Hidden Costs Of Health Care And The CLASS Act

Individuals in the United States spend $363 billion more on health care than is traditionally reported by the Centers for Medicare and Medicaid Services, according to a new Deloitte report.

More than half of that additional spending (55%) was for the estimated value of supervisory care, or care given by unpaid relatives and friends.

The connection to health care reform? Sec. 8002(a)(1) of the Patient Protection and Affordable Care Act (ACA, P.L. 111-148), as I explain below.

ACA Sec. 8002(a)(1) added Title XXXII to the Public Health Service Act (PHSA) to establish the Community Living Assistance Services and Supports (CLASS) Program,

a new national, voluntary, consumer-funded insurance program, the CLASS Program, will help participants who have significant functional limitations to pay for assistive services and devices to allow them to continue to live in their homes or in a community setting. Employers may elect to deduct CLASS premiums from employees' paychecks.

The CLASS Act is an employer-based program meant in part to take the place of private long-term care insurance, which few people currently have. Employers must choose to enroll in the program, and employees can opt out if they wish.

The CLASS program would address those additional costs identified in the Deloitte report as “supervisory care.” However HHS Secretary Kathleen Sebelius already has acknowledged CLASS program funding difficulties. In addition, at a recent House hearing, HHS Assistant Secretary for Aging Kathy Greenlee said, “We are committing to making reforms to the program so that we can hit the financial targets,”  Ms. Greenlee added that HHS would not implement the program without those changes

So here is the dilemma: a substantial part of consumers’ increasing health cost burden is now and will continue to be long term care expenses (remember, baby boomers are just hitting normal retirement age). The CLASS program appears to address that problem, but even before it is implemented, the common wisdom is that the program is financially flawed.

What to do? Republicans want to eliminate the program, Democrats want to make it financially sound.

What do you think?

More on That Deloitte Study

Typically, national health expenditures are based on the CMS’s National Health Expenditure Accounts (NHEA), which totaled $2.467 trillion for 2009. Deloitte's study, developed in collaboration with Oxford Economics, adopted a broad view of health care expenditures which includes both direct and indirect costs, as well as items such as functional foods and nutritional supplements, complementary and alternative medicine (CAM) goods and services, and the imputed value of unpaid supervisory care provided to sick people by family and friends. The study also used data from a phone survey of 1,008 adult U.S. consumers conducted by Harris Interactive in September-October 2010.

The additional $363 billion is 14.7% more than the NHEA figures. Demonstrating the significance of the amount consumers now spend on health care, the additional costs captured in the new Deloitte study support an increase in consumer discretionary spending on health care from 16.2%, for items traditionally reported by the government, to 19.9%, which surpasses housing and utility costs at 18.8%.

High Costs Of Supervisory Care

More than half of the spending (55%) in these ancillary areas was for the estimated value of supervisory care, or care given by unpaid relatives and friends. Supplemental expenditures included complementary and alternative medicine (CAM) practitioners (8%) and products (1%), functional foods and other nutritional products, vitamin and mineral supplements (15%), health publications (1%), ambulance services (3%), other ambulatory care, such as blood banks, some health promotion programs (6%), mental health services (8%), homes for the elderly (4%), and weight loss facilities (1%).

"It has been one year since the passage of health care reform, and our report sheds new light on the hidden costs of health care, and how these costs can add up significantly to billions of dollars and can even eclipse housing as a household expense," said Paul Keckley, executive director, Deloitte Center for Health Solutions. "Our study explores the financial context for the decisions consumers - not simply patients - make about how they spend their money on health care, which will only increase in importance as health care reform continues to take hold."

The Deloitte report, The Hidden Costs of U.S. Health Care for Consumers: A Comprehensive Analysis, was conducted by Deloitte's Center for Health Solutions and Center for Financial Services to gauge the total costs consumers spend out of their own pockets on health care products and services, beyond what is typically paid by insurers and other government sources, such as Medicare and Medicaid.

"The ability of the U.S. economy to recover will be affected in part by how much consumers have in their pockets to spend," said Andrew Freeman, executive director of the Deloitte Center for Financial Services. "This reveals a tremendous burden on the average consumer."

Additional findings in the report:

• According to the Deloitte study, the total 2009 U.S. per capita expenditures were $9,217; professional services (29%) and hospital care (27%) were the biggest categories.


• The estimated value of supervisory care ($199 billion) is significantly higher than total spending on nursing homes ($144 billion) and total spending on home health care ($72 billion), and was only somewhat less than prescription drug expenditures ($246 billion).


• Approximately 70% of spending on nutrition industry items was directed towards functional foods, a category which includes such items as enriched cereals, breads, sports drinks, bars, fortified snack foods, baby foods and prepared meals.


