The Heavy Lift of Implementing Obamacare

But that’s unpossible! The calls for price controls abound:

Health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama administration’s health care law was to stem the rapid rise in insurance costs for consumers.

Particularly vulnerable to the high rates are small businesses and people who do not have employer-provided insurance and must buy it on their own.

In California, Aetna is proposing rate increases of as much as 22 percent, Anthem Blue Cross 26 percent and Blue Shield of California 20 percent for some of those policy holders, according to the insurers’ filings with the state for 2013. These rate requests are all the more striking after a 39 percent rise sought by Anthem Blue Cross in 2010 helped give impetus to the law, known as the Affordable Care Act, which was passed the same year and will not be fully in effect until 2014.

In other states, like Florida and Ohio, insurers have been able to raise rates by at least 20 percent for some policy holders. The rate increases can amount to several hundred dollars a month.

The proposed increases compare with about 4 percent for families with employer-based policies.

Under the health care law, regulators are now required to review any request for a rate increase of 10 percent or more; the requests are posted on a federal Web site, healthcare.gov, along with regulators’ evaluations.

The review process not only reveals the sharp disparity in the rates themselves, it also demonstrates the striking difference between places like New York, one of the 37 states where legislatures have given regulators some authority to deny or roll back rates deemed excessive, and California, which is among the states that do not have that ability.

New York, for example, recently used its sweeping powers to hold rate increases for 2013 in the individual and small group markets to under 10 percent. California can review rate requests for technical errors but cannot deny rate increases.

The double-digit requests in some states are being made despite evidence that overall health care costs appear to have slowed in recent years, increasing in the single digits annually as many people put off treatment because of the weak economy. PricewaterhouseCoopers estimates that costs may increase just 7.5 percent next year, well below the rate increases being sought by some insurers. But the companies counter that medical costs for some policy holders are rising much faster than the average, suggesting they are in a sicker population. Federal regulators contend that premiums would be higher still without the law, which also sets limits on profits and administrative costs and provides for rebates if insurers exceed those limits.

Employers respond to government policies:

Many businesses plan to bring on more part-time workers next year, trim the hours of full-time employees or curtail hiring because of the new health care law, human resource firms say.

Their actions could further dampen job growth, which already is threatened by possible federal budget cutbacks resulting from the tax increases and spending cuts known as the fiscal cliff.

“It will have a negative impact on job creation” in 2013, says Mark Zandi, chief economist of Moody’s Analytics.

Under the Affordable Care Act, businesses that employ at least 50 full-time workers – or the equivalent, including part-time workers – must offer health insurance to staffers who work at least 30 hours a week. Employers that don’t provide coverage must pay a $2,000-per-worker penalty, excluding the first 30 employees.

The so-called employer mandate to offer health coverage doesn’t take effect until Jan. 1, 2014. But to determine whether employees work enough hours on average to receive benefits, employers must track their schedules for three to 12 months prior to 2014 – meaning many are restructuring payrolls now or will do so early next year.

About a quarter of businesses surveyed by consulting firm Mercer don’t offer health coverage to employees who work at least 30 hours a week. Half of them plan to make changes so fewer employees work that many hours.

The health care law will particularly affect companies with 40 to 45 workers that plan to expand and hire. Many are holding off so they don’t cross the 50-employee threshold, says Christine Ippolito, principal at Compass Workforce Solutions, a human resource consulting firm in Melville, N.Y.

Ernie Canadeo, president of EGC Group, a Melville-based advertising and marketing agency with 45 employees, planned to add 10 next year but now says he may add fewer so he’s not subject to the mandate. Still, he says, he’ll eventually have to hire more workers to grow. “If business demands that I hire, then I have to hire,” he says.

Others already over the 50-employee threshold plan to add more part-time workers or cut the hours of full-timers, says Rob Wilson, head of Employco, a human resource outsourcing firm. Many, he says, will hire more temporary workers, whom they won’t have to cover.

Nearly half of retailers, restaurants and hotels will be affected by the law, according to Mercer. They employ large numbers of part-time and seasonal employees, including many who work about 30 hours a week.

Since such low-wage workers are widely available, it often hasn’t been cost-effective or necessary for employers to offer them coverage. Providing them benefits could be costly because employees must pay no more than 9.5% of their wages in insurance premiums, forcing employers to contribute significantly more than they do for higher-wage workers.

“I think you may see employees with fewer hours as a consequence,” says Neil Trautwein, vice president of the National Retail Federation.

A key administration ruling:

In a long-awaited interpretation of the new health care law, the Obama administration said Monday that employers must offer health insurance to employees and their children, but will not be subject to any penalties if family coverage is unaffordable to workers.

The requirement for employers to provide health benefits to employees is a cornerstone of the new law, but the new rules proposed by the Internal Revenue Service said that employers’ obligation was to provide affordable insurance to cover their full-time employees. The rules offer no guarantee of affordable insurance for a worker’s children or spouse. To avoid a possible tax penalty, the government said, employers with 50 or more full-time employees must offer affordable coverage to those employees. But, it said, the meaning of “affordable” depends entirely on the cost of individual coverage for the employee, what the worker would pay for “self-only coverage.”

The new rules, to be published in the Federal Register, create a strong incentive for employers to put money into insurance for their employees rather than dependents. It is unclear whether the spouse and children of an employee will be able to obtain federal subsidies to help them buy coverage – separate from the employee – through insurance exchanges being established in every state. The administration explicitly reserved judgment on that question, which could affect millions of people in families with low and moderate incomes.

Many employers provide family coverage to full-time employees, but many do not. Family coverage is much more expensive, and the employee’s share of the premium is typically much larger.

