Wednesday, February 10, 2010

Health Care Updates

Health Care Reform

Health care reform is stalled at the moment. There have been several calls for the House to pass the Senate's version of the bill and then use budget reconciliation (which only requires 51 votes) to make any additional changes. However, some key Democrats who are facing re-election are opposed to this strategy as it bypasses any semblance of bi-partisanship.

President Obama says he hasn't given up on passing major health care legislation and his 2011 budget includes numbers based on the presumption that a health care bill will be adopted. Additionally, the President has invited both Republicans and Democrats to a live, televised discussion (debate?) on the issue of health care reform. Without some revitalization of this issue, Washington insiders say that health care reform will be put on the back burner.

Other Notable Legislation

HIPAA - Health Insurance Portability and Accountability Act

The HITECH compliance deadline of February 17, 2010 is approaching and there is a long list of to-do items associated with complying with the new regulations. Here's the short list:
Send updated agreements to your business associates with the new HITECH language
Adopt a HIPAA breach notification policy. (Enforcement begins on February 22, 2010)
Amend HIPAA policies and procedures to address the following issues:
Updated minimum necessary rule
Additional prohibitions on the use of PHI for marketing
New individual right to request restrictions on disclosures to health plans
Update the Notice of Privacy Practices if necessary
Train staff on new procedures.
However, updated regulations addressing several HITECH issues have not yet been released and the expectation is that they will not be released prior to Feb 17.

COBRA Subsidy Extension

The 2011 budget includes a line for the COBRA ARRA subsidy extension for employees laid off between March 1 - Dec 31, 2010. They would be eligible for the 65% subsidy for up to 12 months. This is likely to pass based on the current unemployment rates and has broad support throughout Congress.

Children's Health Insurance Program Notices

The DOL posted the model Employer CHIP Notice used to satisfy the employer notice requirement under the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA). Most employers must provide the initial Employer CHIP Notice by May 1, 2010

State Legislation


The California Senate passed a measure to create a $200 billion state-run single-payer health care system. The bill will now be routed to the state Assembly and Gov. Schwarzenegger has already threatened to veto the legislation. This is the 3rd attempt of the CA legislature to pass state based health care reform. The bill proposes creating a California Health System funded by state and federal money already used for healthcare as well as an additional payroll tax.

Health Insurance News

CIGNA Re-organizations

CIGNA recently had a lot of changes to their executive team. David Guilmette, previously from Towers Watson will join CIGNA as the president of the national segment. Kurt Weimer was promoted to president for the individual, small group and select segments of Cigna HealthCare nationwide. Stephanie Gorman Hurlbut has been named president and general manager for Cigna HealthCare of Arizona Inc. Alan Muney, a former Blackstone Group portfolio executive, was tapped to lead its health management and network contracting activities.

Wellness Trends

A survey by Fidelity Investments in conjunction with the not-for-profit National Business Group on Health (NBGH) found that employers on average are spending nearly 2 percent of their total health care claim dollars annually on wellness programs. More than one in four (27 percent) surveyed companies, however, do not measure the outcomes of their wellness efforts, and 65 percent have no measurable goals for their initiatives. In order to encourage participation in wellness programs, more than half (57 percent) of companies surveyed said they use incentives that have a cash value. The most common incentives offered by employers are reducing the employee’s health care premium, followed by contributing cash and contributions to a health savings account (HSA) or a health reimbursement arrangement (HRA). One out of five companies (20 percent) spends more than $400 per employee a year on incentives alone. Almost one third (29 percent) spend less than $100 per employee.

Whole Foods

Whole Foods created a "voluntary" program that provides employees with a way to increase their discount on Whole Foods products by "meeting specific criteria related to significant health measures." Among the biomarkers that the chain will consider: nicotine use, blood pressure, cholesterol level and body mass index (BMI).

Health Care Trends

In 2011 or 2012, public spending on health care will outstrip employer based health care spending. Job lossess in the past 2 years have helped speed up this trend.

Medicare is expected to be insolvent in 2017.

The US spends $282M per hour on health care based on a paper published in Health Affairs on Feb 4th.

2010/11 Health Care Cost Trend Predictions: The first set of health care cost predictions are starting to be released and we're back to double digits: ~ 10.3% - 11.1%. (From Bucks Consulting)

More consolidation is predicted in the health care industry for 2010 if health care reform doesn't pass - The larger insurers: Cigna, WellPoint, UnitedHealth and Aetna are likely to purchase some of the smaller managed care companies