• Seniors account for 36% ($1.01 trillion) of total health care expenditures, but are only 13% of the population.


• Nearly 83% of the $2.83 trillion 2009 U.S. health expenditures were attributed to those with family incomes of $100,000 or less, who make up 89% of the total population.


• One in five (21%) adults surveyed said they paid a medical bill late in the last 12 months.


• A total of 27% of adults estimate that 5% or less of their household budget is spent on health care; 17% said 26% or more is spent on health care.


• A majority (80%) of adults surveyed said they would use generic medicines, seek free advice from a pharmacist or other medical professional (70%), and use technology (61%) if it would save money for health care.


• Approximately 43% would visit a retail clinic, and one in five (20%) would visit another country for more affordable medical care.


• And, 26% would skip a medical test or screening, skip a visit to the dentist or doctor altogether (26%), or skip refilling a prescription (22%) to save money on health care.

"Our study suggests that as the U.S. economy struggles to rebound and consumers continue to be stretched to pay their bills, they are confronted with difficult choices, such as paying for health care instead of other household expenses," added Mr. Keckley. "Many consumers are turning to alternative and over-the-counter products, switching to generic medicines, or even skipping the doctor or visiting a retail clinic instead to save money. Health care organizations looking to address these unmet consumer needs should consider their strategy to expand their focus to include alternative products and services outside of the confines of the traditional health care sector."

For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

Would These Alternative To Health Reform Mandates Work?

Nine categories of “voluntary alternatives” to the mandates in the Patient Protection and Affordable Care Act (ACA, P.L. 111-148) might encourage more individuals to enroll in private insurance coverage, according to the assessments of health care experts interviewed by the Government Accountability Office (GAO).

After looking over the alternatives, let us know if you think they would reduce the number of uninsured by more than 30 million (the approximate reduction predicted for the ACA)?

At the request of Sen. Ben Nelson (Neb.), the GAO obtained the views of 41 experts from 21 organizations on the range of approaches Congress could consider to encourage voluntary enrollment in private health insurance coverage

The GAO report states that the ACA “mandates that individuals, subject to certain exceptions, obtain health insurance coverage or pay a financial penalty beginning in 2014—the ‘individual mandate.’” At the same time, the ACA also imposes a number of requirement on insurers and employers, including automatic enrollment for employers with more than 200 employees and an assessment on certain employers with 50 or more employees, including employers who do and do not offer health coverage.

Primary Approaches

The experts interviewed in the GAO report discussed several specific approaches to encourage voluntary health insurance enrollment during our interviews. The approaches are summarized below, presented in the order of frequency with which they were proposed

• Modify open enrollment periods and impose late enrollment penalties.


• Expand employers’ roles in auto-enrolling and facilitating employees’ health insurance enrollment.


• Conduct a public education and outreach campaign.


• Provide broad access to personalized assistance for health coverage enrollment.


• Impose a tax to pay for uncompensated care.


• Allow greater variation in premium rates based on enrollee age.


• Condition the receipt of certain government services upon proof of health insurance coverage.


• Use health insurance agents and brokers differently.


• Require or encourage credit rating agencies to use health insurance status as a factor in determining credit ratings.

In discussing these approaches, four key themes emerged, according to the GAO.

• First, experts emphasized that most people would prefer to purchase health insurance coverage; however, to the extent that high cost is a barrier, the use of financial incentives is key.


• Second, they stated that regardless of the particular approach taken to increase voluntary enrollment in the absence of an individual mandate, the availability of affordable, high-quality health care plans with a basic set of benefits, and full coverage of preventive care services is essential to encouraging voluntary enrollment in the coverage.


• Third, experts said that strong marketing and public education from trusted, community-based sources informing people about their health care choices, their costs, and the consequences of not enrolling in a timely manner are important.


• And fourth, they said convenient access to the health insurance system through multiple access points staffed by knowledgeable individuals would further facilitate enrollment.

Some of the experts also noted that two of the approaches, conditioning the receipt of government services upon proof of health insurance and imposing a tax to pay for uncompensated care, could be considered the functional equivalent of a mandate.

The GAO notes that “we did not explore suggestions that primarily emphasized more generous subsidies or significant expansions of publicly funded insurance programs as a means of expanding coverage.” The report also states that “we did not independently evaluate the potential effectiveness or the legal implications of the approaches individually or in combination.”

The GAO report is Private Health Insurance Coverage: Expert Views on Approaches to Encourage Voluntary Enrollment, GAO-11-392R.

For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

Illinois Health Care Reform Implementation Council releases initial recommendations

States have been active in analyzing the reform requirements of the Patient Protection and Affordable Care Act (ACA) during the past year. Many have formed task forces or commissions to sort out those requirements. Illinois is among the states that has taken action.