In 2012, according to an annual survey by the Kaiser Family Foundation, premiums for employer-sponsored health insurance averaged $5,615 a year for single coverage and $15,745 for family coverage. The employee’s share of the premium averaged $951 for individual coverage and more than four times as much, $4,316, for family coverage.

Starting in 2014, most Americans will be required to have health insurance. Low- and middle-income people can get tax credits to help pay their premiums, unless they have access to affordable coverage from an employer.

In its proposal, the Internal Revenue Service said, “Coverage for an employee under an employer-sponsored plan is affordable if the employee’s required contribution for self-only coverage does not exceed 9.5 percent of the employee’s household income.”

The rules, though labeled a proposal, are more significant than most proposed regulations. The Internal Revenue Service said employers could rely on them in making plans for 2014.

In writing the law, members of Congress often conjured up a picture of employees working year-round at full-time jobs. But in drafting the rules, the I.R.S. wrestled with the complex reality of part-time, seasonal and temporary workers.

Why Jerry Brown is happy about cutting pay to doctors:

A panel of the 9th U.S. Circuit Court of Appeals ruled Dec. 13 that California may slash pay by 10% to doctors, pharmacists and others who serve low-income patients under Medi-Cal, the state’s Medicaid program.

The three-judge panel said the federal Dept. of Health and Human Services has the authority to determine whether states are justified in cutting Medicaid rates, and that California need not have considered physicians’ costs of providing all the medical services in question before receiving approval from the government for the rate reductions. If the decision stands, it would impede efforts by health professionals throughout the nation to resist unjust Medicaid cuts, said Francisco Silva, vice president and general counsel for the California Medical Assn. The medical society, a co-plaintiff in the case, will ask the full appeals court to rehear the case.

“All physician groups were looking at our case to see if it would give them a strategy to use in their own states,” Silva said. If the full court upholds the ruling, it could make such a strategy difficult for organized medicine to pursue in other states that are considering similar cuts, he said.

The decision involves challenges to several rounds of Medicaid cuts approved by the California Legislature, beginning in 2008, in an attempt to address state budget shortfalls. Doctors, hospitals, pharmacists and others sued the state, challenging a 10% cut first scheduled for July 2008. In 2011, California Gov. Jerry Brown backed the latest legislative attempt to shear 10% off Medicaid payments to doctors and other health care professionals. The Centers for Medicare & Medicaid Services approved that cut, and the CMA, the California Dental Assn. and other groups sued HHS for approving the reductions. California since has rescinded the plan amendments that were in dispute in the 2008 case.

The physicians sued the federal government under the Administrative Procedures Act, which authorizes a process for courts to review agency decisions and decide whether legal challenges against federal bodies have merit. The doctors said the state failed to assess adequately whether decreasing pay rates below physicians’ costs of providing care would result in access problems for patients, and that HHS should have rejected the proposal on these grounds. A district court blocked the cuts based on these arguments, and the federal government appealed.

A longtime liberal shifts his views:

You may ask, even if the ACA may do more for hospitals and drug companies than for the uninsured, doesn’t society have a moral responsibility to include everyone in our health-care system? So what that we may spend $200 billion more to get our neediest only $70 billion in additional real care – isn’t it worth it?

As a liberal, I would have answered yes even a few years ago. Now, I suspect, the questions are out of date. Our system no longer neatly divides between the insured and the uninsured. Your odds of getting appropriate care – rather than excessive and uncoordinated care – depend more on the professional culture of your providers than on your insurance status. And your chances of avoiding a serious medical error are mainly a matter of luck.

The ACA is just the latest in a long line of laws that drive resources from all other goods into health care. The $100 billion a year in additional government spending could, for example, buy gym memberships for 42 million Americans and pay them $10 an hour to exercise three times a week, or put fresh vegetables on the table daily for every child in the U.S. This doesn’t even include the $100 billion now in Americans’ pockets that the ACA will make them spend on health insurance.

If health-care costs were a reasonable percentage of our economy, then the money-is-no-object argument might make sense. But with these costs making up 18 percent of our economy, the decision to shovel more money into health care will have a powerful impact on job creation, wage growth and disposable income. All of these issues are more important to the well-being of the long-term uninsured – even to their health – than more health care.

With dueling injunctions, the contraception mandate is likely to end up at the Supreme Court level.

On January 1, religious business owners whose employee health plans renew at the beginning of the year will face the impossible decision to either violate their deeply held beliefs by complying with the mandate or jump over Obamacare’s conscience cliff and face ruinous fines.

Among those employers peering over the Obamacare ledge is Hobby Lobby. On Wednesday, the Supreme Court denied a request to temporarily stop enforcement of the mandate against the family-owned business while its appeal moves forward. The company now faces the possibility of devastating penalties in 2013. It becomes subject to the anti-conscience mandate on New Year’s Day, the day on which its employee health plan renews.

Headquartered in Oklahoma City, Hobby Lobby has grown from one 300-square-foot garage to over 500 stores in 41 states employing more than 22,500 individuals. The Green family, which founded and runs the company, invests in communities through numerous Christian ministries, closes all its locations on Sundays, and seeks to operate in accordance with Christian principles – including offering an employee health care plan that aligns with those values. Under the Obamacare mandate, however, Hobby Lobby will be forced to provide and pay for abortion-inducing drugs – such as the “morning after” and “week after” pills – regardless of their religious or moral objections to doing so …

In an attempt to dampen widespread outcry over the mandate’s assault on the religious liberty of employers such as Hobby Lobby, the Obama Administration has promised an “accommodation.”

But to the countless employers teetering on Obamacare’s edge, that inadequate, unworkable, and unfulfilled accommodation looks more like a hole-ridden parachute.