Obama offers health plan in advance of bipartisan summit

President Obama offered a health reform plan today that attempts to bridge the differences between bills already passed by the House and Senate. The plan will serve as a starting point for discussion at Thursday's bipartisan health summit.

This is the most specific proposal yet from the president, who has previously outlined general goals but left the legislative details to Congress.

Like both the House and Senate bills, the Obama plan would prohibit insurance companies from denying or cancelling coverage based on health problems, would expand Medicaid to cover more low-income workers and families, would offer premium subsidies to make insurance affordable for moderate-income families, would require individuals to maintain insurance coverage, and would take some steps to rein in health inflation.

The Obama plan doesn't include some key provisions from the CWA-endorsed house bill – among missing are a public health insurance option, a national health insurance exchange rather than state-level ones, and a "millionaire's tax." However, it does make several improvements on the flawed Senate bill:

• Although the Obama plan retains a tax on high-premium health plans, it has adopted the improvements negotiated with labor leaders and goes even further. The threshold for the tax would now be a premium of $27,500 for families and $10,200 for individuals, compared to $23,000/$8,500 in the Senate bill and $24,000/$8,900 in the agreement with labor leaders. That means the tax would hit far fewer working families. The agreement with labor delayed the tax until 2018 for collectively-bargained plans; the latest Obama proposal delays the tax until 2018 for everyone.
• The Obama plan junks the heavily-criticized special treatment for Nebraska's Medicaid costs, but adds more federal help to states to pay for Medicaid expansion (similar to the House bill).
• Following the House bill, the Obama plan closes the coverage gap – the so-called "donut hole" – for seniors on Medicare, meaning thousands of dollars a year in prescription savings to millions of seniors.
• While it doesn't require employers to offer coverage, as the House bill does, the Obama plan increases the penalties on companies whose workers end up on publicly-subsidized plans, to $2,000 per worker, up from $750 in the Senate bill.
• It adds new federal oversight on insurance companies that seek excessive premium hikes, a provision not in either the House or Senate bills. The proposal is in response to recent huge [increases sought by insurers such as Anthem Blue Cross], which is trying to raise individual premiums in California by as much as 39%.
• It adds new provisions to curb abuse and fraud, including some taken from three different Republican bills.

For more information, you can read the 11-page full text of the presidents' plan and see the White House's answers to what-does-it-mean-for-me questions. Also, the Wonk Room blog has a chart comparing Obama proposal to the Senate and House bills.

– 02/22/10

Benefits tax not just a union problem, study shows

Unions have led the fight against the proposed "Cadillac tax" on high-cost health benefits. And when union leaders, including CWA President Larry Cohen, negotiated adjustments in the tax with the White House opponents of health reform depicted the agreed-upon changes as a sweetheart deal for unions.

For example, Fox News said, "Democratic leaders are once again drawing fire from their critics for extending special treatment to an interest group in exchange for its support of the bill. The latest deal was struck Thursday among the White House, Congress and union leaders over the proposed tax on high-value 'Cadillac' health insurance plans."

As with many issues involving health reform, the reality doesn't match the hype.

The so-called "Cadillac tax" as included in the Senate-passed health reform bill would hit millions of workers, 80 percent of whom are not represented by unions, according to a study released today by the Center for Labor Research and Education at the University of California, Berkeley. And under the proposed amendment negotiated by the union leaders with the White House, 83 percent of those affected would be non-union, the study estimates.

Moreover, most of the savings from the union-White House agreement – 71% – would go to non-union workers, according to the study.

Estimates were based primarily on the Kaiser Family Foundation annual survey of employers about health costs. The employers not only report on costs and benefits, but indicate whether their employees are covered by union contracts.

The authors are Ken Jacobs, William H. Dow, Dave Graham-Squire and Laurel Tan. Jacobs is chair of the Center for Labor Research and Education. Dow, a health economist, was a senior economist for President George W. Bush’s Council of Economic Advisers.

