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Healthcare Reform Update - April 22-28, 2010


Email Alert

By Nicole DiMaria*

April 28, 2010

States Uneasy About Impact Of Medicaid Expansion
April 27, 2010

The expansion of insurance coverage under the health reform law is due largely to an expansion of the government-funded Medicaid program, which is causing some doctors to worry about the specifics of implementation, according to the New York Times. Absorbing that many people into the system will not be easy. The program is administered and partly financed by the states, which are now racing to figure out how to carry out the necessary changes and simplify enrollment even as they struggle to cope with severe budget cuts and staff shortages.

Medicaid patients often have trouble finding a doctor and studies have shown that "Medicaid beneficiaries fare less well than patients with private insurance." However, it is an improvement over being uninsured. "Medicaid beneficiaries are more likely to have a usual source of care than people who have no insurance, according to a 2008 analysis by the Kaiser Commission on Medicaid and the Uninsured, which found that only 10 percent of Medicaid beneficiaries did not have a usual source of care, compared with more than half of the uninsured." Still, states will be left making sure that people who are newly insured will be able to access care, "just because you're going to get 16 million new people enrolled, that does not mean those 16 million will have easy access to all the care that they need," said Andy Hyman, senior program officer with the Robert Wood Johnson Foundation (Rabin, 4/26).

Stateline: The problem faced by most states is the same one that Massachusetts already faced after their health overhaul. Due to the increase in insured patients and the doctor shortage in the state, wait times for primary care appointments increased greatly after the law went into effect. Similar problems are expected nationally as the federal law is enacted. "Even before President Obama signed the health bill, there already was a shortage of primary care physicians, who usually are the first person a patient goes to for treatment. . . . A surge of as many as 32 million new patients--many of whom are poor and haven't seen a doctor in a long time--could make the scarcity even worse."

Since the federal law was based largely in part on the Massachusetts legislation, similar problems are expected. In addition to long wait times, an increased doctor shortage and budget problems when it comes to Medicare and Medicaid reimbursement increases are expected. "Massachusetts offers a cautionary tale about the pay hikes, as well. The state initially included Medicaid payment hikes in its health care overhaul, but those increases stopped after two years because of the state's budget problems" (Vock, 4/27). 

Congressional Quarterly: When it comes to state budgets, Medicaid and reimbursement rates, many states also are already facing that problem. A recent source of funding from the federal stimulus package to the states for Medicaid reimbursements is about to dry up, leaving the states on their own until the health care law's payments begin in 2014 unless Congress makes a move quickly. "So far, by the National Governors Association's count, 16 states have assumed in their budgets that Washington will deliver the extra funding--and states will face major budget holes if it does not. Other states are already cutting services or raising fees to avoid relying on the money." When the law does go into effect in 2014 some of the changes could lead to big savings for states, while others won't be as well off. "Depending on their current Medicaid coverage programs, some states will reap small windfalls, while others will see a decline in revenue, mainly because of a change to the way states are sold pharmaceuticals at a discount for their Medicaid patients."

Some states that already have expansive Medicaid programs will begin to receive federal funding, which will be a big help. "The option would benefit several states and Washington, that have made extending health care coverage a priority. Other states that do not have statewide programs but have county-provided coverage, such as California, are investigating whether they would qualify for federal funding, perhaps through a waiver from federal law" (Adams, 4/26).

As Health Reform's Specifics Continue To Emerge, So Do Questions And Answers From Stakeholders
April 27. 2010

USA Today: Determining how the law will be applied will be the next big battle in health reform and lobbyists are gearing up to influence implementation. "Congress gave sweeping power to federal agencies, especially (HHS), to fill in gaps lawmakers left in the 906-page legislation--an effort that will take years. The law refers more than 1,000 times to Cabinet secretaries who will make decisions on how to carry out the law. For example, the law requires insurance companies to spend 80% of premiums on medical claims, as opposed to administrative costs, by 2011. But it directs the health department to decide whether gray-area expenses, such as health-and-wellness programs offered by insurers, count as care or overhead." Groups like America's Health Insurance Plans and the U.S. Chamber of Commerce are already trying to influence decisions on the new law (Fritze, 4/27).

The Philadelphia Inquirer: Employers are looking for answers to a host of health reform questions, and some health consultants are offering guidance. "What seems inescapable, they say, is that the American health-care marketplace likely will look vastly different when and if the plan is put into effect. . . . Some health-care benefits managers have been telling (Brian) Pinheiro (a lawyer and partner at Ballard Spahr LLP in Philadelphia) that they see a future in which employers no longer provide coverage because the cost of dropping health insurance for employees, about $2,000 per person in federal penalties to employers, is far less than the current cost of providing family coverage, about $12,000 per employee" (Mondics, 4/27).

