Tag Archives: Obama Administration

Employer Responsibilities Under The Affordable Care Act

The Affordable Care Act does not require businesses to provide health benefits to their workers, but larger employers face penalties if they don’t make affordable coverage available. The Obama Administration announced “transition relief” under which the penalties will go into effect in 2015 for employers with 100 or more employees and in 2016 for employers with 50 or more workers. This simple flowchart illustrates how those employer responsibilities work.

To view the infographic, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

Medicare Patients Are in for a Surprise

Imagine you’re a Medicare patient, and you go to your doctor for an ultrasound of your heart one month. Medicare pays your doctor’s office $189, and you pay about 20 percent of that bill as a co-payment.

Then, the next month, your doctor’s practice has been bought by the local hospital. You go to the same building and get the same test from the same doctor, but suddenly the price has shot up to $453, as has your share of the bill.

Patients around the country are getting that unpleasant surprise, as more and more doctors’ offices are being bought by hospitals. Medicare, the government health insurance program for those 65 and over or the disabled, pays one price to independent doctors and another to doctors who work for large health systems — even if they are performing the exact same service in the exact same place.

This week, the Obama administration recommended a change to eliminate much of that gap. Despite expected protests from hospitals and doctors, the idea has a chance of being adopted because it would yield huge savings for Medicare and patients.

In the dry language of the annual budget, the White House asks Congress to “encourage efficient care by improving incentives to provide care in the most appropriate ambulatory setting.” In normal English, that means reducing financial incentives that are causing many doctors to sell their practices to hospitals just to take advantage of extra revenue.

The heart doctors are a great example. In 2009, the federal government cut back on what it paid to cardiologists in private practice who offered certain tests to their patients. Medicare determined that the tests, which made up about 30 percent of a typical cardiologist’s revenue, cost more than was justified, and there was evidence that some doctors were overusing them. Suddenly, Medicare paid about a third less than it had before.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

Spending Growth Dropped to Historical Low

The announcement that the rate of healthcare spending growth dropped to a historic low in 2013 is presented as a positive development for the long-term fiscal health of the country and welcome news for the Obama Administration. Many outlets are reporting that the Affordable Care Act contributed to the continued slowdown. For instance, USA Today (12/4, Ungar, O’Donnell) reports that on Wednesday, the Centers for Medicare and Medicaid Services announced that “health care spending in the U.S. grew last year at the lowest rate ever recorded,” and that it was “due in part to the Affordable Care Act.”

The Los Angeles Times (12/4, Levey) reports that total spending on healthcare “increased just 3.6% last year to $2.9 trillion, according to the study from independent analysts at the Department of Health and Human Services.” That rate is down from 4.1 percent in 2012 “and way down from 2002, when health spending increased by nearly 10%.”

The Washington Post (12/3, Millman) reports in its “Wonkblog” that most healthcare services saw a lower rate of spending growth in 2013 compared to 2012. Most of the $2.9 trillion the United States spent on healthcare went toward “hospital care ($936.9 billion), physicians and clinical services ($586.7 billion), and prescription drugs ($271.1 billion).”

The AP (12/4, Alonso-Zaldivar) reports the study found that healthcare spending in 2013 also “remained stable as a share of the total U.S. economy, accounting for 17.4 percent.” Spending growth slowed “in several key areas, including hospital care, doctors’ services, Medicare spending, private health insurance, and out-of-pocket spending by consumers.”

Robert Pear of the New York Times (12/3, Pear, Subscription Publication) says that the Administration believes that “among factors restraining the growth of health spending” are “new limits on Medicare payments…automatic across-the-board cuts in federal spending required by” the ACA, and “the proliferation of high-deductible health insurance plans.” National Journal (12/4, Subscription Publication) has an analysis titled, “Obamacare And The Weak Economy Are Slowing Health Care Spending Growth.” National Journal’s Sam Baker writes that “much of the slowed growth rate is owing to the sluggish economy,” although Baker adds that the ACA is “also playing a part.”

Steve Teske of Bloomberg BNA (12/4) says “there has been widespread disagreement about the reasons for the slowdown,” and while “some have argued ACA provisions have contributed to it…others have claimed the slow economy is the biggest factor.” However, the Huffington Post (12/3, Young) reported that “spending is projected go up faster this year and in the near future,” and that it will be “driven in part by…new Obamacare spending.” It is also noted that the ACA was not fully implemented in 2013 and that the law’s impact on overall spending may be a cause for concern for consumers.

