I hope you are enjoying the Holidays.
I am on the Board of the Pacific Business Group on Health. While the organization is made up of larger companies they do some terrific work around trying to reduce health care cost and impacting the recently passed House and Senate bills. I believe that on these issues big business and small business are aligned.
This is clearly much longer than most emails I send but I think small businesses must understand these important issues and as we talk to Congress members reinforce the importance of these reforms.
Small Business California has joined PBGH in their efforts. I welcome your comments.
Have a wonderful New Year. 2010 is the year I will see my 11 year dream come true that being a Volunteer in Medicine Clinic in SF.The clinic will be called Clinic By the Bay and will open in the summer of 2010. Thank you to all that have contributed to the Clinic.Small Business California has been an important part in making this happen and it is an example of small business looking to find solutions to helping the working uninsured get health care.
Small Business California looks forward to working with all of you in 2010 in getting the voice of small business heard in Sacramento and Washington.
PBGH Board & Colleagues:
With the passage today of the Senate health reform bill, the action now moves to forthcoming conference committee effort to merge the House and Senate provisions. As you know, the “devil’s in the details” – but the details also have the prospect of including many “angel” concepts that are crucial to building a platform for creating a more effective delivery system in the years to come. In the coming weeks, you will be seeing mountains of analysis and reviews of the major issues. What follow is a quick list of two types of issues: first major delivery reform issues (where PBGH has been focusing its efforts on your behalf), and second the major issues relating to the “big ticket” employer and coverage issues.
Delivery Reform: after lots of work in the House and the Senate the prospects of “bending the curve” (for both the federal government and the private sector) and promoting better quality are real. However, there are two big “ifs.”
First, the Senate and the House have different elements, with different “strengths.” Of note, many of the Senate delivery reform provisions were added directly in response to the efforts of PBGH and others to make proposals more robust. If, however, we end up with the lowest common denominator – we will be in VERY bad shape. PBGH has organized other employer groups along with labor and consumers, to push for the strongest final reform package. We have already provided our recommendations to the White House, Senate and the House (see Recommendations sent December 21, 2009 at http://www.pbgh.org/news/pubs/commentary.asp).
ACTION OPPORTUNITY: We will be updating this document and resending to policy-makers the first week of January. PBGH members are invited to join as endorsers and to encourage other state or national groups to which you belong to also join this effort. If interested, contact Peter Lee at email@example.com.
Second, if legislation passes – the “devil” will be in how a huge array of programs is implemented. PBGH and other groups will need to be engaged, vigilant and dogged in assuring that the myriad programs enacted are actually implemented with an eye to meeting the needs of patients and purchasers.
There are many delivery reform issues in play (see the Recommendations noted above for details), but the big issues – many of which are already garnering huge pushback from providers – include:
Establishing an Independent Payment Advisory Board. Originally framed as the “Independent Medicare Advisory Board,” this entity proposed in the Senate would be empowered to make recommendations regarding both Medicare AND actions that could reduce costs and improve quality in the private sector. As proposed, some of its recommendations would be required to receive “fast-track” consideration by Congress – though these fast-tracked recommendations could not affect hospitals and hospices until 2020 (which have other cost cutting provisions in the bill). Through our work, the Board is called on to issue annual reports on quality and cost trends in Medicare and the private sector.
Speeding Up and Improving Payment Reforms. Many steps are geared to speed up payment reforms by Medicare and encourage those efforts to align with private payers.
Robust Comparative Effectiveness Research Enterprise. It is critical that there be a well funded and truly independent process to assess what treatments and interventions work. Just as important, the results of that research need to be used to improve care.
Effective Measurement and Public Reporting. A broad coalition of groups, Stand for Quality, that PBGH helped organize is pushing for priority setting, developing measures and data collection. There continues to be substantial pushback by providers in the area of public reporting.
Release of Medicare Data. One of the big last-minute successes on the Senate process was to add a provision to release Medicare data for use in developing performance reports on providers. This is HUGE and is the focus of huge pushback from providers.
Reform Issues In Play: There are major issues in play that could have dramatic impacts on employers, consumers and providers. While the conventional wisdom is that on average Senate provisions will “win-out” is likely correct…it is also correct, that you can easily drown in a lake that is “on average” only 2 inches deep. There will definitely be some “wins” for the House. While PBGH has and will continue to focus its attention on the delivery reform issues discussed above, what follows – building on the request at the PBGH Board meeting – is a quick reference grid of some of the big issues. I’m NOT, however, giving any predictions on how these issues will pan out.
