Enforcement

This page archives executive-branch news related to the Patient Protection and Affordable Care Act. Given that PPACA cost overruns now exceed the initial cost of the PPACA, this page will soon be split into separate topics.

Cost Overruns

In late April, 2010, studies began to reveal significant errors in financial projections.

A government analysis of the new health care law says it will not slow the overall growth of health spending because the expansion of insurance and services to 34 million people will offset cost reductions in Medicare and other programs.

The study, by the chief Medicare actuary, Richard S. Foster, provides a detailed, rigorous analysis of the law.

In signing the measure last month, President Obama said it would “bring down health care costs for families and businesses and governments.”

But Mr. Foster said, “Overall national health expenditures under the health reform act would increase by a total of $311 billion,” or nine-tenths of 1 percent, compared with the amounts that would otherwise be spent from 2010 to 2019.

In his report, sent to Congress Thursday night, Mr. Foster said that some provisions of the law, including cutbacks in Medicare payments to health care providers and a tax on high-cost employer-sponsored coverage, would slow the growth of health costs. But he said the savings “would be more than offset through 2019 by the higher health expenditures resulting from the coverage expansions.”

The report says that 34 million uninsured people will gain coverage under the law, but that 23 million people, including 5 million illegal immigrants, will still be uninsured in 2019.

[…]

Mr. Foster says the law will save Medicare more than $500 billion in the coming decade and will postpone exhaustion of the Medicare trust fund by 12 years, so it would run out of money in 2029, rather than 2017. In addition, he said, the reduction in the growth of Medicare will lead to lower premiums and co-payments for Medicare beneficiaries.

But, Mr. Foster said, these savings assume that the law will be carried out as written, and that may be an unrealistic assumption. The cuts, he said, “could become unsustainable” because they may drive some hospitals and nursing homes into the red, “possibly jeopardizing access to care for beneficiaries.”

[…]

In his report, Mr. Foster made these points:

  • The government will spend $828 billion to expand insurance coverage over the next 10 years. Expansion of Medicaid accounts for about half of the cost. The number of Medicaid recipients will increase by 20 million, to a total of 84 million in 2019.
  • People who go without insurance and employers who do not provide coverage meeting federal standards will pay $120 billion in penalties from 2014 to 2019. Individuals will pay $33 billion of that amount, while employers pay $87 billion.
  • The law will reduce consumers’ out-of-pocket spending on health care by $237 billion over 10 years, to a total of $3.3 trillion.

Cuts in federal payments to private Medicare Advantage plans will “result in less generous benefit packages,” the report said. By 2017, it said, “enrollment in Medicare Advantage plans will be lower by about 50 percent, from its projected level of 14.8 million under the prior law to 7.4 million under the new law.”

Pear, Robert. “Health Care Cost Increase Is Projected for New Law”. New York Times. April 23, 2010 (New York Edition, April 24, 2010, p. A8). Available online as of 2010-04-24. Hyperlink in original modified to point to locally cached copy of study.

All during the health care debate, examples were available to show that ObamaCare would cause health care costs to rise, not fall. Those examples were New York and Massachussets. Both had already enacted their own versions of reform (although New York did not have a personal mandate), very similar to ObamaCare.

Costs went up and they're still going up. Yet the existence of these test cases made little difference on Capitol Hill. Democrats jumped off the cliff anyway.

Now experts at Health and Human Services admit that just as in New York and Massachussets, health care costs will rise under ObamaCare.

[T]he analysis found that the law falls short of the president's … goal of controlling runaway costs, raising projected spending by about 1 percent over 10 years. That increase could get bigger, however, since the report also warned that Medicare cuts in the law may be unrealistic and unsustainable, forcing lawmakers to roll them back.

This is just one of many post-passage reports admitting that the law won't do what its supporters pledged. Among them is the New York Times, which has acknowledged that the law might not lower costs for the sick, was so sloppily drafted that it may deprive members of Congress of their current coverage), and it may not help resolve the hard cases.