The Illinois Health Care Reform Implementation Council, which Governor Pat Quinn established via Executive Order #10-12 in July 2010, has issued its initial report on how Illinois should implement the ACA.

The report indicates the council’s recommendations fall into two categories: issues that the state must address immediately, and decisions that will be made after the council gathers more information from stakeholders and the federal government provides additional guidance.

Health insurance exchange. Foremost among the immediate recommendations is to establish a health insurance exchange for Illinois, governed by a quasi-governmental authority. Other recommendations describe its nature and scope, including initially organizing the exchange as a “market developer” and later transitioning to a “market organizer” model once premium volume and a sufficient number of covered lives are achieved within the exchange marketplace.

According to the report, the council recommends that Illinois initially establish a single exchange entity that sells products to both individuals and small employers. The council also recommends that the state revisit merging the individual and small group risk pools after it receives additional information and analyses of the marketplace and the potential impact of this option.

Insurance protections. The report also indicates that the council recommends immediate action to provide Illinois consumers with the same health insurance protections contained in the ACA to assure fairness and affordability. These protections include:

• internal appeals and external review,
• minimum medical loss ratios, and
• premium rate review.

According to the report, the council recommends that Illinois law be amended as necessary to remove barriers and facilitate formation of nonprofit member corporations eligible for federal funding under the ACA.

Other issues and next steps. The report indicates the council recommends further study on whether Illinois’ definition of “small employer” should be increased from 50 to 100 employees and whether larger employers should be allowed to participate in the exchange.

In addition, the council recommends waiting for further guidance from HHS before deciding whether to require benefits beyond the “essential benefits” defined by HHS. The report explains, “Some of Illinois’ existing benefit mandates may not be included in the definition of ‘essential health benefits.’ The ACA allows states to require qualified health plans offered in the Exchange to provide benefits in addition to the “essential health benefits.” However, states must pay for any portion of subsidized coverage that is attributed to the cost of those additional benefits. The state could consider funding these mandates separate from the Exchange.”

Council process. The council conducted four public meetings in Chicago, Peoria, Carbondale, and Springfield focused on the following issues:

(1) establishing a health insurance exchange and related consumer protection reforms;

(2) reforming Medicaid service structures and enrollment systems;

(3) developing an adequate workforce;

(4) incentivizing delivery systems to achieve high-quality health care;

(5) identifying federal grants, pilot programs, and other non-state funding to assist with implementation of the ACA; and

(6) fostering the widespread adoption of electronic medical records and participation in the Illinois Health Information Exchange.

In addition, the council solicited written comments regarding a series of specific questions concerning implementation of the insurance exchange in Illinois. A fifth public meeting was held in Chicago in February for stakeholders to question and react to the initial recommendations submitted by the council on February 3. Overall, more than 150 individuals and organizational stakeholders shared their suggestions with the council.

Health care reform law turns one year old

Guess what today is? Go ahead – check your calendar (I’ll wait). That’s right! It’s March 23, 2011. I know what you must be thinking: “So what?” But after I remind you that today the Patient Protection and Affordable Care Act (ACA) turns one year old, you might be thinking, “Wow, that was a year ago?”

Yes, one year ago on this date, President Obama signed into law a historic piece of legislation aimed at expanding health care access and coverage. Since then, there’s been a plethora of health reform-related activities. Let’s take a look:

Lawsuits. One of the first activities was challenging the ACA in court. At least four cases (Florida v. HHS, Virginia v. Sebelius, Liberty University, Inc. v. Geithner, and Thomas More Center v. Obama) were filed on March 23, 2010. Numerous cases have been filed since then. The Independent Women's Forum, which has been tracking the cases since day one, indicates there are more than 20 active cases challenging the law.

In the Florida and Virginia cases, the courts ruled that the ACA is unconstitutional, and in the Liberty and Thomas More Center cases, the courts ruled the ACA is constitutional. The Eleventh Circuit Court of Appeals has agreed to an accelerated briefing schedule in the Florida case and has required all briefings to be filed by May 25. The Justice Department has asked the Supreme Court to deny Virginia’s request to review its case and allow it to be heard first by the Fourth Circuit Court of Appeals.

More than a dozen cases have been dismissed for lack of standing.

Regulations. The three agencies responsible for implementing the ACA (DOL, IRS, HHS) have issued at least 15 sets of regulations. The provisions covered include:

• consumer support and information
• external appeals
• content requirements for Healthcare.gov
• Pre-Existing Condition Insurance Plan
• Early Retiree Reinsurance Program
• state innovations
• Consumer Operated and Oriented Plans Program
• health market reforms
• coverage for young adults
• grandfathered plan
• medical loss ratio
• Patient’s Bill of Rights
• prevention
• review of insurance rates
• student health plans

Guidance, other than in the form of regulations, has been issued on some of these and other provisions, including Health Insurance Exchanges and annual limit waivers.

