Obama Administration Delays Regulations Until After Election

Published October 16, 2012

Consumer Power Report #346

You may have heard that in reaction to President Barack Obama’s health care law, small businesses and franchises are considering shifting employees to part-time work. The Darden Restaurant group is the latest company to attract attention for this, responding to the requirement to cover full-time workers by shifting existing workers to 28 hours per week:

In an experiment apparently aimed at keeping down the cost of health-care reform, Orlando-based Darden Restaurants has stopped offering full-time schedules to many hourly workers in at least a few Olive Gardens, Red Lobsters and LongHorn Steakhouses.

Darden said the test is taking place in “a select number” of restaurants in four markets, including Central Florida, but would not give details. The company said there has been no decision made about expanding it.

In an emailed statement, Darden said staffing changes are “just one of the many things we are evaluating to help us address the cost implications health care reform will have on our business. There are still many unanswered questions regarding the health care regulations and we simply do not have enough information to make any decisions at this time.”

Analysts say many other companies, including the White Castle hamburger chain, are considering employing fewer full-timers because of key features of the Affordable Care Act scheduled to go into effect in 2014. Under that law, large companies must provide affordable health insurance to employees working an average of at least 30 hours per week.

If they do not, the companies can face fines of up to $3,000 for each employee who then turns to an exchange – an online marketplace – for insurance.

“I think a lot of those employers, especially restaurants, are just going to ensure nobody gets scheduled more than 30 hours a week,” said Matthew Snook, partner with human-resources consulting company Mercer.

The uncertainty created by Obama’s health care law almost certainly impacted the economy in negative ways, and it continues to do so in an environment where it makes more financial sense to cap employees at a maximum number of hours – effectively forcing them to work two jobs. And how has the Obama administration responded to this? By announcing quietly that they’ll delay releasing employer mandate regulations, which include all the new rules employers will have to follow, until after the election.

Treasury and IRS later this fall will publish regulations to implement excise tax penalties that could be assessed on certain employers under the Affordable Care Act, a White House adviser says. Elizabeth J. Fowler, special assistant to the president for health care and economic policy at the National Economic Council, says the rules would not be ready for publication until after the November elections. Fowler says the regulations will address three questions of concern to employers that are subject to potential excise tax penalties under tax code Section 4980H, which was added by ACA. The key questions are who is a full-time worker, what is affordable coverage, and how does an employer determine whether its health plan satisfies ACA’s minimum-value standard, Fowler says at a conference sponsored by the American Bar Association’s Joint Committee on Employee Benefits.

All these questions still need answering, and employers are increasingly frustrated by a climate where their options are limited and hours have to be cut back to avoid penalties. Well, it could be worse, as Mickey Kaus points out, “At least the recent BLS data didn’t show a massive increase in involuntary part-time employment. … Oh, wait.” Be prepared to be more like France, and soon.

— Benjamin Domenech



Are ACOs going to fail us on cost control?

Accountable care organizations (ACOs) that improved diabetes outcomes by as much as 10% achieved minimal or no cost savings, results of a published simulation showed. The simulation found that a 10% clinical improvement would create just 1.22% in savings for Parts A and B – well below the level needed to trigger savings sharing, results published online in Health Affairs showed.

That’s bad news for those who were hoping to reap some revenue from ACOs.

Providers and organizations that participate in Medicare’s Shared Savings Program, created by the Affordable Care Act, can share the savings they achieve in parts A and B of the Medicare program – but the savings must exceed 2% in a given year.

“Our analysis indicates that the savings needed to generate these payments will have to come from activities other than improvements in the clinical quality measures,” David Eddy, MD, PhD, founder and chief medical officer emeritus at the health-modeling company Archimedes, and Roshan Shah, associate scientist at Archimedes, wrote.

The authors used their Archimedes model to simulate what would occur if the Shared Savings Program were implemented in an “average” ACO. They used data from the National Health and Nutrition Evaluation Survey to track patient information for hemoglobin, blood pressure, low-density lipoprotein, stroke, heart attacks, and other complications of diabetes. The effects of treatments were based on clinical trial results.

