Things are moving quickly in Washington. Democratic leaders began informal discussions about how to work out the differences between the Senate and House-passed health reform bills. The current strategy is to avoid a formal conference committee process. Instead, if Senate and House Democratic leaders agree on a common bill, the House could passed that compromise version, and then the Senate would do likewise, all with a goal of having a bill that the President can sign by late January or early February.
The Massachusetts Senate race may make or break health care reform legislation. There is a special election today to fill Ted Kennedy's Senate seat. The outcome of the special election could alter the Democratic majority in the Senate and end any attempts at health care reform.
The proposed 40 percent excise tax on health plans considered "high value" could limit the use of HSAs and FSAs. The tax would be levied if a health plan's "aggregate value" exceeds $8,500 for individuals and $23,000 for families. Under the language of the bill, calculation of the aggregate value includes: health, dental and vision coverage, HSAs, HRAs, and Med-FSAs. If you put in the maximum to either an HSA, HRA, or FSA, then it leaves only ~$5400-$6000 to purchase core health insurance before the excise tax kicks in.
Last week, union leaders negotiated an exemption of their plans from the "cadillac tax" until 2018 ending rumors that the limits might be raised in the final version of the bill.
Employers believe that health care costs will increase in the short term as millions of previously uninsured individuals get coverage and start going for checkups - similar to what happen in Massachusetts. According to preliminary analyses of the "cadillac tax" it is expected to impact 20% of firms by 2019 unless employers dial back coverage.
Health Care Reform and California
Part of the health care reform bills includes a tax/surcharge on fully insured plans. Unlike most other states, California is the largest consumer of fully insured HMOs. (43% vs the national average of 21%) With this portion included in the legislation, Californians can expect to see increased costs if they participate in a fully insured plan.
Genetic Information Nondiscrimination Act (GINA)
Several health plan special interest groups are urging federal agencies to change their regulatory interpretation of the Genetic Information Nondiscrimination Act (GINA). The current regulations limit the ability of employers to offer comprehensive and effective wellness and disease management programs. The final GINA regulations are due out later this year.
Health Care Trends
The 2009 Mercer National Survey of Employer-Sponsored Health Plans found that 53% of large employers (500 or more employees) offer health advocacy services as part of their benefits package, up from 47% in 2008. However, this lags behind other services such as health risk assessments (73%) and case management (82%). The survey shows that employers held cost growth to 5.5.% in 2009, the lowest annual increase in a decade. Employers predicted that medical plan cost would increase by about 9% in 2010 unadjusted for changes however most stated they wanted to achieve a 6% increase after making changes to plan design or changing vendors.
According to a recent survey of large employers by Fidelity Investments and the National Business Group on Health, most companies now offer health-improvement programs including, EAPs, flu shots, fitness, nurse hotlines, nutrition counseling, disease management, and on-site clinics. Of the 40% of companies that track ROI across all programs, about half say they see a two-to-one return on their investment. About one-quarter see greater returns, while the other quarter says they are just breaking even or even losing money.
More employers are starting to include over the counter drugs as part of their pharmacy plan offerings. Employers are starting to focus on encouraging employees to use the most appropriate drug with the lowest net costs. (ex - Ibuprofen vs. Oxycontin). Generics and over the counter drugs should be the first alternative based on cost and efficacy.
Another trend in "value based design" where the amount allocated to the employee is based on the average cost of drugs in that class. For example, for proton pump inhibitors, if the average cost is $100, then the employee gets up to a $100 credit. If they go under this amount, they pay nothing. If they go over it, they pay any amount over the $100.