Notices. The agencies also have issued about 10 model notices, including the (pick your favorite adjective) well-known, much maligned, complex Grandfathered Plans Model Notice.

State activity. “Every state has done something to move ahead on the new federal requirements and has accepted federal planning funds. By the end of 2010, at least 33 states had formed a task force, commission or other special group to study and guide its implementation of health care reform. At least 12 states already had issued a preliminary report,” according to Martha P. King, author of States have moved ahead despite uncertainty, risk and opposition.

King also notes that “Eight states enacted laws or passed initiatives in 2010 opposing certain requirements or refusing to enforce certain provisions. Five other states adopted resolutions to protest federal provisions.”

At least one state seemed to embrace the requirement regarding health insurance exchanges. California enacted legislation (AB 1602 and SB 900) on September 30, 2010, that established the California Health Benefit Exchange. (As you may recall, prior to the ACA, in 2006, Massachusetts had set up an exchange called the Health Connector.)

On February 16, 2011, HHS awarded seven grants to help a group of “Early Innovator” states design and implement the information technology (IT) infrastructure needed to operate exchanges. Kansas, Maryland, New York, Oklahoma, Oregon, Wisconsin, and a consortium of New England states will receive a total of approximately $241 million.

Early Retiree Reinsurance Program (ERRP). In the first nine months after enactment of the ACA, the ERRP issued $535 million in reimbursements to 253 approved retiree plans, according to the first annual ERRP report from HHS. The report notes that as of December 31, 2010, more than 5,000 plan sponsors were approved for participation in ERRP. The number of approved sponsors varied significantly by state; in several states, more than 100 sponsors were approved.

Legislation. On March 30, 2010, just one week after the President signed the ACA into law, he signed a second health reform bill – The Health Care and Education Reconciliation Act of 2010. That law made a number of health-related financing and revenue changes to the ACA and modified higher education assistance provisions.

(By the way, I just have to mention that Wolters Kluwer was one of the first publishers to provide a version of the ACA integrated with the amendments made by the Reconciliation Act. If you’d like to get your very own copy of it, please click here.)

On December 15, 2010, President Obama signed the Medicare and Medicaid Extenders Act of 2010 (P.L. 111-309), which in part extends current Medicare payment rates through Dec. 31, 2011, and avoids a scheduled 25% reduction in those rates. The law also increases the existing reimbursement limits under the ACA for amounts that individuals who, based on income, have been overpaid for the advanced refundable income tax credit for health insurance purchases in state exchanges.

In January, the “Repealing the Job-Killing Health Care Law Bill” (H.R. 2) passed the House by a vote of 245-to-189. The president has said that he would veto any repeal bill.

On March 3, 2011, the House voted, 314-112, to repeal the Form 1099 reporting requirements (H.R. 4), which the Senate had already voted to repeal (in an unrelated air transportation bill passed on February 17). The repeal would increase the federal deficit, and the House and the Senate have proposed different methods of offsetting that increase. The 1099 repeal will be stalled until Congress resolves the difference. President Barack Obama also favors the 1099 repeal but has not proposed a funding method.

Waivers. As of March 10, 2011, HHS has provided annual limit waivers to more than 1,000 organizations covering more than 2.6 million employees under Sec. 2711 of the Public Health Service Act (PHSA). The waivers include 423 self-insured employers.

Hearings, webcasts, teleconferences, comments, swear words. I don’t think it’s possible to count all these, so let’s just leave it at . . . A LOT.

What have I missed? It’s inevitable this list is incomplete. Let me know the ACA-related activity that you hold near and dear to your heart (or not) that I’ve missed.

U.S. wants brakes put on Virginia’s request for Supreme Court review of health reform case

“This case would make a poor vehicle to address the constitutionality of the Affordable Care Act’s minimum coverage provision.”

That is one of the arguments in the United States’ brief in opposition to the state of Virginia’s request to fast track its health care lawsuit to the Supreme Court. In case you forgot, the Virginia Attorney General filed a petition last month asking the Supreme Court to take Virginia’s case now, as opposed to waiting for the case to first be decided by the court of appeals (see Health reform rollercoaster on fast track to Supreme Court?).

Normal course of review. In addition to the “poor vehicle” argument quoted above (if you’re into detailed legal arguments, see below for an explanation of it), the U.S. argues in its brief that there’s no “basis for short-circuiting the normal course of appellate review.” The constitutionality of the minimum coverage provision is already under expedited review in three courts of appeals, including the Fourth Circuit, where these parties are set for oral argument on May 10. The provision does not take effect until 2014, so the Supreme Court has plenty of time to decide whether to grant review in the normal course, according to the brief.