In fact, some reports posit that part of the reason for the relatively slow growth in healthcare spending is that people who bought high-deductible insurance plans via the ACA’s marketplaces cannot afford to seek medical care because they do not have the cash on hand to pay their out-of-pocket expenses. Under the headline, “More Cost Of Health Care Shifts To Consumers: High-Deductible Insurance Plans Prompt Some to Delay Treatment,” the Wall Street Journal (12/3, Armour, Subscription Publication) explores the consumer behavior changes caused by the ACA’s implementation. Drew Altman, president of the Kaiser Family Foundation, is quoted as saying, “There has been a steady increase in deductibles and the main effect is to reduce use.”

USA Today (12/4, Ungar, O’Donnell) reports that CMS “attributed” the “slowing growth in health care spending to…factors including relatively slow economic growth and more gradual increases in private health insurance and Medicare spending.” USA Today notes that Micah Hartman of CMS’s Office of the Actuary pointed out that “more high-deductible insurance plans and increases in the percent of health care costs borne by consumers also contributed to the slower rate of increase” because “the more people have to pay for health care treatment out of pocket, the less they tend to use.”

The Huffington Post (12/3, Young) noted that the CMS Office of the Actuary “expects these record-low rates of increase won’t continue forever,” and “spending is projected go up faster this year and in the near future, though it’s still expected to be slower than during prior decades.” For 2014, CMS “projects health care spending will increase more than 5 percent to $3.1 trillion, driven in part by faster economic growth and in part by new Obamacare spending on subsidized health insurance and Medicaid coverage,” according to the Huffington Post.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

The Mutual Benefit of The Government and Insurance Companies

As Americans shop in the health insurance marketplace for a second year, President Obama is depending more than ever on the insurance companies that five years ago he accused of padding profits and canceling coverage for the sick.

Those same insurers have long viewed government as an unreliable business partner that imposed taxes, fees and countless regulations and had the power to cut payment rates and cap profit margins.

But since the Affordable Care Act was enacted in 2010, the relationship between the Obama administration and insurers has evolved into a powerful, mutually beneficial partnership that has been a boon to the nation’s largest private health plans and led to a profitable surge in their Medicaid enrollment.

The insurers in turn have provided crucial support to Mr. Obama in court battles over the health care law, including a case now before the Supreme Court challenging the federal subsidies paid to insurance companies on behalf of low- and moderate-income consumers. Last fall, a unit of one of the nation’s largest insurers, UnitedHealth Group, helped the administration repair the HealthCare.gov website after it crashed in the opening days of enrollment.

“Insurers and the government have developed a symbiotic relationship, nurtured by tens of billions of dollars that flow from the federal Treasury to insurers each year,” said Michael F. Cannon, director of health policy studies at the libertarian Cato Institute.

So much so, in fact, that insurers may soon be on a collision course with the Republican majority in the new Congress. Insurers, often aligned with Republicans in the past, have built their business plans around the law and will strenuously resist Republican efforts to dismantle it. Since Mr. Obama signed the law, share prices for four of the major insurance companies — Aetna, Cigna, Humana and UnitedHealth — have more than doubled, while the Standard & Poor’s 500-stock index has increased about 70 percent.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

Affordable Care Act Divides Workers and Employers

Disputes between unions and employers over paying for new costs associated with the Affordable Care Act are roiling labor talks nationwide.

Unions and employers are tussling over who will pick up the tab for new mandates, such as coverage for dependent children to age 26, as well as future costs, such as a tax on premium health plans starting in 2018. The question is poised to become a significant point of tension as tens of thousands of labor contracts covering millions of workers expire in the next several years, with ACA-related cost increases ranging from 5% to 12.5% in current talks.

In Philadelphia, disagreement over how much workers should contribute to such health-plan cost increases has stalled talks between the region’s transit system and its main union representing 5,000 workers as they try to renegotiate a contract that expired in March.

Roughly 2,000 housekeepers, waiters and others at nine of 10 downtown Las Vegas casinos voted this month to go on strike June 1 if they don’t reach agreements on a series of issues, the thorniest of which involve new ACA-related cost increases, according to the union.

Labor experts on both sides say the law doesn’t take into account that health benefits have been negotiated by employers and unions over decades, and that rewriting plans to meet new requirements can affect wages and other labor terms.

“It’s been a challenge for even some of the stronger unions to maintain the quality health plans that they have offered over the years,” said Daniel Murphy, an attorney in New York who represents employers in labor talks.

Among the earliest supporters of the health-care law, unions have unsuccessfully tried to win concessions from the Obama administration on some issues now involved in the labor talks.

One pressure point is the higher costs of new mandates, especially the requirement that health plans expand coverage for dependents. For Unite Here, adding that coverage for 14,000 dependents raised costs in the health-care fund run by the union’s Las Vegas local by $26 million since 2011, said union spokeswoman Bethany Khan.

To read more, click here.

Jeffrey R. Ungvary


Jeffrey R. Ungvary