– 02/18/10

Health reform = up to 400,000 jobs a year, study says

Health reform, when fully implemented, will create 250,000 to 400,000 jobs a year, according to a new study by David Cutler of Harvard University and the Center for American Progress, and Neeraj Sood, of the health policy center at the University of Southern California.

The new study draws together research that Cutler and Sood had done separately.

Sood and two co-authors had previously analyzed data from 38 industries over 19 years to show that increases in health premiums result in a loss (or slower growth) in jobs. On the contrary, he and his colleagues concluded, slowing health care cost growth generates jobs. (To show that the effect they found was related to health costs and not to other industry factors, Sood and colleagues compared U.S. industries to those in Canada, where the government pays health costs.)

Cutler, along with health economics experts at the Commonwealth Fund, had done previous research estimating the savings from health reform, and predicted it would slow the growth of premiums by .75 to 1.5 percentage points annually. Without health reform, they projected, premiums will rise 71 percent by 2019, but reform could chop 8.4 to 12.3 percentage points off the growth.

Putting the two studies together generates the conclusion: "We estimate that health care reform that reduces premium growth will add between 250,000 and 400,000 jobs annually over the next decade."

– 02/17/10

Big insurers’ profits jump 56%, topping record $12 billion

The five top U.S. health insurance companies rolled up a record $12.2 billion in profits in 2009 – up 56% from 2008, according to a recent report from Health Care for America Now!, a reform coalition of which CWA is a member.

"The outsize earnings are a vivid reminder that without comprehensive national health care reform the gatekeepers of our broken health insurance system always will put the short-term interests of Wall Street before the needs of millions of patients and a national economy plagued by joblessness," the report concludes.

One of those insurers, WellPoint, has recently come under fire for premium hikes of up to 39%. The other four largest insurers are UnitedHealth, Aetna, Humana and Cigna. All but Aetna showed sharply higher profits in 2009. HCAN compiled the earnings data from insurance company filings with the federal Securities and Exchange Commission.

At the same time the insurers were fattening their balance sheets, millions of Americans lost coverage, the report says. The top five insurance companies reported 2.7 million less Americans covered by private coverage, although the number they covered through government programs, such as Medicare and Medicaid, rose by 688,000.

In part, the report explains, fewer Americans were covered because so many lost their insurance when they lost jobs. "But many others – exact tallies are trade secrets – were victims of an industry practice called purging," the report continues, "in which sharply higher premiums push individuals with health problems or employers with sicker or older workforces away from coverage."

– 02/16/10

Voters tell Washington: Keep trying on health reform

By a nearly two-to-one margin, voters want both major political parties to keep trying to pass comprehensive health reform, according to a new Washington Post-ABC News poll.

In the poll, 63% said lawmakers should "keep trying to pass a comprehensive health-care reform plan," while only 34% said Congress should "give up." Voters were evenly split on whether President Obama was doing the right amount or not enough to reach out to Republicans, but, by a two-to-one margin, said strongly that Republicans were not doing enough to compromise with the president.

Meanwhile, the president is making another effort to bring the Republicans and Democrats together. President Obama has called a bipartisan health summit for Feb. 25. In discussing his plans, the president said that he was continuing to work toward the goals of controlling costs, ending insurance company abuses and making sure insurance is available and affordable for people. He's not willing to give up on those goals, he said, but will listen to all ideas about the best way to achieve them:

"When I was in Baltimore talking to the House Republicans, they indicated, we can accomplish some of these goals at no cost. And I said, great, let me see it. And I have no interest in doing something that's more expensive and harder to accomplish if somebody else has an easier way to do it.

"So I'm going to be starting from scratch in the sense that I will be open to any ideas that help promote these goals. What I will not do, what I don't think makes sense and I don't think the American people want to see, would be another year of partisan wrangling around these issues; another six months or eight months or nine months worth of hearings in every single committee in the House and the Senate in which there's a lot of posturing. Let's get the relevant parties together; let's put the best ideas on the table. My hope is that we can find enough overlap that we can say this is the right way to move forward, even if I don't get every single thing that I want.

