coverage would immediately be expanded to the uninsured, decreasing the amount of uncompensated care costs that gets shifted to the premiums of state employees. For states that provide early retiree health benefits to their state employees, a reinsurance program would provide premium relief of up to $1,200 per family policy per year for all employees.
    • Reduces uncompensated care. Right now, providers in New Mexico lose $335 million in uncompensated care each year,13 which states subsidize at least in part. Instead, under reform, uncompensated care would begin to be reduced immediately as more uninsured people gain coverage.
  • 1 Garrett B, Hoalan J, Doan L et al. The Cost of Failure to Enact Health Reform: Implications for States. September 2009.
  • 2 Behavioral Risk Factor Surveillance System Survey Data. Atlanta, Georgia: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, 2008.
  • 3 Behavioral Risk Factor Surveillance System Survey Data. Atlanta, Georgia: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, 2007.
  • 4 Behavioral Risk Factor Surveillance System Survey Data. Atlanta, Georgia: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, 2007.
  • 5 Kaiser Family Foundation. 2009 Employer Health Benefits Survey.
  • 6 Kaiser State Health Facts. http://www.statehealthfacts.org/comparetable.jsp?ind=353&cat=7.
  • 7 Kaiser State Health Facts. http://www.statehealthfacts.org/comparetable.jsp?ind=353&cat=7.
  • 8 Rick Foster, Office of the Actuary, Centers for Medicare and Medicaid Services. Letter to Congressman Stark, June 25, 2009.
  • 9 Office of the Actuary. Centers for Medicare and Medicaid Services.
  • 10 Centers for Medicare and Medicaid Services.
  • 11 Center for Financing, Access and Cost Trends, AHRQ, Medical Expenditure Panel Survey - Insurance Component, 2008, Table II.A.2.
  • 12 Center for Financing, Access and Cost Trends, AHRQ, Medical Expenditure Panel Survey - Insurance Component, 2008.
  • 13 Hospital uncompensated care cost is estimated using a GAO model and the Hospital Cost Reports. Total uncompensated care is computed as hospital uncompensated care divided by 63% (Hadley and Holahan's study on "The Cost of Care for the Uninsured" for Kaiser in 2004 found that hospitals account for 63% of total uncompensated care). Data expressed in 2009 dollars using Centers for Medicare and Medicaid Services, "National Health Expenditure Data."
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