The details vary somewhat, but cumulative picture is one that's broadly in line with what critics have been arguing since the first legislative drafts became available (at least). Rather than offer true reform for our country's health care system, ObamaCare takes a dysfunctional mess and makes it even more dysfunctional, and at greater cost.

McClanahan, E. Thomas. “Now they tell us: Costs will rise under ObamaCare”. Kansas City Star (op-ed column). April 23, 2010, 4:59pm. Available online as of 2010-04-24. Hyperlinks in original.

[…]

The legislation will increase the size of the federal budget by increasing outlays by $411 billion and revenues by $525 billion over the next 10 years (excluding the provisions of the reconciliation act related to education, which will reduce spending by about $19 billion over that period).

The legislation will increase the federal budgetary commitment to health care (the sum of net federal outlays for health programs and tax preferences for health care) by $390 billion over the next 10 years.

[…]

Nevertheless, estimates of the effects of comprehensive reforms are clearly very uncertain, and the actual outcomes will surely differ from our estimates in one direction or another.

[…]

As CBO’s estimate noted, the legislation will lead to some increases in discretionary spending (that is, spending subject to future appropriation action) that are not included in the deficit figures cited above.

[…]

The legislation will improve the cash flow in the Hospital Insurance trust fund (that is, Part A of Medicare) by more than $400 billion over 10 years. Higher balances in the fund will give the government legal authority to pay Medicare benefits longer, but most of the money will pay for new programs rather than reduce future budget deficits and therefore will not enhance the government’s economic ability to pay Medicare benefits.

[…]

In fact, CBO’s cost estimate noted that the legislation maintains and puts into effect a number of policies that might be difficult to sustain over a long period of time. For example, the legislation reduces the growth rate of Medicare spending (per beneficiary, adjusting for overall inflation) from about 4 percent per year for the past two decades to about 2 percent per year for the next two decades. It is unclear whether such a reduction can be achieved, and, if so, whether it would be through greater efficiencies in the delivery of health care or through reductions in access to care or the quality of care. The legislation also indexes exchange subsidies at a lower rate after 2018, and it establishes a tax on insurance plans with relatively high premiums in 2018 and (beginning in 2020) indexes the tax thresholds to general inflation.

[…]

Congressional Budget Office, April 12, 2010. Emphasis Added.

While Republicans seek to take political advantage of opposition to federal health-care reform and Democrats worry about its impact on the November election, neither party seems willing to get serious about Americans' primary health-care concern: containing costs.

Two nonpartisan reports issued this past week continue to point out that the nation has yet to get a handle on controlling health-care expenses.

A report Thursday from economic experts at the Health and Human Services Department said that while the federal Patient Protection and Affordable Care Act will indeed expand insurance coverage to more than 30 million Americans, it is likely to raise government spending as well, despite supporters' claims to the contrary.

The report also expressed concern that the law's efforts to reduce costs, such as cuts in Medicare, could have a negative financial impact on health-care providers to the point that seniors' access to care is jeopardized.

In a second report last week, Pentagon officials revealed that military spending on health care is rising twice as fast as the nation's overall health-care costs. Medical spending by the nation's armed forces is expected to go from $19 billion in 2001 to $50.7 billion next year - an increase of 167 percent. Total U.S. spending on health care will have climbed by 84 percent over that same period, from $1.5 trillion to $2.7 trillion.

Defense Secretary Robert Gates recently told Congress that military health-care spending is “beginning to eat us alive.”

Many Americans share that concern about the nation as a whole. That is why shortly after President Obama signed the health-care legislation last month, polls showed roughly half of Americans oppose it.

It's not because Americans are against ensuring that people have access to affordable health care. It's because they doubt politicians' claims that the government can expand Medicaid eligibility, subsidize insurance premiums, encourage businesses to provide health care benefits and take other steps - all while reducing costs.