For a good detailed side-by-side of the major elements of reform see Kaiser Family Foundation,
For a good review of major issues specific to employers see some good work done by the HR Policy Association.
ACTION OPPORTUNITY: PBGH members are encouraged to advocate on these issues – the White House and Congress needs to hear from those who pay for and receive care (they’ll be hearing loud and clear from the providers and suppliers whose incomes are at stake).
The House and Senate have in common broad provisions that will dramatically change how health care is covered and paid for. Without going in the details, those provisions include:
Individual Mandate – require individuals to have “acceptable” coverage (ISSUE: if the penalty is small, there could be risk selection as healthy individuals opt-out until they need coverage)
Employer Mandate – require employers to provide coverage or pay a penalty (ISSUES: what constitutes acceptable coverage could raise big issues for employers, dependent coverage requirements, part-time and seasonal employees)
Expansion of Public Programs – there will be large expansions of Medicaid (ISSUE: since states pay a portion of Medicaid, the size of the expansion will have big implications for state budgets over time)
Subsidies for Individuals and Employers – there will be subsidies for individuals through “Exchange” and to small businesses in the form of tax credits; for large employers through a temporary reinsurance program (ISSUE: for large employers there is the potential of some employees “opting in” to get coverage through the Exchange – which could have major risk selection implications)
Insurance Underwriting and Coverage Rules – guaranteed issue (no screening for pre-existing conditions), no lifetime caps; many consumer protections; maybe caps on non-health care spending
Exchanges to Offer Coverage – State (and in the House version a National) Exchanges will offer plans for individuals and employees of small business (ISSUES: there are many issues regarding how plans in Exchanges operate, plan designs and aligning with other efforts to promote delivery reform)
Defined “Essential Benefits” – all plans must offer “essential benefits,” including coverage of preventive services (House defines as 70% of actuarial value of covered benefits; Senate 60%) (ISSUE: what is on the list and what the actuarial value are have huge implications for all employers and consumers)
Cafeteria Plans – Caps FSA contributions at $2,500 and excludes OTC medications without a doctor’s prescription under FSAs, HRAs and HSAs. Penalties on non-medical HSA distributions increased to 20%
Paying for Expansion – both House and Senate reduce Medicare Advantage payments significantly
Promoting Wellness – national strategies to promote health and wellness
Fair Share from Pharma – there is lots of pressure on pharma to “kick in” more to reform than hand-shake deal of $80 billion over ten years (this SHOULD happen – with closing of donut hole and coverage expansion, pharma has plenty of room to support lowering costs)
What follow are some of the provisions in the House or Senate provisions that are particularly important from an employer perspective AND are very much in-play.
Paying for Expansion:
Tax on high income individuals
Limits contributions to FSAs and scope of HSAs
Tax on "Cadillac Plans" (BIG employer issue - depending on how structured could affect many benefit offerings in out years)
Fees on RX, medical devices, health insurance - will all be passed on to employers and employees
"Pure" pay-or-play mandate with minimum contribution for full and part-time (OR pay 8% of payroll penalty)
Penalty only when coverage for full-time employee does not hit 60% actuarial value
Exchange & Employee "Opt Out" of Employer Coverage
Provision requires some employers (where the ee's contributions to the plan is very high) to be given voucher to buy in Exchange. Few employees likely affected, but sets precedent and has potential of adverse selection.
Grant program for small and mid-sized employers, BUT participating employers must offer the programs to all employers and cannot mandate participation or use participation as a condition to receive any financial incentive.
Increase incentive limit to 30% of total premium
Secretary of HHS would have the authority to issue regulations allowing financial incentives up to 50%
Prohibits any post-retirement reductions in benefits for retirees unless same reduction done for actives
PBGH continues to “keep our eyes on the prize” of delivery system re-engineering and payment reform that truly moderate health cost trends.
Feel free to contact me if you have questions or comments. AND…best wishes for the holidays.
Peter V. Lee
National Health Policy
Pacific Business Group on Health
221 Main Street, Suite 1500
San Francisco, CA 94105
Small Business California
2311 Taraval Street
San Francisco, CA 94116