Consumer Power Report #481
Just in time for Halloween, Congress and President Barack Obama reached a budget agreement that some experts, including the Urban Institute’s Richard Johnson, are calling “an unexpected bit of sanity coming out of Washington,” according to a report by CNBC.
I’m not sure how “sane” it is to continue kicking the we’re-just-going-to-let-someone-else-deal-with-the-looming-debt-crisis can down the road, but one of the budget deal’s negotiated provisions dealing with Obamacare has many large employers breathing a sigh of relief. After much negotiating, an onerous requirement has been permanently eliminated: the requirement that would have forced all employers with 200 or more full-time employees to automatically enroll new full-time employees in a health care insurance plan and would have required the employer to automatically re-enroll employees during open-enrollment.
The requirement for large employers was added to the Fair Labor Standards Act when the Affordable Care Act (ACA) was passed in March 2010. The provision was set to go into effect in 2017, although many had speculated the plan would be delayed because the Department of Labor (DOL) had delayed the effective date of the automatic enrollment requirement until it could release regulations, which never occurred.
Under the automatic-enrollment provision, employees would have been given an opportunity to voluntarily choose a health insurance plan or decline having a plan. Large employers would have had to create large, complex reporting systems for their employees to ensure they weren’t automatically enrolling in a plan someone who didn’t want one.
The requirement to automatically enroll employees would not have cost employers any additional direct costs related to providing health insurance, but it would have been incredibly difficult and costly to implement from a human resources perspective. According to the HealthAffairs Blog, the Congressional Budget Office reports ending auto enrollment for large businesses will “reduce the budget deficit by $7.9 billion over the 2016-2025 period because employees would receive more taxable income rather than health benefits, which are not taxable, and because of increased individual responsibility penalty payments.”
Writing in The National Law Review, Damian A. Myers, an associate in the Employee Benefits, Executive Compensation, and ERISA Litigation Practice Center, says the lack of details regarding the auto-enrollment mandate created a number of questions that were never fully answered.
“Given the nature of most employer health benefit programs, the statute left open a large number of questions,” wrote Myers. “For instance, who constitutes a full-time employee for this purpose? Would dependents also need to be enrolled? Which benefit option must an employee be enrolled in? Is a refund necessary for an employee who opts-out?”
Numerous business associations applauded the decision to remove this costly and unnecessary provision that was slipped into ACA without much media attention more than five years ago. The Retail Industry Leaders Association, National Restaurant Association, Food Marketing Institute, Associated General Contractors, American Hotel & Lodging Association, National Association of Health Underwriters, and National Retail Federation all praised the removal of the auto-enrollment requirement.
“Without this change, the auto-enrollment requirement would have had a damaging impact on both restaurant owners and their employees – creating additional administrative burdens for employers,” said Angelo Amador, senior vice president and regulatory counsel at the National Restaurant Association, in a press release. “This fix helps alleviate the potential financial burden placed on employees who inadvertently miss opt-out deadlines and free restaurant owners from additional unnecessary paperwork.”
Most of the Obamacare-related budget negotiations focused on eliminating the so-called “Cadillac tax,” a new 40 percent excise tax on health insurance plans that exceed $10,200 annually for one person or $27,500 annually for family coverage. The Cadillac tax is set to take effect in 2018 and has been a major source of contention between congressional Republicans and Democrats.
Republicans, echoing the concerns of many businesses, say the tax will likely lead to higher premiums for employees and will punish employers for offering higher-quality health insurance plans.
One of the major problems related to the Cadillac tax that has already emerged is the so-called “spousal surcharge,” an extra cost added to health insurance plans provided for employee spouses. Many companies are adding $100 or more per month to premiums in the hope spouses will seek coverage elsewhere.
Republicans failed to negotiate a deal that would eliminate the Cadillac tax, which many Democrats say will be an important source of revenue in future years, but defeating the auto-enrollment requirement is still a significant win for countless businesses and their employees. By forever removing this onerous provision, many businesses will be able to save millions in future regulatory and human resources costs, which means more money will be available to invest in employees, research, business expansion, advertising, and product development.
— Justin Haskins
IN THIS ISSUE:
- More than 500,000 Apply to Buy Health Insurance in National Obamacare Exchange in First Week of Enrollment
Colorado voters will decide next year whether this state should be the first to pay for comprehensive health care for residents.
Proponents of a single-payer state system gathered enough signatures to put ColoradoCare on the ballot, the secretary of state’s office announced Monday.
They needed 98,492 valid signatures to put a state-governed health care system to a vote. After reviewing a 5 percent sample of the 158,831 signatures submitted, the secretary of state projected that the valid total would be 110 percent of the number required – and certified that Initiative 20, the “State Health Care System,” will be on the 2016 ballot.
Residents would choose their own health care providers, but ColoradoCare would pay the bills.