"But here's the point that I made to [Republican Congressional leaders]: Bipartisanship can't be that I agree to all the things that they believe in or want, and they agree to none of the things I believe in and want."

– 02/11/10

A 39% premium hike: a reminder of why we need health reform

We've been understandably focused on the details of health reform legislation: Will our benefits get taxed? Will there be a public option? What will premiums be? Who will be eligible for coverage? Of course, we need to think about these questions — it's important to get health reform right. But it's also worth remembering why we need health reform in the first place.

WellPoint, the country's largest health insurer, is socking individual members in California with premium increases of 30% to 39%, the Los Angeles Times reported. And as if that annual rate hike is not enough, the insurer (doing business in California as Anthem Blue Cross), says it plans to bump premiums up more often than once a year.

WellPoint said it needed the premium increase to cover rising medical costs. But the company itself says that its medical costs increased 8.9% last year — a large amount, to be sure, but hardly 39%. Clearly, the premium increases leave a generous margin for profit and for executive pay.

In the same announcement in which it said costs were going up 8.9%, WellPoint told Wall Street that it rang up $4.7 billion in profit in 2009, including $2.7 billion in the fourth quarter alone — nearly double the profit from the previous year's fourth quarter. Its CEO pockets nearly $10 million a year in pay, benefits and stock options.

"The Company continues to price its business so that expected premium yield exceeds total cost trend, where total cost trend includes medical costs and selling, general and administrative ("SG&A") expense," WellPoint said in the announcement. Translation: We're going to keep raising premiums more than medical costs plus administrative expense — which, by the way, is 17% of the premium dollar — so profits will continue to go up.

Also contributing to the size of the increases is the way insurance group customers to set rates, as explained by The New Republic's health blogger, Jonathan Cohn. Insurers companies create risk pools by grouping people by geography and/or by demographic factors such as age and gender. As the members in one particular pool age, they get more care, and premiums for that group go up faster. That causes young and healthy members to drop coverage, which adds to the number of uninsured and pushes premiums up even faster for those who remain.

WellPoint's hefty increases have caught the attention of Congress and of Kathleen Sebelius, the Secretary of Health and Human Services. But while federal officials can pressure WellPoint, they're limited in what they can do to head off rate-gouging.

Unless health reform becomes law.

How could health reform help? Although they differ in details, bills passed by the House and Senate would:

• Make for fairer risk pooling by combining large numbers of people into insurance exchanges (a national exchange in the House bill, state exchanges in the Senate bill). The bills would prohibit insurers from charging more for women (now a routine practice) and limit the amount that insurers can charge older enrollees relative to younger members.
• Establish minimum percentages of premium that insurers have to spend on care (85% in the House bill, 85% for large employers and 80% for small employers and individuals in the Senate bill). WellPoint is currently at 84.8% -- meaning under the House bill, it would have to cut premiums by a little, not raise them 39%.
• Set up a process to review the justification for premium increases before they could go into effect.
• Also, the House bill would create a public health insurance plan that people could choose if private insurers raised rates too much. The resulting competition should keep private premiums lower.

– 02/10/10

Coverage denied or cancelled: a reminder of why we need health reform

We've been understandably focused on the details of health reform legislation: Will our benefits get taxed? Will there be a public option? What will premiums be? Who will be eligible for coverage? Of course, we need to think about these questions - it's important to get health reform right. But it's also worth remembering why we need health reform in the first place.

Rashidam Shakirova waited for an insurance company to approve her enrollment - and while she was waiting, delayed treatment for a lump she felt in her breast. Finally, after several months she hired a lawyer, and the insurer began coverage. By then, however, the cancer has spread, and although she received treatment, doctors think she has less than five years to live, the New York Times reported.