Politicians have yet to show they are willing to make the tough decisions that will be required to rein in medical expenses. Until they do, taxpayers will cast a wary eye on claims that health-care costs are under control, and those concerns just might sway their votes come November.

(Michigan) Battle Creek Enquirer (op-ed). April 25, 2010. Available online as of 2010-04-25.

It was inevitable that the facts had to eventually emerge about he health care overhaul, and they’re not exactly in line with the way the legislation was originally sold to the American people.

First the good news: The expansion of health insurance will potentially add an estimated 34 million citizens to the coverage rolls. OK, that’s pretty much it for the good news.

Next the bad news: The health care reform will add to the ongoing national debt because it will not cut costs as promised during the perpetual sales pitch leading up to its passage and signing into law. Additionally, Medicare cuts are unrealistic and unsustainable which will likely force an modest estimate of 15 percent of hospitals into a severe deficit and essentially jeopardize or drastically limit access to health care for virtually all seniors.

The good news and bad news was released last week in a report by impartial economic experts in the government’s own Health and Human Services Department. An immediate response from White House officials insisted that these analyses are typically overly pessimistic and present the most bleak potential outcome from the law’s presumed capacity to actually achieve cost reductions thereby resulting in overall health care savings. However, these analysts held their ground insisting there was no foreseeable hope for the White House cost saving claim coming to fruition for at least a decade, if ever.

Medicare officials insist that from now through the year 2019 any potential cost savings would be overcome by the obvious increased costs associated with the expansions of health insurance coverage for 34 million. There’s simply no supportable data available to back up the administration’s claims that the program will effectively pay for itself. Further, in order to sustain minimal levels of Medicare coverage for those already insured and the estimated number that will be added to the program, there’s a valid concern that many will either be turned away by health care providers via opting out of Medicare entirely or cutting back their practices by reducing actual office days and hours of operation.

It’s true that tax credits would offer some assistance for many middle-class households in paying their annual premiums, and Medicaid would assume coverage for additional low-income people. Also, health care insurers would be required to accept all applicants, regardless of their overall health condition and preexisting conditions. This doesn’t begin to offset the greater problem–how to pay the bill. We all know who will get to help pay that tab.

A separate Congressional Budget Office analysis that was also released last week estimated that at least 4 million households will have tax penalties levied against them under the new law for failing to sign up for mandatory insurance coverage.

With doctors already bailing out of their practices and opting out of Medicare acceptance, the long-term prognosis for medical care for most people isn’t looking to healthy from the standpoints of physician available and affordability.

I’m still waiting to hear that our elected representative have jettisoned their Cadillac health care plans and jumped into the medical swamp with the rest of us. But I’m not betting on it….

“Health care overhaul reality begins to emerge”. Tuscon Citizen (op-ed). April 24, 2010. Available online as of 2010-04-25.

States will likely face rising costs due to federal health care reform over the long term, Moody’s Investors Service said in a report released this week.

The new law’s key effect on states will be an expansion of the Medicaid program starting in 2014. Medicaid already makes up 20% of states’ budgets, and the expansion could mean that some states will face higher costs, Moody’s said.

In a separate report, Moody’s said first-quarter upgrades outpaced downgrades in the nonprofit hospital sector for the first time in 16 quarters. But analysts warned the momentum is unlikely to continue, due in part to health care reform.

Most states have already seen their Medicaid costs rise during the recent recession as residents lost jobs and insurance, Moody’s said. The federal government temporarily increased its match to help states cover their shortfalls, and states are depending on the federal matches again as they craft their 2011 budgets.

For the long term, most states are still trying to get a handle on what the new law means for their budgets.

Michigan’s independent Senate Fiscal Agency, for example, released a report last week saying that the Medicaid expansion could cost an additional $200 million annually starting in 2020 — an expense that could be offset by other cost-cutting provisions of the new law.