The U.S. also points out that even if Virginia’s petition is granted, the case would not be heard until next Term (because Virginia did not seek expedition of its request for certiorari before judgment), so it’s possible that one of the other expedited appellate court cases could be heard next Term in the normal course. So, granting the petition would not necessarily result in significantly accelerating the Court’s review of the minimum coverage provision. And granting it would deny the Supreme Court the ability to view how the circuits ruled on the issue.

Considerable resources. The U.S. also rejects Virginia’s argument that it must spend considerable resources to meet requirements of the other provisions of the Affordable Care Act (ACA). “That petitioner must remain subject to those unchallenged provisions during the relatively short time necessary for orderly appellate review thus does not constitute an extraordinary circumstance warranting certiorari before judgment,” the brief states.

No extraordinary circumstances. The brief’s third argument is that this case does not resemble the handful of cases in which the Supreme Court granted review before judgment. In those cases, the Court “granted early review because allowing review to proceed in the normal course presented risks of extraordinary disruption and irreparable harm.”

Among the cases mentioned are Mistretta v. United States (federal sentencing guidelines), United States v. United Mine Workers (coal mine strike) and Youngstown Sheet & Tube Co. v. Sawyer (federal government’s seizure of the nation’s steel industry).

Unlike those cases, this case does not involve extraordinary circumstances that warrant the Court’s immediate intervention, the U.S. argues.

Poor vehicle. And finally, we reach the “poor vehicle” argument. The U.S. argues that Virginia lacks standing (in other words, doesn’t have the relevant rights) to bring a lawsuit challenging the minimum coverage provision. That’s because that provision applies only to individuals and imposes no duties on Virginia or any other state. The brief states the Supreme Court’s prior rulings indicate that a state cannot sue the federal government to protect its citizens against the operation of a federal statute.

Virginia’s basis for standing is the Virginia Health Care Freedom Act, a state statute enacted shortly before the ACA was signed into law. But the U.S. points out the district court acknowledged the statute was “declaratory” because it doesn’t grant Virginia any power of enforcement. The state has not shown the statute is anything other than an effort to create standing, according to the brief.

Thus, if the state of Virginia cannot overcome the threshold standing question, the Supreme Court might be prevented from reaching the merits of the case. And that, my friends, according to the U.S., makes this case a “poor vehicle” to address the minimum coverage provision.

Appellate courts move on health reform challenges

The 11th Circuit Court of Appeals, which will review a Florida district court's decision that the Patient Protection and Affordable Care Act (ACA) violates the Commerce Clause of the Constitution, has agreed to an accelerated briefing schedule in the case (State of Florida v. U.S. Dept. of HHS (11-11021-HH)). The court has required all briefs to be filed by May 25, which is even earlier than requested by the Justice Department.

The State of Florida also asked the appellate court to hear the case during the week of June 6 en banc, or by all ten appellate court judges, rather than by a three-judge panel, which is customary for a first argument on appeal. The appellate court has yet to rule on this request.

Virginia cases. Meanwhile, in 2010 two Virginia district courts ruled on the constitutionality of the ACA. One found it to be constitutional (Liberty University v. U.S., No 6:10-cv-00015-nkm); one found it to be unconstitutional (Commonwealth of Virginia v. Kathleen Sebelius (No. 3:10CV188-HEH). Oral argument on both those cases in front of the 4th Circuit is scheduled for May 10 (Virginia v. Kathleen Sebelius, No. 10-1014).

In February the State of Virginia requested that the Supreme Court go ahead and review Virginia v. Sebelius prior to the 4th Circuit's review. The Justice Department has now asked the High Court to deny that request and allow the 4th Circuit review to proceed. "Given the Court of Appeal's imminent consideration of this case, there is no basis for short-circuiting the normal course of appellate review by granting a writ of certiorari before judgment," the DOJ explained in its motion.

For a comprehensive analysis of the ACA, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

EBSA will host April forum on health plan automatic enrollment

The Department of Labor's Employee Benefits Security Administration (EBSA) has announced a public forum on April 8, 2011, on the implementation of the health plan automatic enrollment provisions of the Fair Labor Standards Act (FLSA) Sec. 18A, added by the Patient Protection and Affordable Care Act (ACA, P.L. 111-148).

FLSA Sec. 18A requires employers that have more than 200 full-time employees to automatically enroll new full-time employees in one of the employer's health benefits plans (subject to any waiting period authorized by law), and to continue the enrollment of current employees in the employer's health benefits plan. Sec.18A further requires adequate notice and the opportunity for an employee to opt out of any coverage in which the employee was automatically enrolled.