"If I had gotten it when I was supposed to, I would have gone back to work and felt fine and my life would not have been broken," she told the Times. "I'm paying taxes. I'm not here for charity. I want to work; I want to contribute and be functional in society."

For other people, the problem isn't getting coverage from an insurance company. The problem is keeping the coverage they have.

Jennifer Latham, a Colorado preschool teacher, suffered a brain injury and multiple fractures when her car was slammed by a suspect fleeing police. She spent a month in the hospital and a month in a rehab center. But soon after she got home, she received a letter from her insurance company, saying they had cancelled her claim and wouldn't pay her $185,000 in medical bills, according to an article in the Boulder Daily Camera.

The insurer said it was justified in cancelling because when she applied for the insurance, she hadn't told the company about a previous emergency room treatment for shortness of breath.

Coverage denied, coverage delayed, coverage withdrawn - all part of our broken system.

How could health reform help? Although they differ in details, bills passed by the House and Senate would:

• Prohibit insurance companies from denying coverage based on pre-existing medical conditions.
• Prohibit insurance companies from cancelling policies when people get sick.
• In addition, the Senate bill would penalize employers who require a waiting period for coverage of more than 60 days - a provision that would have gotten Rashidam Shakirova coverage about the time she first felt the lump in her breast.

Getting rid of denying coverage for pre-existing conditions is popular; Republicans as well as Democrats say they support it. Some have suggested, given the political complexity of passing comprehensive reform legislation, just passing a law requiring insurance companies to sell policies to anyone who wants one. But passing small, popular pieces of reform without a comprehensive package creates more problems.

In this case, simply preventing insurers from denying coverage would mean that people could go uninsured until they get sick, then quickly buy a policy. Like selling homeowners insurance to people whose houses are already on fire, that would drive up premiums for everyone. So the comprehensive reform bills say everyone has to buy health insurance.

What about people who can't afford the full cost of coverage? To make it possible for everyone to buy coverage, the comprehensive bills set up a system of sliding-scale subsidies for moderate-income people.

– 02/08/10

Costs continue to soar: a reminder of why we need health reform

We've been understandably focused on the details of health reform legislation: Will our benefits get taxed? Will there be a public option? What will premiums be? Who will be eligible for coverage? Of course, we need to think about these questions - it's important to get health reform right. But it's also worth remembering why we need health reform in the first place.

We've got two fresh reminders of how out-of-control health costs are stretching the resources of working families, employers and government.

• Health insurance costs are primed for another double-digit increase, according to a recent survey of insurers by a benefits adviser, Buck Consultants. In responses from more than 100 insurers and HMOs covering 78 million people, Buck projects increases in premiums for 2010 of 11.1% for PPOs and 10.3% for HMOs. "The double-digit cost increases that Buck Consultants expect are over twice the rate of general inflation in the U.S. expected in 2010. Thus, the marketplace isn't nearly moderating health costs on its own without the influence of health reform," writes health blogger Jane Sarasohn-Kahn. And cost escalation isn't exactly news. From 1999 to 2009, the average cost of employer-provided family coverage has jumped from $5,701 to $13,375, according to the Kaiser Family Foundation. And the share of that premium paid by workers has more than doubled as well - from $1,543 to $3,515.
• Governments and the economy in general are feeling the pain, just as families and employers are. A new report by Medicare's Office of the Actuary, released today, finds that health spending grew to consume a record 17.3% of the economy last year, up from 16.2% in 2008. A nearly half of that $2.5 billion in health spending comes from the federal government. "The report appears likely to fuel further debate about the health bills now stalled in Congress," the Los Angeles Times said. "In the absence of change, the report raises a grim prospect for the country - a healthcare system consuming an ever greater and potentially unsustainable share of the economy even as private health coverage lags." And with the federal deficit ballooning, "the big drivers are mandatory spending on Medicare and Medicaid - huge, rapidly growing costs that are outside the purview of Obama's (or any president's) annual recommendations for discretionary spending," the Wall Street Journal's Health Blog commented.