Indiana Gov. Mitch Daniels warned the Medicaid expansion would mean ­higher taxes for Hoosiers. Indiana is one of 18 states that sued over the new law, saying it violates constitutional rights by forcing Americans to buy insurance, and that the new Medicaid standards will force states to spend billions in additional dollars.

The expansion, which will cover all people with incomes under 133% of the federal poverty level and childless adults, will take effect in 2014. At first it is not expected to have much effect on state budgets, as the federal government will cover 100% of the costs for the first two years. Starting in 2017, however, states will be required to start chipping in, starting at 5% and reaching 10% by 2020.

“Everybody is in the early stages of trying to quantify the numbers,” said Nicole Johnson, the Moody’s analyst who wrote the report titled “Healthcare Reform Expected to Create Longer Term Financial Pressure for States.”

“It will have a different impact on ­different states, depending on where they start,” she said. “If the economy does ­improve, states will be in a better position to handle the costs. If the recovery is weak or delayed, it could be tougher to handle.”

In addition to Medicaid, states could be forced to spend more money on administrative, regulatory, and enforcement of the new reform rules.

[…]

“Health care reform will further temper not-for-profit hospital revenue growth with reimbursement pressures coming from the commercial payers, resulting in lower payment per procedure,” analyst Sarah Vennekotter wrote in the report.

Devitt, Caitlin. “Health Care Reform Likely To Cost States, Moody’s Says” Bond Buyer. April 29, 2010. Available online as of 2010-04-29.

Some families could pay a price if they seize the chance offered by the new health-care law to keep children up to age 26 on their insurance policies, regulations drafted by the Obama administration show.

Until 2014, when health plans will be prohibited from charging higher premiums based on preexisting conditions, insurers in the individual market can take into account the young adult's medical condition when setting the family's premium.

In addition, under certain circumstances, families could be required to pay extra to carry young adults on their policies.

The regulations published Monday also explain that there is an exception to the expanded coverage.

The provision “applies only to health insurance plans that offer dependent coverage in the first place: while most insurers and employer-sponsored plans offer dependent coverage, there is no requirement to do so,” the Department of Health and Human Services said in a statement Monday.

[…]

Group health plans, such as those sponsored by employers, can charge employees extra to cover adult children only if they already base their premiums on the number of children the employee enrolls – as opposed to offering a flat premium for families of all sizes.

If the costs are spread across all families with employer-sponsored coverage, family premiums will rise about 1 percent in 2012, the government estimated. In the individual market, premiums for adding young adults are estimated to average $2,400 in 2012, the government said.

“On the whole, this is a very cheap group to cover . . . as long as they don't get pregnant or have a motorcycle accident,” said Timothy Stoltzfus Jost, a professor at Washington and Lee University School of Law.

[…]

Families can take advantage of the option even if the young adult no longer lives with his parents and is not a dependent on their tax return. The new policy applies to married and single children, though the children's spouses and children do not qualify, HHS said.

For coverage years beginning before 2014, group plans that have grandfathered status are not required to cover young adults who have access to insurance through their jobs.

Hilzenrath, David S. “Some families face higher health premiums to insure adult children”. Washington Post. May 11, 2010. Available online as of 2010-05-12.

[…]

If a health plan offers dependent coverage, then it will have to offer the extension of coverage, too, under interim regulatons just put out by the Department of Health and Human Services.

But, as the Washington Post notes, there's nothing stopping insurers for charging a whole lot more for families who buy coverage on the individual market and whose children have preexisting conditions.

In 2014, the new health law won't let insurers levy higher premiums for people with preexisting conditions.

Right now, HHS figures 2.4 million young adults might qualify for the extension on their parents plans. How many will sign up? The department isn't sure, but its middle-of-the-road estimate would be 1.24 million in 2011.

Oh, and how much will the average premium run? About $3,380 per person for group plans and about $2,360 for families buying plans on the individual market in 2011, HHS estimates.