Eddy and Shah studied patients with type 2 diabetes, a disease that includes the widest range of adverse events and the largest performance measures, who thus could have the largest impact on the Shared Savings Program. While a 10 percentage-point improvement in performance under these measures would lead to a 4.1% drop in adverse events, it only generated 1.22% in savings, they found.

“However, the savings are diminished or become cost increases when the cost of the visits and tests needed to improve performance is included,” Eddy wrote. “The net effect is that the savings in Parts A and B, if any, are very likely to fall below the 2% limit that CMS has set for sharing savings in the one-sided option.”

The full study is here.

SOURCE: Med Page Today


Hospitals just swallow the extra costs:

The Obama administration recently rolled out two programs that will penalize hospitals that provide low-quality care. The whole idea is to give health care providers a financial incentive to deliver excellent care.

While there are some signs that hospitals are changing their behaviors under the new incentives, new research on a similar Medicare program launched four years ago suggests caution about expecting big results.

In 2008, Medicare stopped paying hospitals for infections that patients contracted due to medical care, such as catheter-related urinary tract or blood stream infections. Hospitals shouldn’t get more money, the thinking went, for health-care problems they themselves were creating. They should eat the costs.

The goal was for hospitals to see that preventable infections were hurting their bottom lines and take steps to reduce those numbers.

That, according to research published in the New England Journal of Medicine, did not happen. “We did not find any effect on rates of targeted health care-associated infections as measured with the use of clinical data,” the researchers concluded. The number of health care-associated infections [was] already dropping when the new policy started, and the study showed “no measurable additional benefit of the policy.”

The NEJM study is here.

SOURCE: Washington Post


The case for reform:

Early Medicaid-reform experiments in some states suggest that block grants or similar reforms can improve access to care and lower Medicaid spending. In 2009, Rhode Island accepted a five-year cap on combined state and federal Medicaid spending as part of a waiver from the federal government. The allotment was based on historical and projected spending trends.

The waiver gave the state administrative flexibility – allowing it to change health-care delivery systems to improve care and lower costs. It also made it easier for the state to get answers to questions or permission to make program changes, promising federal responses within 45 days. The state is responsible for any spending above its cap (as under a block grant).

To date, Rhode Island projects that by various new measures – focusing on community-based care that keeps seniors out of expensive nursing homes, for instance, and medical supervision that can keep children and adults out of emergency rooms – the state has saved $100 million. The flexibility to plan care has also helped reduce its projected Medicaid spending rate to 3% from 8% annually …

Here the lessons from welfare reform should guide Medicaid block grants. Under Temporary Assistance for Needy Families, any activity that can (reasonably) meet any of four federal goals is permissible for the states. Policy makers should follow this model and establish Medicaid-specific goals, including streamlined reporting focused on health outcomes, and set broad goals that include enhancing access to primary care and moving recipients into high-quality private insurance.

Allowed to figure out what works for their own Medicaid populations, states could design coverage and care arrangements tailored to specific groups – including different options for the healthy, disabled and those in long-term care, and different benefit, premium and copay designs. A block grant would encourage states to coordinate and deliver health care in the most cost-effective way, with an emphasis on prevention and wellness. The grant should also base federal support on a state’s population of low-income and disabled residents, adjusted for cost of living, and allow funding to be adjusted for downturns in the economy.

SOURCE: Wall Street Journal


Report from Indiana:

The tax-free Health Savings Accounts (HSAs) for out-of-pocket expenses are just one feature of Indiana’s CDHP for state workers, along with high-deductible insurance and 100 percent coverage of preventive care. The state deposits money in each worker’s HSA every pay period, and employees can make contributions as well. Employees receive a simple statement every month showing deposits, expenditures, and balances.

It’s the HSA that users seem to appreciate most, judging by interviews with a dozen state workers approached at random in the main state office building here the other morning. “Actually, I love it,” said one fortyish paralegal who’s been in her state job almost a year. “Saving those pre-tax dollars benefits me – I’m a single mom.” A middle-aged administrator noted, “You’re saving as you go, so you have the resources when you need them.” Two others emphasized, “You decide how much you put in,” and, “The state gives you money.”

