Freedom Benefits Universal Health Insurance Blog

There is a serious timing problem here with the start of the state-run health insurance exchanges.

The Obama administration forged ahead with health care reforms on Wednesday, announcing a November 16 deadline for state governments to submit proposals showing how they intend to operate health insurance exchanges in 2014.

The Department of Health and Human Services released a detailed blueprint of the legal and operational requirements states must meet in their proposals if they expect to win federal approval to begin operating regulated insurance markets, in whole or in part, by January 1, 2014, when the 2010 law is scheduled to come into full force.

President Barack Obama’s embattled Patient Protection and Affordable Care Act calls on states to establish exchanges that would offer federally subsidized health coverage to an estimated 16 million people who currently do not have health insurance. The exchanges would allow consumers to purchase their insurance from an easy-to-understand menu of competing plans, at premiums set on a sliding scale according to the buyer’s income.

But progress at the state level has been uneven, with many states waiting to see how health care reform fares in a Supreme Court ruling anticipated in June that could overturn the law. The main case before the court was brought by 26 states that believe the reforms exceed the federal government’s constitutional powers.

Health care reform also faces a political test in the November 6 election, which falls 10 days ahead of the new filing deadline for health care exchanges. Obama’s re-election bid is being challenged by presumptive Republican presidential nominee Mitt Romney, who has vowed to repeal health care reform if elected.

HHS Secretary Kathleen Sebelius told reporters that 34 states, including some that want health care reform overturned, and the District of Columbia now have accepted federal grant money to help establish the insurance exchanges.

Obama administration: Proposals for exchanges due November 16 – Articles – Employee Benefit Adviser

Virtually everyone admits that the 2010 federal health reform law did little to control health care costs and in fact all reporting authorities indicate that the new law will significantly increase our nation’s spending on health care for the remainder of the decade. Some view that as a necessary first step toward nationalized government control of the system. The first actual plan to control health care costs and spending is pending approval in Massachusetts. This passage comes form a  Wall Street Journal Online article published 5/4/2012: 

No state, or initiative of the federal government, has implemented such a broad effort, said Paul Ginsburg, president of the Center for Studying Health System Change, and "there will be a lot of attention to what Massachusetts is doing."

The rate of growth in spending on health—initially set to parallel the growth of the state’s overall economy as measured by its gross domestic product—would be enforced by a regulatory authority. Health-care providers and health plans that the regulator found to be pushing spending above the goal would have to submit improvement plans to bring expenses down. Institutions would still be able to challenge their findings by showing extenuating circumstances, such as necessary improvements to the system, that kept expenses up. The authority, which will include government, industry and consumer representatives, would ultimately have the power to force them to renegotiate their contracts.

The bill from House Speaker Robert DeLeo and state Rep. Steven Walsh, co-chairman of the legislature’s Joint Committee on Health Care Financing—and two key Democrats in a Democratic-controlled legislature—would take another major step by pushing changes in how insurers pay hospitals and other health-care providers, moving them away from the traditional method of fees for each service. It would require health plans to give greater price transparency to consumers, so people would know how much they would pay out of their pockets for particular medical services.

If the House bill becomes law, the approach will likely face serious challenges, health economists said. "It’s the right idea" to focus on total spending, a measure that incorporates not just how much is charged for medical services, but how often consumers get medical care, said Gerard Anderson, a professor at Johns Hopkins University. But "it’s going to be exceedingly difficult at a state level" to implement, partly because of limits on the state’s authority, which would require a waiver from the federal Medicare program, but also because it’s very difficult to force cutbacks on consumers’ use of medical services, traditionally a key driver of health spending.

"That’s rationing, and nobody wants that," he said.

Sure, obstacles exist on every angle. We’re not even really sure we want it. But it will really work to compress our spending in the health care field if we really decide to get behind and promote this approach.

Personally, I think it’s a great public policy proposal without a prayer of chance of working out as envisioned. Actual cost containment reforms – when they finally become effective – will be a lot messier and convoluted.

source: WSJ Professional Article – WSJ.com

HSA contribution limits for 2013:

• Individuals (self-only coverage) – $3,250 (up $150 from 2012)
• Family coverage – $6,450 (up $200 from 2012)

Minimum required policy deductibles in 2013:

• $1,250 for self-only coverage
• $2,500 for family coverage

Out-of-pocket* maximum for 2013:

$6,250 for self-only coverage

$12,500 for family coverage

(* includes deductibles, co-payments, and other amounts, but not premiums)

For more information please see www.healthsavingsaccount-hsa.com

Here at Freedom Benefits we have been promoting small business defined contribution health plans for more than 25 years and sometimes its been a lonely journey. This month the nation’s largest small business advocacy group joined in the campaign.

This excerpt comes from Zane Benefits, another promoter of DC plans:

On its Top 5 Website, the National Federation of Independent Business (NFIB) has officially endorsed defined contribution health benefits as a "common sense" solution for small business health insurance.

In the video below, NFIB Top 5 host Amanda Austin discusses proposals to bring down healthcare costs for small businesses that include providing a "new defined contribution option that would let business owners contribute a simple, pre-tax dollar amount to employees, who could then choose their own health plan."

In the official video (see below), the NFIB describes the defined contribution solution as follows:

"What if you as a business owner could contribute a simple dollar amount pre-tax to your employees so they could choose to purchase a health plan that is best suited for their needs."

"A win-win for the employer and the employee."

"And, you wouldn’t have to deal with administering the plan and your employees would not be stuck with only one health insurance option."

"Sounds like a good deal right? We agree."

The NFIB is the nation’s leading small business association with more than 300,000 members and representation in all 50 states and D.C.  This an exciting endorsement in the small business community for defined contribution health benefits!

There is still a long way to go before defined contributions become the default design for small business health plans. Accountants, agents and advisers are largely unaware of the advantages and operating details of defined contribution plans. We expect to continue to provide education and administrative support for the most popular and innovative types of health benefit plans including Health Reimbursement Arrangements,  Flexible Spending Accounts, Section 125 cafeteria plans and Health Savings Accounts.

Perhaps I shouldn’t be at all surprised when reminded how our socio-political system has an amazing ability to make simple things complicated. Consider this discussion in “HealthCare Reforms”:

“Can the Individual Mandate clause be really dissolved without seriously harming the rest of the law? If yes, then what can be the possible ramifications of such a Supreme Court ruling?

A group of 103 economists filed for an amicus brief that insists that the Individual mandate clause is so inextricably intertwined with the rest of the Affordable Care Act (ACA), that it cannot possibly be severed from the ACA. Our curiosity piqued, our team at hCentive tries to envision a U.S. health industry without an Individual mandate directive.”

I thought that it was obvious that the individual insurance mandate could not be severed from the rest of the law (with or without 103 economists also saying so) without collapsing the other key features. Sure it would be possible to salvage some provisions but the real impact will be destroyed without the individual mandate.  The only surprise at this point is the amount of ongoing discussion and disagreement on the point. Until now, I’ve assumed that those taking a different view on severability simply do not understand the basics of insurance economics, actuarial science or legislative drafting principles. Taking the law at face value we could presume that the absence of a severability clause (that would normally have been included if it was feasible) leads most to conclude that if the mandate fails the constitutionality test, the entire law will be repealed and, in effect, sent back to Congress to reconsider its approach to health reform. That was the intent supported by precedent and economics; there is no need to reinvent our entire legislative development system over one controversial provision of the  law in question.