Note that the DOL has previously said that until regulations are issued (and effective), employers are not required to comply with FLSA Sec 18A. The agency intends to issue final regulations by 2014.

The forum will be held on April 8, 2011, 1:00 pm to 5:00pm (EST) at the U.S. Department of Labor, Frances Perkins Building, Room C-5521 (#4),

200 Constitution Avenue, N.W., Washington, DC 20210.

Individuals and organizations interested in attending are requested to register electronically by emailing their name, organization, title, email address and phone number to e-ORI@dol.gov (use "Health Plan Automatic Enrollment Forum" as the subject line of the e-mail). For more information, contact June Solonsky in the Office of Regulations and Interpretations, EBSA, (202) 693-8500.

For a comprehensive analysis of the ACA, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

Florida reform case: DOJ asks for "expedited review"

After informing District Court Judge Roger Vinson that it would appeal his ruling on the constitutionality of the Patient Protection and Affordable Care Act, the Justice Department filed an appeal with the 11th Circuit U.S. Court of Appeals on an "expedited basis," as requested by Mr. Vinson in his January 2011 ruling.

Rather than file the expedited appeal, the Justice Department first asked Mr. Vinson to "clarify" his original ruling. In response, Mr. Vinson issued a brief stay of his original order, pending the DOJ's motion for appeal.

The motion for expedition of appeal asks the court to "establish the following briefing schedule, with oral argument to follow on an expedited basis as determined by the Court:"

• Defendants' Opening Brief: due 4/18/2011,
• Plaintiffs' Response Brief: due 5/18/2011,
• Defendants' Reply Brief: due 6/1/2011.

According to the Justice Department, "expedition in this case is particularly warranted because of the district court's unprecedented severability ruling, which presents issues that the federal government has not previously addressed in appellate briefs and covers numerous provisions of the Act already in effect."

The appellate case is State of Florida v. United States Department of Health and Human Services, No 11-11021.

For a comprehensive analysis of the ACA, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

Massachusetts After Health Reform – Do Medical Bankruptcies Spell Trouble for the Rest of Us?

So, now that Massachusetts residents have had an individual mandate for health care since January 2008, how has that impacted their rate of medical bankruptcies, which were projected to fall? According to a clinical research study recently published in the American Journal of Medicine (Medical Bankruptcy in Massachusetts: Has Health Reform Made a Difference?), medical bankruptcies in that state rose by more than one third between 2007 and 2009. The number of state residents who were uninsured decreased by approximately half, from 10.4% in 2006, when the Massachusetts health care reform was passed, to 5.5% in 2008, when the plan was implemented, lower than any other state, according to the study, which quoted Census Bureau figures.


But, we probably shouldn’t worry, because the Massachusetts health plan bears little resemblance to the ACA, right? Not according to doctors David U. Himmelstein, Deborah Thorne, and Steffie Woolhandler, who conducted the study and published the results on March 8. They claim that Massachusetts’ health reform law “closely mirrors” the ACA, and that the state’s law increased access to health insurance for its citizens but failed to substantially upgrade existing coverage or reduce costs.

In fact, as attorney Charles K. (Chip) Kerby, Liberté Group LLC, Washington, D.C. pointed out in a recent webcast (Looking Ahead to the Health Insurance Exchanges: What You Need to Know Now), both the Massachusetts health plan and the ACA have individual and employer mandates, health care exchanges, and premium subsidies. The Massachusetts plan can give all of us a good idea for what state exchanges will look like in the future, Kerby says.

According to Himmelstein, Thorne, and Woolhandler, while the new Massachusetts health care system has increased coverage for many people who were previously uninsured, the new health coverage was insufficient to counteract the high cost of premiums and gaps in coverage consisting of such things as copayments, deductibles, and uncovered services, problems that were in place before the law was passed, and that continue to exist. This is why, perhaps, that most medical bankruptcies in general appear to affect middle-class families with health insurance, they said.

For example, they point out that, under the least expensive coverage available in the Massachusetts plan, it’s conceivable that an insured couple with an income exceeding 300% of the poverty level, which is the eligibility threshold for insurance subsidies, might only make $44,000, but might have to pay $20,512 in medical expenses, and this wouldn’t include uncovered services such as physical therapy, drugs, or home care. Adding to the problem, they contend, is the fact that many people have lost their jobs, either due to the recession, or because of illness. Also, health costs have risen sharply since the state’s health care reform law was enacted.

While the authors acknowledge that the recession may have had an impact on the number of bankruptcy filings, they argue that it doesn’t change the fact that Massachusetts Governor Deval Patrick’s statement that the new health care reform would mean that “. . .families are less likely to be forced into bankruptcy by medical costs” was perhaps overly optimistic.

However, the study’s authors are hopeful that the ACA can actually reduce the number of bankruptcies in the United States, and they point to Canada as an example of a nation with national health coverage, but with an apparently lower number of bankruptcies than we have in the U.S. To lower the chance of an increase in medical bankruptcies, they advise that the ACA will have to improve, not just expand, insurance to citizens, and will have to include better income support for the sick and their caregivers via improved disability insurance programs.

For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

Amended complaint filed Bryant v. Holder - but it's still flawed

The plaintiffs in Lt. Gov. Phil Bryant v. Eric Holder Jr. (Civ. Act No. 2:10-CV-76-KS-MTP), have filed an amended complaint, after the U.S. District Court for the Southern District of Mississippi issued a ruling, without prejudice, that they did not have standing to file suit. At this level, the plaintiffs only have to allege facts necessary for the suit to proceed, but it will be interesting in the coming weeks and months to hear them explain the specifics of what they've alleged.


The court held that they failed to plead exemptions to the penalty, failed to plead they’re above the income threshold, failed to show impending injury and failed to show they didn’t meet a religious exemption in the ACA. In the original complaint, the plaintiffs alleged injury from (1) having to purchase health insurance, (2) economic harm of a tax penalty if they don’t purchase health insurance, and (3) economic harm from having to rearrange their affairs in order to pay the penalty for not purchasing health insurance. These allegations were reiterated in the amended complaint.


The plaintiffs have now further alleged that they are “applicable individuals” under the ACA, are not incarcerated, that they do not meet the requirements for the ACA's religious exemption, and that they are not individuals who cannot afford coverage. The complaint further alleges that the ACA is causing them to ". . . currently experience fear, anxiety and emotional distress over their loss of medical privacy, . . .”


The plaintiffs are further arguing that the ACA's religious exemption violates the constitution by discriminating against various faiths because it would allow members of certain religions, ". . . who otherwise would be subject to the Individual Mandate to not comply with the mandate or be subject to any penalties for such noncompliance, while followers of other faiths (like the religious faiths of Petitioners) are subject to the Individual Mandate and to penalties for noncompliance.” But, don't other federal laws, such as the FMLA, already make allowances for members of certain religions if they have prohibitions against certain kinds of medical treatment? For example, in the recent First Circuit decision Tayag v. Lahey Clinic Hospital, Inc., No. 10-1169, (CA-1), January 27, 2011, the court pointed out that there is a "Christian Science exception" adopted by Congress, which extends FMLA protection for leave to those seeking care from religious institutions. That exception applies, however, only if the acceptance of standard medical care would be antithetical to a patient's religious beliefs. That is why one cannot expect to be given FMLA leave both for standard medical treatment and for religious nonmedical healing.



The plaintiffs add that the ACA will violate their right to privacy because the new law will require them to divulge confidential medical information to insurance companies as a result of entering into health insurance contracts in compliance with the ACA's individual mandate.



The complaint explains that some of the plaintiffs do not have health insurance, do not care to buy any, and don't want to reveal confidential medical information to any insurance company. This reason alone, they contend, would inspire them to contest the ACA's constitutionality.


One can't help wondering, what health information could they possibly not want to divulge if they see no reason to buy health insurance? Wouldn’t that mean they’re particularly healthy? At any rate, someone should probably advise the plaintiffs that any economic harm they might experience via the ACA's tax penalty if they don’t purchase health insurance or if they have to rearrange their affairs will pale in comparison with any medical bills they will have to pay if they incur a major illness or run into any kind of catastrophic medical situation.

For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

Form 1099 Repeal has support, but lawmakers disagree on payment method

It would appear that lawmakers in Washington are in agreement on the repeal of new Form 1099 reporting requirements, but can't agree on how to accomplish that. On March 3, the House passed the "Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011" (H.R. 4), which is designed to repeal the expansion of information reporting requirements contained in the section of the ACA that required businesses to file Form 1099 for payments of expenses of $600 or more.

Rep. Daniel Lungren (R-CA), who introduced the bill, has stated that it would "finally provide assurance to small business owners that they will not be subject to this unfair and unnecessary tax reporting burden." The repeal of the expanded reporting requirements has received wide bipartisan support, but many lawmakers are less than pleased with this particular bill, and it is possible that it won't pass the Senate.

According to House Ways and Means Ranking Committee Chairman Sander Levin (D-MI), "the issue is not repeal of this provision of 1099. We on this side not only favor repeal but all of us who were here last session voted for it. We voted to repeal it. It failed because only two people on the then-minority side voted for the bill," adding that the "effort to repeal was blocked on the Republican side last session."

Levin said middle income families would see a tax increase if the bill were passed, explaining that, "It increases how much they will have to pay to the IRS if their income increases over what was projected when they would have obtained health insurance."

