“Last Saturday, August 16, marked the 60th anniversary of the enactment of the Internal Revenue Code of 1954, which permanently established in federal law generous tax advantages for employer-paid health-insurance premiums. Those group health benefits are excluded from employees’ taxable wages and thereby are not subject to income and payroll taxes. This tax break has been praised as a pillar of our employer-based private health-insurance system, but its age is showing. A growing list of critics agrees that the tax exclusion needs to be changed. The key questions are when and how. We should expect a significant overhaul, but not a full retirement party, within the next five to ten years.
The simplified history of the tax exclusion for health care usually begins with a 1942 ruling by the War Labor Board that allowed employers to bypass wartime wage controls by providing fringe benefits to workers. In 1943, the Internal Revenue Service issued a special ruling that confirmed employees were not required to pay tax on the dollar value of group health-insurance premiums paid on their behalf by their corporate employers. Over the next decade, a number of IRS rulings and court decisions created additional uncertainty over the full scope of the tax exclusion. When Congress codified this area of tax policy in 1954, it provided many employers and unions with even stronger incentives to sponsor group health-insurance plans.”
“For all the endless talk about reforming the health care system these past five years, it’s remarkable how little we’ve done to solve its actual problems. Spending hundreds of billions of taxpayer dollars to subsidize insurance coverage for several million people? That’s the easy part. The hard part is addressing the fact that American health care is so expensive.
The high price of U.S. health care is the fundamental reason tens of millions of Americans are uninsured. It’s the principal suppressor of middle-class wage growth. It’s a constant threat to businesses’ operating margins, and it’s the primary driver of the federal debt.
In May the American Health Policy Institute surveyed the chief human resource officers of 360 large employers, representing 10 million workers. When asked what troubled them the most about the Affordable Care Act, 85% said “increasing access to the health care system without making significant improvements in the efficiency and affordability of that system.” Only 6% believed that “the ACA will help my company more effectively control health care costs”; 82% disagreed.
According to the Congressional Budget Office’s 2014 Long-Term Budget Outlook, the United States remains on an “unsustainable” trajectory, driven entirely by growth in the big federal health care entitlements: Medicare, Medicaid and Obamacare.”
“Last Monday, Jed Graham of Investor’s Business Daily reported that insurers say Affordable Care Act enrollment is shrinking, and it is expected to shrink further. Some of those who signed up for insurance on the exchanges never paid; others paid, then stopped paying. Insurers are undoubtedly picking up some new customers who lost jobs or had another “qualifying life event” since open enrollment closed. But on net, they expect enrollment to shrink from their March numbers by a substantial amount — as much as 30 percent at Aetna Inc., for example.
How much does this matter? As Charles Gaba notes, this was not unexpected: Back in January, industry expert Bob Laszewski predicted an attrition rate of 10 to 20 percent, which seems roughly in line with what IBD is reporting. However, Gaba seems to imply that this makes the IBD report old news, barely worth talking about, and I think that’s wrong, for multiple reasons.”
“The American Hospital Association’s expenditures increased by 7% in 2013, to $117 million, spurred in part by efforts to convince states to expand Medicaid, according to the organization’s most recent tax return.
The group spent $3.3 million on grants to state hospital associations last year to assist with efforts to convince states that they should expand Medicaid to households with incomes up to 138% of the federal poverty level.
Under the Patient Protection and Affordable Care Act, the federal government will pick up 100% of the tab for the first three years of Medicaid expansion and 90% of the cost thereafter.”
“Republicans seeking to unseat the U.S. Senate incumbent in North Carolina have cut in half the portion of their top issue ads citing Obamacare, a sign that the party’s favorite attack against Democrats is losing its punch.
The shift — also taking place in competitive states such as Arkansas and Louisiana — shows Republicans are easing off their strategy of criticizing Democrats over the Affordable Care Act now that many Americans are benefiting from the law and the measure is unlikely to be repealed.
“The Republican Party is realizing you can’t really hang your hat on it,” said Andrew Taylor, a political science professor at North Carolina State University. “It just isn’t the kind of issue it was.”