More than a half-million applications to buy health insurance under the Affordable Care Act were submitted nationwide to HealthCare.gov during the first four days of enrollment for next year, the U.S. Department of Health and Human Services said Monday.
Department spokesman Benjamin Wakana added in an email that a quarter of million applications arrived in the first 48 hours.
Enrollment for 2016 opened Nov. 1 across the country with many eyes watching to see if the number of uninsured in the country will continue to drop.
Nationally, more than 16 million people have gained health insurance coverage since the Affordable Care Act went into effect, either through buying plans through the federal marketplace or state exchanges, expanded Medicaid coverage in some states or because young adults can stay on their parents’ plans until age 26, according to federal statistics.
In the first six months of 2015, 28.5 million people of all ages remained uninsured, dropping the rate to 9 percent, a report released last week by the U.S. Centers for Disease Control’s National Center for Health Statistics showed. That is 7.5 million fewer than in 2014 and 16.3 million in 2013.
SOURCE: By Jenny Deam, Houston Chronicle
Alaska’s high costs for health care are well-known; a 2011 study for the Alaska Health Care Commission highlighted the differences between Alaska and five Western states (Washington, Oregon, Idaho, Wyoming and North Dakota). Alaska consistently came out at the top of the pack, with costs averaging 59 percent higher than the rest, the study authors write.
In some cases, procedures were more than three times as expensive – the average cost in Alaska for a surgeon to insert an intracoronary stent was $4,866.68, compared to Washington, where the same procedure was $1,331.22.
Rolled out this year, Premera’s medical travel program started both as a reaction to high costs of care and as a way to provide more access to health care, especially for rural residents, spokesperson Melanie Coon wrote.
The company started a trial run of its medical travel program in 2013, and in January expanded the program to all of its members in Alaska. There are 17 procedures covered, including hip replacement, shoulder arthroscopy, knee replacement and bariatric surgery.
About 25 people have flown out of state for surgeries this year so far, Coon said.
The approved procedures have a lower risk for complications, Coon said, and were also based on cost differences between states. Knee and hip surgeries are among the most popular procedures. For both Premera and the state, Seattle is the most common destination.
GCI also introduced its program in 2013 and has seen steady growth since then, with 10 people leaving Alaska for care so far this year. GCI uses Bridgehealth Medical, a company solely dedicated to negotiating lower rates for procedures to find savings, according to vice president of human resources Joe Wahl.
The cost difference is startling. For one surgery in late October (a cerebral angiogram with embolization and surgical resection of arteriovenous malformation) Bridgehealth’s estimate of an Alaska surgery versus one at St. John’s Hospital & Medical Center in Arizona showed savings of more than $200,000, Wahl wrote.
Unlike Premera’s plan, there is no specific list of procedures, but general areas are orthopedic, nonemergency heart conditions and planned major surgeries. In May, the company opened up the program to cancer surgeries as well.
For many Alaskans, these kinds of procedures just aren’t available locally. A few of Premera’s medical travel patients have flown to Anchorage for their procedures. The same goes for the state of Alaska, which reimbursed around 160 in-state flights for medical procedures during the first six months of the year.
A study looking at mental health care among states has ranked Oregon dead last.
The president of Mental Health America, Paul Gionfriddo, said researchers considered 13 elements for the ranking: from the number of residents with mental illness to access to care.
“Oregon does generally poorly on the prevalence of mental illness ranking,” he said. “In other words, there are more children and adults with mental illnesses; with dependence on alcohol or drugs; with serious thoughts of suicide.”
The study also looked at factors like how many people have access to insurance, whether that insurance is adequate, and how high are the barriers to accessing mental health care.
Minnesota was ranked at the top of the list for its mental health care, while Idaho and Washington also ranked near the bottom – coming in at 45th and 47th, respectively.
Republican Matt Bevin’s election Tuesday as governor has placed Kentucky’s widely lauded health insurance expansion under the Affordable Care Act squarely in the crosshairs, with the governor-elect having pledged to eliminate or at least scale back the plan also known as “Obamacare.”
More than a half-million Kentuckians now get health coverage through the federal law implemented under executive order of Gov. Steve Beshear. That includes more than 400,000 low-income Kentuckians covered through the Medicaid expansion and another 100,000 who have purchased private plans, many with federal subsidies to offset the costs. …
Bevin ran a campaign in which he denounced Obamacare and initially said he would abolish the Medicaid expansion in Kentucky. Later in the campaign he said he plans to scale back the Medicaid expansion but would not disrupt coverage for the more than 500,000 people covered through Medicaid or kynect.
“I am going to get rid of kynect,” he said in an interview with The Courier-Journal prior to the election. “We don’t need a state exchange.”
Bevin has said he plans to shut down kynect next year, by the fall of 2016, and transfer people to the federal exchange – a process health policy experts say could be costly and disruptive to people who use it to manage their health insurance coverage.