Politico: States are worried about the establishment of high-risk pools, mandated by the new health reform law. "On Friday, states must decide whether to help the Department of Health and Human Services set up or expand high-risk insurance pools by the June 21 deadline set in the law, or, in the alternative, leave HHS to do it all by itself. The pools, modeled after similar programs that already exist in more than 30 states, are designed to quickly provide coverage to adults with pre-existing medical conditions. People will qualify to join the pools, which will offer catastrophic coverage but still have high premium costs, if they've been without insurance coverage for six months." HHS has $5 billion to start up the pools, but states like Louisianaand Georgia have already opted out of assisting HHS (Haberkorn, 4/27).

The New York Times: An inquiry by House Democrats into a change in earnings estimates from major companies worried the health law would hurt their bottom lines has convinced them that "the companies were right to tell investors and the government about the expected adverse effects of the law on their financial results." The provision concerned elimination of a tax benefit for companies who give drug benefits to retirees. "The tax change, expected to generate $4.5 billion of revenue over the next 10 years, will help offset the cost of providing coverage to the uninsured. Within days after President Obama signed the law on March 23, companies filed reports with the Securities and Exchange Commission, saying the tax change would have a material adverse effect on their earnings." The companies included AT&T, Caterpillar, Deere and Verizon. "In a memorandum summarizing its investigation, the Democratic staff of the (House Energy and Commerce Committee) said, 'The companies acted properly and in accordance with accounting standards in submitting filings to the S.E.C. in March and April.' Moreover, it said, 'these one-time charges were required by applicable accounting rules.' The committee staff said this view was confirmed by independent experts at the Financial Accounting Standards Board and the American Academy of Actuaries" (Pear, 4/26).

Fine Print Complicates Effort To Cover Young Adults
April 27, 2010

Some parents may have to wait to get children as old as age 26 to be allowed to stay on their health plans because of the health law's fine print, The Associated Press reports. "As a consequence, some families may have to wait until 2011 to get their kids covered, particularly if the parents are working for a large employer, benefits experts and government officials say. Some employers weighing whether to immediately extend coverage for young adults are wondering whether they'll have to withhold additional federal taxes from parents to cover the value of the benefit." Up to 485,000 would gain coverage from the provision. "However, an important caveat was largely overlooked: The insurers' decision applies to policies they sell directly to customers, and not generally to health plans operated by large employers. Big companies--the primary sponsors of private coverage-- usually budget enough money to cover their health care costs and hire insurers as intermediaries to administer their plans. Under the health care overhaul law, there may be a lag in when they offer the new benefit." Although the provision begins Sept. 23, it becomes effective for the next plan year, which for many plans doesn't begin until Jan. 1, 2011 (Alonso-Zaldivar, 4/27).

The Associated Press, in a separate story: "A senior administration official told The Associated Press that the Treasury Department will issue a clarification Tuesday reassuring employers that neither they nor their workers will face a tax hit if companies extend benefits immediately" (Alonso-Zaldivar, 4/27).

USA Today: "Some states already allow adult children to remain on their parents' plan, but the maximum age varies, and some states limit the coverage to full-time students. In addition, the state requirements don't apply to companies with self-funded insurance plans. Under the federal health care law, any child younger than 26 can remain on a parent's plan, as long as the child doesn't have access to an employer-provided plan. The requirement will include self-funded plans," according to Sandra Block, who writes a column for the paper about personal finance. And college graduates can take advantage of COBRA, which allows them to stay on their insurance plan after college, but they will have to pay 100 percent of the premium and administrative costs. USA Today suggests people find out how much it will cost to cover a child and compare it with the cost of a high-deductible plan (Block, 4/27).

The Federal Times: "The Office of Personnel Management is working with Congress to implement the health reform law early by allowing health insurance coverage of employees' adult dependent children up to age 26 before Jan. 1. If current laws are not changed, however, dependents age 22 and older will have to wait until 2011 for coverage. Some health insurance providers plan to extend coverage to adult dependent children of their non-federal enrollees early."

"The health care reform law requires insurers to extend coverage to enrollees' children in the first plan year beginning on or after Sept. 23. . . . But the Office of Personnel Management said April 23 that the current law governing the Federal Employees Health Benefits Program does not allow federal plans to cover enrollees' children before the health care reform provisions take effect" (Losey, 4/26).

KHN Related Coverage: FEHBP Will Not Allow Adults Up To Age 26 To Stay On Parents' Health Plans This Year (Marcy, 4/27).

Report: Health Reform Will Cover More People, Cost More Than Originally Projected
April 24, 2010

The Associated Press reports that "Economic experts at the Health and Human Services Department concluded in a report issued Thursday that the health care remake will achieve Obama's aim of expanding health insurance--adding 34 million to the coverage rolls. But the analysis also found that the law falls short of the president's twin goal of controlling runaway costs, raising projected spending by about
1 percent over 10 years."

The report also warns that Medicare cuts could drive 15 percent of hospitals into debt and as many as 50 percent of Medicare Advantage enrollees out of the plans. ". . . some of the cost-control measures in the bill--Medicare cuts, a tax on high-cost insurance and a commission to seek ongoing Medicare savings--could help reduce the rate of cost increases beyond 2020. But it held out little hope for progress in the first decade" (Alonso-Zaldivar, 4/23).

The Hill: The report--from CMS actuary Richard Foster--says the "new healthcare reform law would cost $828 billion over the next decade while saving $577 billion." Foster said, however, that the projections don't take into account changes to the tax code that were enacted including a tax on high-cost--so-called "Cadillac"--insurance plans. "Foster informed lawmakers that his office needed time to assess the law, and was unable to complete its analysis by the time Congress voted on the bill. Congress is bound by numbers released by CBO, which released its cost estimates before the final House and Senate votes" (Cusack, 4/22). 

Los Angeles Times: The health overhaul could result in lower Medicare premiums for seniors and a more sustainable Medicare program. "The analysis, the first since Obama signed the law last month, suggests that the Medicare program will remain viable until 2029--longer than some earlier projections. Before passage of the healthcare overhaul, Medicare had been projected to slip into the red in 2017" (Levey, 4/22).

The New York Times: "Mr. Foster said these savings assume that the law will be carried out as written, and that may be an unrealistic assumption. The cuts, he said, 'could become unsustainable' because they may drive some hospitals and nursing homes into the red, 'possibly jeopardizing access to care for beneficiaries.' Nancy-Ann DeParle, director of the White House Office of Health Reform, said that fear was unfounded."

"Mr. Foster’s report, which analyzes the effect of the law on national health spending of all types, has a different focus from studies by the Congressional Budget Office, which concentrated on federal spending and revenues and concluded that the law would reduce budget deficits by a total of $143 billion over 10 years" (Pear, 4/23).

CBS News: Republicans said "the findings validate their concerns about Obama's 10-year, nearly $1 trillion plan to remake the nation's health care system." Health and Human Services Secretary Kathleen Sebelius said in a statement, however, that "'[t]he analysis by the independent Office of the Actuary reaffirms what the Congressional Budget Office has already said: the Affordable Care Act will cover more Americans and strengthen Medicare by cracking down on waste fraud and abuse, modernizing payment systems and improving benefits by providing free preventive services, supporting innovations that help control chronic disease and closing the prescription drug donut hole'" (Maer, 4/23).

Obama Chooses Stephanie Cutter To Oversee Health Overhaul Communications Strategy
April 23, 2010

The Boston Globe: "President Obama has chosen Stephanie Cutter, who served as a top aide to Senator Edward M. Kennedy and communications director for Senator John F. Kerry's presidential campaign in 2004, to be in charge of getting out the word about the benefits of the new health care insurance overhaul. 'Stephanie is one of the most respected professionals in public affairs and has an innate understanding of the nexus between policy and communications,' Obama said yesterday in a statement." She will start in the new position next month. "Administration officials said Cutter's job will be more educational than political. But several Democrats said better messaging on health care is crucial to the party's election hopes this year" (4/23).

The Washington Post: "This will be Cutter's second stint, and third role, in the Obama White House. She began as counselor to Treasury Secretary Timothy F. Geithner and transitioned to run the strategic and communications operation surrounding the selection and confirmation of Sonia Sotomayor as Supreme Court justice last year. Cutter also served as lead spokeswoman for the presidential transition team. During the 2008 general election campaign, she was chief of staff to Michelle Obama." Her tenure is expected to be short-term, and then she will "return to her consulting firm, the Cutter Media Group. A new poll from the Kaiser Family Foundation released Thursday suggests that Americans remains largely in the dark about the health-care legislation. Fifty-five percent expressed confusion about the law and 56 percent said they didn't know enough about it to assess how it would affect them personally" (Cillizza, 4/23).

*We would like to thank Nicole DiMaria, Esquire (Wolff & Samson, West Orange for selecting the articles for this week’s compilation.

This information was reprinted from with permission from the Henry J. Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives and sign up for email delivery. © Henry J. Kaiser Family Foundation. All rights reserved.

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