How could health reform help? Although they differ in details (such as subsidy levels), bills passed by the House and Senate would:

• Help moderate-income families buying their own insurance with premium subsidies.
• Help small employers, who often can't afford coverage, with tax credits if they buy health insurance for workers.
• Allow those buying their own insurance to join in an exchange, bringing down average costs by pooling risk.
• Bring down government costs by phasing down subsidies to insurance companies providing Medicare coverage and by slowing future growth of payments to hospitals, medical equipments companies and providers. This would save hundreds of millions of dollars, but would not change Medicare benefits or reduce payments to doctors.
• Develop new payment models to control future costs by experimenting with recognizing "accountable care organizations" that provide good quality at reduced cost and "bundled payments" to hospitals and doctors which would reward lower-cost care.
• Since Medicare has been a leader in developing new payment models in the past, private insurers are likely to follow suit with any changes that help control costs. This would help control costs for companies and those who get insurance from employers.
• The Senate bill would create an independent board to take stronger action to control costs in Medicare.
• The House bill would require the government to negotiate lower drug prices.

– 02/04/10

Health reform efforts continue, but quietly

Quiet talks continue in Washington on how to move health reform forward, as the Los Angeles Times reported.

"We're still inside the five-yard line," White House spokesman Robert Gibbs said Sunday, as reported by the Wall Street Journal.

Similarly, CWA and its allies are deciding how best to make reform a reality. Medical and consumer groups also are working to find a way to fix the health system.

On Capitol Hill, "behind the scenes party leaders have nearly settled on a strategy to salvage the massive legislation," the L.A. Times said. "They are meeting almost daily to plot legislative moves while gently persuading skittish rank-and-file lawmakers to back a sweeping bill."

Over the next few weeks, the newspaper said, Democratic leaders may put together a plan to have the House of Representatives pass the Senate's version of the health reform bill, and, more or less simultaneously, have both Houses agree on a series of fixes to the Senate bill.

CWA was among the backers of a new Coalition of Health Care Coalitions announced last week.  Other participants include Health Care for America Now, the American College of Cardiology and Families USA. CWA and its partners will continue to seek meaningful reform of the health system without a tax and benefits which would punish working families.

– 02/01/10

Would benefits tax really save money? Study suggests not

Supporters of the tax on high-premium health benefits said it would lower health costs.  Here's how it's supposed to work, they said: Employers will cut benefits to avoid the tax, meaning higher out-of-pocket costs for workers; to avoid paying those costs, the workers would cut out unnecessary doctor visits, saving costs for the system.

A new study in this week's New England Journal of Medicine adds more evidence that the theory of cost savings through higher out-of-pocket costs isn't true.

The study tracks Medicare health plans, such as HMOs, that increased the co-pay for doctor visits.  It compared records of more than 800,000 patients - some in health plans that raised co-pays, some in similar plans that kept co-pays level. Those facing higher co-pays did, in fact, make fewer doctor visits - but they ended up needing more hospital care, driving overall costs up.

By raising co-payments, the study estimated, health insurers collected an additional $5,950 in co-pays from each 100 patients, and fewer doctor visits saved another $1,200 for the insurance company, for a total apparent saving of $7,150.  But those 100 patients, on average, generated an extra two hospital admissions and 13 days of hospital care, for an added cost of $24,000 - more than three times as much as was "saved."

The results are consistent with other research showing that higher co-payments can lead to more hospitalizations when patients defer needed preventive care.

Why does this matter? As Congress considers how to move forward with health reform, the Senate's health reform bill would tax high-premium benefits, the House's bill wouldn't.  Some are suggesting the House should pass the Senate's bill.  CWA thinks that's the wrong way to go because the benefits tax is misguided policy.

– 01/29/10