Still, some employees have tried a CDHP and preferred to return to traditional health insurance. Not many, though – under 3 percent.

State budget hawks are delighted at the savings. An independent analysis by the consulting firm Mercer in 2010 concluded that the CDHPs reduced costs to the state by 10.7 percent per year, for projected savings of $17 to $23 million in 2010. That’s in addition to the $7 to $8 million employees themselves were projected to save.

The users’ savings come from cost-conscious decision-making. “Employees and dependents have historically been … shielded from the actual costs of health care services,” noted Mercer. CDHP “participants are exposed to the full cost of health care services and forced to decide if the care is appropriate.” Providers, for their part, like receiving immediate payment, without the rigmarole of third-party reimbursement.

The common objection to market-based schemes is fear that people paying out of pocket won’t go to the doctor. Mercer found “no evidence that participants in the CDHPs are avoiding care” – no reporting of health difficulties resulting from deferred care, no flood of complaints, no exposés in the press, barely a trickle of participants returning to traditional insurance. At present, CDHP participants are getting preventive care at rates higher than those in the traditional plan, according to the governor’s office.

SOURCE: Weekly Standard


The new exchange is mandatory for all small businesses:

Those of us who may have had doubts about the health reform law were comforted by President Obama’s repeated assurances that, “If you like your health plan … you will be able to keep your health care plan. Period.” But, by dismantling and recasting the separate health insurance marketplaces that serve small employer groups and individuals in the District, D.C. policymakers would take away the option of keeping the health plan that they now have. Rather, to continue to offer health benefits to employees after 2013, small employers like us would have no choice but to go to an undefined, untested, more expensive entity to obtain coverage. Especially in these uncertain economic times, many employers, and their workers, must be given the time to adjust their budgets for the estimated price increases of the Exchange. In addition, many of us have long-established relationships with health insurers we know and are guided by broker advisors who understand our unique needs. We do not want to be forced to buy the standardized, cookie-cutter coverage that would be offered through a government-run Exchange …

Indeed, forcing all consumers seeking Individual or Small Group health coverage to go to the Exchange to purchase health plans runs counter to the ACA’s essential promise of more – not less – choice. … The diversity of small employer health plans currently available in the District cannot be replicated in the standardized plans offered by the Exchange. Small employers rely on choice amongst a wide array of health plans available in the current commercial marketplace and the flexibility to design contributions to complement each employer’s unique budgetary and financial situations. … With the many changes that will be required of employers of all sizes under the new federal health care reform law, it seems unreasonable to add to those concerns by eliminating the commercial marketplace which we know for an undefined, unfamiliar and untested Exchange-driven marketplace.

In addition, we cannot ignore the significant costs of administering the Exchange which will undermine one of the key goals of the federal law – affordability.

Signatories include the Brady Center To Prevent Gun Violence and other left-leaning groups. They’re going to get hit by this, too.

SOURCE: Cato At Liberty


But remember, death panels are a lie.

An elderly woman died alone after doctors failed to tell relatives they were ending her life on the controversial Liverpool Care Pathway.

Olive Goom, 85, passed away with no one by her side after medics neglected to consult with her family about her treatment at Chelsea and Westminster Hospital.

Last night MPs, including Labour health spokesman Andy Burnham, called for an urgent review into the way the pathway operates.

Chris Skidmore, a member of the influential Commons health select committee, said: ‘These cases are disturbing, and if families have not been kept informed, that is wrong. It undermines the mutual bonds of trust which are essential in the NHS. We need an investigation into this breakdown of trust.’

As Miss Goom lay dying alone, staff reassured relatives on the phone just hours before her death that there was no urgent need to visit – even though doctors had already removed tubes providing vital food and fluids.

Her family discovered that she had died only when her niece went to visit her and found she was already being prepared for the mortuary. They said last night that they will never be able to stop feeling guilty that no one was there in her final hours.

SOURCE: Mail Online