The party had been counting on anti-Obamacare sentiment to spur Republican turnout in its quest for a U.S. Senate majority, just as the issue did when the party took the House in 2010. This election is the first since the law was fully implemented.
“Opposition to the 2010 health care law has been above 50 percent for over a year. And that continues to be true, as the latest Fox News national poll finds voters oppose the law by a 52-41 percent margin.
Support for Obamacare has been as high as 43 percent (May 2014) and gone as low as 36 percent (January 2014).
The number opposing the law has ranged from 49 percent (June 2012) to a record-high 59 percent (January 2014).
As in the past, the new poll shows that most Democrats favor Obamacare (74 percent), while most Republicans (84 percent) and independents (61 percent) are against it.
Voters in every age group are more likely to oppose the law than favor it, with one exception: those ages 65 and over. And that group only favors it by two percentage points.”
“A mix-up of information about two physicians with the same name in different states has opened a window on wide-ranging technical problems the CMS is facing with its Open Payments website reporting industry payments to doctors and teaching hospitals. Registration for the system, which was scheduled…”
NOTE: This article is behind a paywall.
“Nearly one company in six in a new survey from a major employer group plans to offer health coverage that doesn’t meet the Affordable Care Act’s requirements for value and affordability.
Many thought such low-benefit “skinny plans” would be history once the health law was fully implemented this year. Instead, 16 percent of large employers in a survey released Wednesday by the National Business Group on Health said they will offer in 2015 lower-benefit coverage along with at least one health plan that does qualify under ACA standards.
The results weren’t unexpected by benefits pros, who realized last year that ACA regulations would allow skinny plans and even make them attractive for some employers. But the new survey gives one of the first looks at how many companies will follow through and offer them.”
“When benefits enrollment season arrives this fall, employees around the country can expect to see the impact of corporate cost-cutting on their finances.
Benefits costs will rise only 5 percent for employers that take certain cost-reduction measures, instead of 6.5 percent for companies that do not, according to a June survey of employers representing 7.5 million workers by the National Business Group on Health.
Although costs are not rising as quickly, employees are still being squeezed.
The main way companies are keeping healthcare costs in line is by shifting workers into high-deductible health plans, defined by the Internal Revenue Service as having deductibles above $1,250 for an individual. (here)
For 2015, 81 percent of employers will offer a high-deductible plan as an option, up from 72 percent last year; while 32 percent will offer such plans as the only option, up from 22 percent last year.
The challenge employers face is: “How do you keep costs from spiraling out of control but not shift all of it to the employee?” said Karen Marlo, a vice president at NGBH who authored the report.”
“When Covered California unveiled its initial slate of 13 carriers last year, their low rates got some attention — but so did their mix.
While Covered California couldn’t boast Aetna or UnitedHealthcare, which instead elected to leave the state’s individual market, four major insurers were on board: Anthem Blue Cross, Blue Shield of California, Health Net and Kaiser Permanente.
And the exchange also had drawn in several smaller health plans, like Ventura County Health Plan, which were going to compete for share on the individual market for the first time.
“For me, the story is [these] new participants,” Micah Weinberg of the Bay Area Council told California Healthline last summer. “Who exactly they are, and how they are being offered in these marketplaces, is worth watching.”
But Ventura County quietly pulled out. A second small carrier, Alameda Alliance, was kicked out. And earlier this summer, a third carrier — Contra Costa Health Plan — was forced to drop out, citing state rules around offering on- and off-exchange plans.
That’s left Covered California with 10 plans — which would be a bounty for nearly any other state. Not so across California’s vast, 164,000-square-mile expanse, where many regions are essentially dependent on a lone insurer.
As “Road to Reform” tracked throughout last year’s enrollment period, the seven small insurers ended up splitting just a fraction of Covered California’s customers, while the “big four” insurers were responsible for almost 95% of all sign-ups across the state.
“It’s not just an issue of market concentration,” California Insurance Commissioner Dave Jones (D) told California Healthline. “It’s the absence of choice that exists for some consumers in some parts of California.””