The Obama Administration added its two cents in a White House Statement of Administration Policy, stating that, "The Administration strongly opposes the House’s offset to pay for this repeal in H.R. 4," and, "Specifically, H.R. 4 would result in tax increases on certain middle-class families that incur unexpected tax liabilities, in many cases totaling thousands of dollars, notwithstanding that they followed the rules."

On the other hand, the Administration concedes that "the burden created on businesses by the new information reporting requirement . . . as included in Section 6041 of the Internal Revenue Code as modified by Section 9006 of the Affordable Care Act, is too great."

For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

Obama Administration Gets Seven Days To Appeal Repeal Ruling

Phew! Now those implementing the provisions of the Affordable Care Act can breathe easier—Florida Judge Roger Vinson has delayed his order repealing the entire law and generously granted the Administration of Barack Obama seven days (count them) to appeal his ruling before it takes effect. Assuming the appeal is made, implementation of the law will continue until the case is resolved.

You may recall that Mr. Vinson made his ruling in response to claims made by Florida and 25 other states. In late January, Mr. Vinson issued his original order. Subsequently, the Obama Administration asked Mr. Vinson for a clarification as to whether he intended that the federal government cease implementing the law. In issuing the delay, Mr. Vinson “clarified” that his original order indicated the law could not be implemented.

In a sharp rebuke, Mr. Vinson said that he had not expected that the Administration “would effectively ignore the order and declaratory judgment for two-and-one-half weeks, continue to implement the Act, and only then file a belated motion to ‘clarify.’”

Nonetheless, Mr. Vinson said, “I agree that it would indeed be difficult to enjoin and halt the Act’s implementation while the case is pending appeal. It would be extremely disruptive and cause significant uncertainty.”

Mr. Vinson then concluded, “As both sides have repeatedly emphasized throughout this case, the Act seeks to comprehensively reform and regulate more than one-sixth of the national economy. It does so via several hundred statutory provisions and thousands of regulations that put myriad obligations and responsibilities on individuals, employers, and the states. It has generated considerable uncertainty while the constitutionality of the Act is being litigated in the courts. The sooner this issue is finally decided by the Supreme Court, the better off the entire nation will be. And yet, it has been more than one month from the entry of my order and judgment and still the defendants have not filed their notice of appeal.”

Thus, Mr. Vinson conditioned his delay upon the Administration filing its “anticipated appeal within seven (7) calendar days of this order and seeking an expedited appellate review, either in the Court of Appeals or with the Supreme Court.”

Some of the states involved in the case had delayed beginning implementation of portions of the law. After Mr. Vinson’s stay, at least one of those states, Alaska, finally decided it had better begin the process. In delaying implmentation, Alaska lost its opportunity to get $1 million in federal health care assistance. Money talks both ways.

For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

Need For Health Reform Greater Than Ever

Two new reports from the Agency for Healthcare Research and Quality, the National Healthcare Quality Report and the National Healthcare Disparities Report, seem to bolster the need for provisions of the Patient Protection and Affordable Care Act. These reports found that health care quality and access are lower than is desirable, that access to and disparities in care are not improving and some are worsening.

In the report summary, the AHRQ wrote that “our analyses indicate that health care quality in America is suboptimal. The gap between best possible care and that which is routinely delivered remains substantial across the Nation.”

Access to health care services and disparities in care are especially connected to socioeconomic status, race, and ethnicity. For example, low income individuals overwhelmingly experienced worse quality of care (in 82% of measures) and access to care for all care measures than did high income; followed by Hispanics (in three-fifths of measures for quality of care and four-fifths of measures for access to care) compared with nonHispanic whites; and blacks (in two-fifths of measures for quality of care) compared with whites.

But it isn’t just the disadvantaged uninsured that experienced lower than desired quality and access to care—on average, individuals received recommended preventive services two-thirds of the time and appropriate acute care services and recommended chronic disease management services three-quarters of the time. Also, individuals reported barriers to care 20% of the time with 60% of individuals indicating that their “usual” medical provider hhad no office hours on evenings or weekends.

The AHRQ reports also found that individuals with private non-group health insurance are nearly three times as likely as those with private, employer-sponsored health insurance to pay high premiums and out-of-pocket medical expenses.

Adults age 18 through 44 and Hispanics are least likely among all age and ethnic groups to have health insurance. Of particular note is that the percentage of people with health insurance worsened for middle-income individuals. In the current, depressed economic climate, middle-income individuals are increasingly vulnerable to loss of health insurance.

“We need to improve access to care, reduce disparities, and accelerate the pace of quality improvement, especially in the areas of preventive care, chronic disease management, and safety,” the AHRQ concluded. The ACA is attempting to do just that, if only we will work with it.

For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.