[…]

Hensley, Scott. “Adding Some Grads To Parents' Health Plans Could Be Costly”. National Public Radio May 11, 2010. Available online as of 2010-05-12.

Conservatives warned that the tons and tons of voter-pleasing goodies included in President Barack Obama's health care bill would make insurance more expensive for tens of millions of Americans. Oh, goodness no, claimed Obama and his liberal cronies. Such criticism was merely a cynical ploy to prevent health care reform, they insisted.

Wrong. Proof that we and other conservatives were right has been flowing out of Washington since the bill was enacted.

One provision in the law allows parents to keep children on their health insurance policies as dependents until the young people reach age 26.

That will increase the average cost of health insurance provided by employers by nearly 1 percent for everyone, the Department of Health and Human Services estimated this week. Many companies will pass the cost on to employees in one way or another.

In other words, you'll be paying for health insurance for the 25-year-old, working son of a co-worker who doesn't feel like buying his own policy.

The next time a liberal tells you some grand plan “won't cost anything,” remember that.

Editorial Board. “Critics Right About Health Care Costs”. Wheeling, WV Intelligencer and News-Register (editorial). May 12, 2010. Available online as of 2010-05-12.

One of the biggest failures of the health care reform legislation passed by Congress and signed into law by President Obama this year is that there is no provision to prevent insurance companies from imposing unreasonable rate hikes. Now, with new coverage requirements for children scheduled to take effect this year, Americans will see just how high of a bill the insurance companies are going to stick us with.

One of the most anticipated early benefits of health care reform is the requirement is that young adults can stay on their parents’ health insurance until they turn age 26. On Monday, the Department of Health and Human Services reported its estimate that the benefit will cost $3,380 for each dependent, raising premiums by 0.7 percent in 2011 for employer group plans. That’s a big payday for the insurance companies, especially since 1.2 million young adults are expected to sign up. More than half of those young adults would have been uninsured before health reform was passed.

Also this year, insurers will be required to insure all children regardless of medical history. Sounds like a blessing to families who could not receive insurance benefits for one or more of their children. Problem is, the health reform bill does not limit what the insurance companies can charge to provide that coverage. That means parents will still face the agonizing decision of whether to insure their child because they may not be able to afford it. The Associated Press reports that nearly 20,500 children were denied coverage because of medical conditions in 2008, the latest year for which statistics are available. More than 18,300 were allowed policies that exclude the condition, often at a higher premium. It was a practice used by insurers to shield themselves from risk. They protect their bottom line, restrain premiums for healthier families, while those in need of medical care get locked out of the system.

These types of injustices and system failures are what fueled the desire to reform health care. Now that reform’s been passed, after a divisive political battle, affordability will remain a problem for the foreseeable future. Congress needs to revisit the legislation to impose restrictions on unreasonable premium increases. Problem is, after that long political fight and with this being an election year, they won’t. Because Congress could not stand up effectively against insurers, the American people will again be stuck with the bill.

Editorial Board. “OUR VIEW: Stuck with the bill for health reform”. (Wilmington, Ohio) Wilmington News-Journal. May 11, 2010. Available online as of 2010-05-12.

The nation's most influential small business lobby is joining a court challenge to President Barack Obama's health care overhaul. The National Federation of Independent Business will announce today it is joining a federal lawsuit filed in Florida by 20 state attorneys general and governors. NFIB's involvement ensures that constitutional arguments for overturning the health care law will be extensively aired in the fall campaigns, regardless of how the suit comes out.

Associated Press. “Suit against health care law gets a big supporter”. May 14, 2010. (Northern Michigan) TV-9. Available online as of 2010-05-14.

An independent poll recently conducted on behalf of the American Osteopathic Association (AOA) shows that an alarming number of physicians will stop seeing Medicare beneficiaries if current payment policies are not reformed. When physicians who have at least some say in what kind of insurance they accept in their practices were asked about the pending 21.3% cut in Medicare payments, only 42% said they would definitely or probably continue seeing their current Medicare patients if the cut were to occur. Another 33% were undecided as to whether or not they would continue to see their current Medicare patients. Twenty-four percent said they probably or definitely would not. Furthermore, only 30% of those currently accepting new Medicare patients said they would continue to do so if the cut were to be implemented (32% said they might, and 37% said they probably or definitely would not).

The AOA has long argued that Congress should enact reforms to the Medicare physician payment formula that ensure annual increases in payments based upon increases in practice costs. When asked about their participation in the Medicare program if such reforms were enacted, 94% of respondents would continue to see their current Medicare patients and 92% indicated they would continue to accept new Medicare patients. Though base sizes were small for those who do not currently accept Medicare, a third of them did indicate that they would start accepting new Medicare patients if the payment formula was reformed.

“These numbers should be a wake up call to policymakers,” stated AOA President Larry A. Wickless, DO. “The proposed cut of 21.3% and the lack of a predictable and equitable payment formula will, without question, have a severe negative impact on physicians' future participation in the Medicare and Medicaid programs.”

According to respondents, their three largest concerns with the current Medicare reimbursement system are:

1. Medicare payment rates do not increase at the same rate that medical costs increase;

2. The current payment formula does not adequately cover the cost of care provided and;

3. Congress's temporary fixes are unreliable, with reimbursement rates potentially fluctuating on a monthly basis.

Less than 70% of all respondents indicated they accept Medicaid from their current patients. A majority use some form of health information technology (HIT) in their practice, and 50% are using electronic prescribing. For those not using HIT currently, 11% stated that they are in the process of implementing a HIT system in their practice. Respondents were supportive of quality improvement programs with 50% indicating that their practice or hospital participates in the Physician Quality Reporting Initiative (PQRI).

“Osteopathic physicians are committed to providing high quality health care services to Medicare beneficiaries, participate in quality improvement programs, and implement health information technology in their practices. However, they have clearly indicated that they need a more stable funding formula in the nation's public program to assure continued patient access and improved quality,” stated AOA Executive Director John B. Crosby, JD.

The Benenson Strategy Group (BSG) polled 1,021 osteopathic physicians (DOs) on behalf of the American Osteopathic Association (AOA) between April 28 and May 1, 2010. All respondents were members of the AOA and spend at least 20% of their time providing direct patient care. Generally speaking, 55% of respondents described themselves as primary care physicians, 25% as medicine specialists, and 20% as surgeons or surgical specialists. Nearly 70% of those responding to the poll practice in an ambulatory setting or private practice, with half of those having at least some ownership stake in the practice. Fifty-five percent practice in a single office location, and 62% practice in a group of 5 or fewer physicians. Twenty-four percent of respondents practice in a rural community, 45% practice in a suburban or exurban community, and 31% practice in an urban community. Forty-eight percent of all respondents have at least some role in the decision making process when it comes to deciding what type of insurance to accept and 63% of respondents in an ambulatory setting responded that they have a role in the process.

American Osteopathic Association. “Proposed cuts in Medicare payments impact access to healthcare: Poll”. The Medical News. May 13, 2010. Available online as of 2010-05-14.

Zach Hoffman was confident his small business would qualify for a new tax cut in President Barack Obama's health care overhaul law.

But when he ran the numbers, Hoffman discovered that his office furniture company wouldn't get any assistance with the $79,200 it pays annually in premiums for its 24 employees. “It leaves you with this feeling of a bait-and-switch,” he said.

When the administration unveiled the small business tax credit earlier this week, officials touted its “broad eligibility” for companies with fewer than 25 workers and average annual wages under $50,000 that provide health coverage. Hoffman's workers earn an average of $35,000 a year, which makes it all the more difficult to understand why his company didn't qualify.

Lost in the fine print: The credit drops off sharply once a company gets above 10 workers and $25,000 average annual wages.

It's an example of how the early provisions of the health care law can create winners and losers among groups lawmakers intended to help — people with health problems, families with young adult children and small businesses. Because of the law's complexity, not everyone in a broadly similar situation will benefit.

[…]

On paper, the credit seems to be available to companies with fewer than 25 workers and average wages of $50,000. But in practice, a complicated formula that combines the two numbers works against companies that have more than 10 workers and $25,000 in average wages.

“You can get zero even if you are not hitting the max on both pieces,” said Blumberg. Being close to the upper limit on either of the two measures significantly reduces the credit, she explained.

Hoffman used an online calculator to figure his company's eligibility. At least four are available, including one from the House Energy and Commerce Committee, which helped write the legislation. All produced the same result.

“I think (the administration's) intentions are good, but the numbers and applications don't come out to what they intend,” said Hoffman, part owner of Wiley Office Furniture, a third-generation family business in Springfield, Ill.

The Treasury Department, which administers the new credit, did not dispute the calculations.

“The small-business tax credit was designed to provide the greatest benefit to employers that currently have the hardest time providing health insurance for their workers — small, low-wage firms,” said Michael Mundaca, assistant secretary for tax policy. “Small employers face higher premiums and higher administrative costs than large firms and in many cases cannot afford to provide coverage.”

Small business owners are a pivotal constituency in the fall congressional elections, and Democrats are battling to win them over. Major benefits of the health care law — competitive insurance markets, more stable premiums and a ban on denying coverage to those in poor health — don't take effect until 2014. But the health care credit is available this year.

[…]

To get the most out of the new federal credit, Hoffman said he'd have to cut his work force to 10 employees and slash their wages.

“That seems like a strange outcome, given we've got 10 percent unemployment,” he said.

Alonso-Zaldivar, Ricardo (Associated Press). “FACT CHECK: Will health care land your small biz a tax credit? The numbers may not add for all”. Los Angeles Times. May 20, 2010. Available online as of 2010-05-04.

Millions of American workers could discover that they no longer have employer-provided health insurance as ObamaCare is phased in. That's because employers are quickly discovering that it may be cheaper to pay fines to the government than to insure workers.

AT&T, Caterpillar, John Deere and Verizon have all made internal calculations, according the House Energy and Commerce Committee, to determine how much could be saved by a) dropping their employer-provided insurance, b) paying a fine of $2,000 per employee, and c) leaving their employees with the option of buying highly-subsidized insurance in the newly created health-insurance exchange.

[…]

A Congressional Budget Office (CBO) analysis of the House version of ObamaCare, which is close to what actually passed in March, assumed a $15,000 premium for family coverage in 2016. Yet the only subsidy available for employer-provided coverage is the same one as under current law: the ability to pay with pretax dollars. For a $30,000-a-year worker paying no federal income tax, the only tax subsidy is the payroll tax avoided on the employer's premiums. That subsidy is only worth about $2,811 a year.

If this same worker goes to the health-insurance exchange, however, the federal government will pay almost all the premiums, plus reimburse the employee for most out-of-pocket costs. All told, the CBO estimates the total subsidy would be about $19,400—almost $17,000 more than the subsidy for employer-provided insurance.

In general, anyone with a family income of $80,000 or less will get a bigger subsidy in the exchange than the tax subsidy available at work.

But will the insurance in the exchange be as good? In Massachusetts, people who get subsidized insurance from an exchange are in health plans that pay providers Medicaid rates plus 10%. That's less than what Medicare pays, and a lot less than the rates paid by private plans. Since the state did nothing to expand the number of doctors as it cut its uninsured rate in half, people in plans with low reimbursement rates are being pushed to the rear of the waiting lines.

The Massachusetts experience will only be amplified in other parts of the country. The CBO estimates there will be 32 million newly insured under ObamaCare. