Bureaucratic Reality: Reform Mandate Won't Be Enforced Anyway

[The Health Reform Law] counts on most of the scofflaws turning themselves in. If you do not have insurance and think you owe the tax, then you will be asked to check a box to that effect on your tax return. If you choose to ignore the mandate, you might also choose not to check the box. But even those who do confess that they do not have insurance may not be liable for the new tax. Illegal aliens, Native Americans, prisoners, those who are without insurance for less than 3 months, those who do not have to file an income tax return, anyone who faces a hardship or cannot find affordable coverage, and others are all exempt.

Full Text: Joseph Antos and Michael R. Strain at The Health Care Blog.

More Than 10% of the Folks on Your Health Plan Are Fraudulent

Dependent eligibility audits are designed to ensure that every employee family member who receives health coverage is actually eligible for that coverage. Every employee, from CEO to chief surgeon to janitor, must show copies of their marriage certificates, their children’s birth certificates, and perhaps even the first page of their most recent tax returns, with numerical amounts blacked out, to demonstrate that they are currently married and are legally the parents of any children they claim as dependents on the health plan.

A typical dependent eligibility audit finds that between 6 and 16 percent of dependents are ineligible for the company health plan.     

The list of ineligible covered persons might include: 

• employee children who are older than 26;
• kids who aren’t legally an employee’s child; 
  
• a domestic partner’s child; or
• grandchildren.  

Audits also find that:

• employees haven’t really married; or
• people were married and divorced without telling human resoruces.   

For smaller companies with less than 1,000 employees, the human resources executive may handle a dependency eligibility audit, simply by making a list of employees with dependents on the company plan, asking for supporting documents, and checking them off as employees produce them. 

For an easier alternative, some firms simply ask employees for an affidavit stating that their dependents are legally theirs. But certification isn’t terribly effective as a willingness to lie may not be dissuaded.

Link to full text: http://www.benefitspro.com/2012/07/18/got-dependents-prove-it?utm_source=BenefitsProDaily&utm_medium=eNL&utm_campaign=BenefitsPro_eNLs 

Calorie Labels Could Be All Wrong

Sarah Kliff at Ezra’s blog. ... 

The new health-care law will soon require chain restaurants to post the caloric content of standard menu items. There’s just one problem: The methodology for determining caloric content, developed about a century ago, may not be all that accurate. That is what scientists are learning as they try to answer what seems like a pretty simple question: How many calories does an almond have?

Answer: 20% fewer than what is on the label. 

"What they found, as described by study author David Bear: “When people are consuming nuts, the amount of fat in the feces goes up. And that suggests that we’re not absorbing all the fat or calories that’s in the nut.”

In other words, there’s might be a whole lot of fat in almonds that shows up in a bomb calorimeter, but a good amount of it never gets absorbed by the body. As a result, the researchers concluded that almonds actually have 20 percent fewer calories than we currently think."  

Over Last 3 Years: 3.1 Mil. Gained Disability and 2.6 Mil. Got Jobs

• While the economy has created 2.6 million jobs since June of 2009, as many of 3.1 million people have become recipients of federal disability insurance.

• The economy created 80,000 jobs in June of 2012, the Bureau of Labor Statistics reported on Friday.  In contrast, 85,000 workers left the workforce to enroll in the Social Security Disability Insurance program that same month, according to the Social Security Administration.

Link to full text: http://www.dailymail.co.uk/news/article-2170044/85-000-Americans-went-disability-benefit-June-80-000-jobs-added-period.html#ixzz20tzwMtDv

Supreme Court Upholds Mandate as a Tax - Medicaid Restrictions Detailed

Overview

With the release of the Supreme Court ruling today you are likely to see a flurry of emails and updates on PPACA. The Court upheld the Sections of the law related to employers entirely. We are committed to providing accurate and timely information to our clients. We believe today’s ruling is merely the end of the beginning of the debate on the future of healthcare. Given the significant nature of the ruling we want to take some time to review and discuss internally what we believe are the best strategies going forward.

We will have a position paper out within the next day or two. Additionally we will have a comprehensive webinar to review the key elements of the law along with a calendar of compliance dates. No employer can afford to wait any longer before beginning the work of total compliance.

We fundamentally still think employers are likely to bear the majority of future costs associated with healthcare increases. The governments budgets are stretched to a breaking point and cost will be shifted to the private sector. Benefits remain a competitive business priority in today’s business climate.

We continue to emphasize that employers who proactively help their employees stay healthy and manage known conditions, have medical cost increases which are about half of their peers who do nothing. We will continue to bring new services and support you in these areas.

Ruling

Today's ruling is approximately 200 pages and it will take us some time to read, synthesize and digest.  (Ruling linked here). 

In short, the Supreme Court upheld the health care law in a splintered, complex opinion.  The justices said that the individual mandate -- the requirement that most Americans buy health insurance or pay a fine -- is constitutional as a tax.  In 2014, the penalty will be; 

• $285 per family or 1% of income, whichever is greater;
• by 2016, it goes up to $2,085 per family or 2.5% of income, whichever is greater. 

Chief Justice John Roberts provided the key vote to preserve the landmark health care law, which figures to be a major issue in the upcoming Presidential election.

The government had argued that Congress had the authority to pass the individual mandate as part of its power to regulate interstate commerce; the court disagreed with that analysis, but preserved the mandate because the fine amounts to a tax that is within Congress' constitutional powers. 

Justice Anthony M. Kennedy, the usual swing vote, spoke for the conservative dissenters and said the entire law should have been struck down.

Medicaid Issue

The ruling was not a total victory for the Obama administration.

Roberts said the law's required expansion of Medicaid violates states' rights.  In essence PPACA expanded a citizen's right to Medicaid if that person made up to 133% of the federal poverty limit (as opposed to 100% prior to the law).  The law further stated that if states did not take on this extra burden, all federal Medicaid assitance could be fully extracted from that state.  This appears to be a significant issue and we will be addressing it further in the upcoming weeks. 

"The states are given no choice in this case. They must either accept a basic change in the nature of Medicaid or risk losing all Medicaid funding," he wrote.

He said the federal government cannot require the states to follow this part of the law. States that want to take extra federal money may do so, he said, but they cannot be threatened with the loss of all federal funds if they refuse to expand the program as required by Washington.

Market Response

Since the decision issued, stocks have been dropping sharply.

The Dow Jones industrial average, which was down about 100 points before the court ruled, was down 133 points at 12,494 shortly before noon EST Thursday.

Stocks of major insurance companies fell sharply as analysts sorted through the ruling. Hospital chains rose.

Bank stocks were the biggest losers in the market. JPMorgan fell 4 percent after the New York Times reported that its loss from a complex trade could swell to $9 billion.

The Standard & Poor's 500 index fell 14 points to 1,318 and the Nasdaq composite index was off 40 points at 2,834.

Quantification of the Regulatory Burden on U.S. Business

The current regulatory environment places an enormous burden on the American economy by crushing small businesses with nonsensical rules and making the United States a toxic country in which to locate a business. 

• Last year alone, 3,807 new final rules were published in the Federal Register -- more than 10 per day.
• During that same period, Congress passed only 81 new laws. 
• Big businesses with more than 500 employees pay about $7,755 per employee to comply with federal rules each year, according to the SBA.
• But small businesses with fewer than 20 employees pay $10,585 per employee per year -- that's a built-in competitive advantage for big business of nearly $3,000 per employee.

For text:  http://spectator.org/archives/2012/06/05/washingtons-ten-thousand-comma 

Source: Ryan Young and Wayne Crews, "Washington's Ten Thousand Commandments,"American Spectator, June 5, 2012.  

How Much is that Free Healthcare Costing Your Plan?

As Kelly Kennedy in USA Today writes: 

A new report shows costs vary as much as 700% for some preventive examinations, and as the federal health care law increases demand for those procedures, it can mean an increase in premiums if employees don't pay attention to those costs.

So how many of us think we have employees who are going to shop around to get the best price for these "free" services? [Yes, it was impossible for me to keep a straight face as I typed that.] 

Test	Cost Range
Mammography	$169-$403
Type 2 Diabetes	$51-$437
Cholesterol	$117-$374
Colonoscopy	$786-$1,819
Pap Smear	$131-$476

Hat tip to Dr. John Goodman for the posting. 

The Government's Record in Providing 'Health Care'

U.S. government doctors once thought it was fine to experiment on disabled people and prison inmates. Such experiments included giving hepatitis to mental patients in Connecticut, squirting a pandemic flu virus up the noses of prisoners in Maryland, and injecting cancer cells into chronically ill people at a New York hospital. ... U.S. officials also acknowledged there had been dozens of similar experiments in the United States - studies that often involved making healthy people sick.  ...

Read the full story at the Washington Post.  

Carrier Logic: Utilization Up So Increase Premiums; Utilization Down So Increase Premiums

This classic carrier-spin points to a lose-lose for policy holders.  You have to love they way they operate.  

The New York Times and California Healthline report:

[E]ven as profits increase, insurers continue to push for higher premiums, citing the higher costs of care and the belief that demand for care will increase later this year as the economy improves.

Lonny Reisman, chief medical officer of Aetna, said, "I think there's a real concern about a bounce-back, a rebound, in utilization."

Heads means carriers win and tails mean you lose. 

Cost Control Requires Patients to Pay a Percentage of the Bill

The cost of employee benefits has risen by over 125% in the last decade. One of the myriad of challenges exacerbating this problem is that the end users of your benefit plan regularly have no financial incentive to make sure they are purchasing the most reasonably priced treatment available to them.  

Below is a great illustration of this point.  Hat tip to Jane Cooper of Patient Care and SHRM. Low cost plans with fixed co-pays as opposed to coinsurance percentages do not correct the below market failure.  

1 in 4 U.S. Adults on Government Health Insurance

Gallup finds that 1 in 4 U.S. adults are covered by Medicare, Medicaid or military/veterans' benefits. 

California’s Road to Ruin | The Economist

Golden State’s ability to sustain Medicaid and private health insurance will rely largely on its ability to tame its budget woes. 

California is now widely studied as an example of what to avoid.  (Note that this is a particularly alarming statement coming from a European media outlet.) Why is the home of Apple and Google so useless when it comes to running school districts or budgeting, and why have so many clever people settled for such a bad deal?

• A messy structure of government. Look at an administrative map of California and you might assume that a child had scrawled over the design. It is a muddle of thousands of overlapping counties, cities and districts. Beverly Hills and West Hollywood sit in the middle of Los Angeles but are separate cities. The LA school district has 687,000 pupils, but there are 23 others with 20 pupils or fewer. Often voters have little idea what their officials do for their money. Last year the residents of Bell, a poor Latino city of 38,000 people, found their city manager was paid $788,000 and their police chief $457,000 a year.

• Ever more taxes. A study last year by the Pacific Research Institute said California had the fourth-largest government of all American states, with state and local spending equal to 18.3% of its gross state product. Texas, a state with which California is often compared, chewed up just 12.1% of GSP. It also looked at tax structures, and on that count California came 45th out of 50 states, with its steep income tax being especially damaging. Its tax system has been a mess ever since the dotcom boom when it relied too heavily on capital-gains taxes. As taxpayers have got crosser, the state has tried to tax them as sneakily as possible while adding tax breaks for favored lobbies.

• And more rules: The broader problem is the growing thicket of regulation—of which taxes are merely the most onerous part. Many of the new laws that have been passed in both Europe and America have admirable aims: better health care, cleaner air, less discrimination against minorities. But as Philip Howard of Common Good points out, they are amazingly cumbersome—Mr Obama’s health bill was over 2,000 pages long—and once on the statute book, they seldom come off again. One solution is to follow Texas’s example and let legislatures meet only occasionally. Another would be to introduce sunset clauses so that all regulations automatically expire after a while.

• Towards the older middle. Given the fury from the left about bankers and from the right about welfare spongers, you would expect all that extra government spending to have been swallowed by either end of the income spectrum. In fact in California, as in most of the West, the cash has flowed mostly towards those with middle incomes and the old.  Both the rich and the poor do relatively badly out of government.

• The rich pay for most of it. In California the top 1% by income accounted for 43% of income-tax revenues in 2008 and the top 5% paid 64%. In America as a whole the top 1% paid 38% of federal income taxes and the top 5% paid 58%; their respective shares of national income were 20% and 38%. The wealthy pay the lion’s share in most European countries too. Getting the rich to cough up so much might be a desirable social goal in a time of great inequality, but it is hard to claim that they are not paying their share.

Californians are still determined to get something for nothing. (See graph below.) “People here are addicted to improving their lifestyle. They want more and more from their government.”

Is there a better way? Many of those who used to see the future in the Golden State now prefer to look across the Pacific—towards emerging Asia.

Source: The Economist, Print Edition, Mar. 17, 2011. Full text: http://www.economist.com/node/18359882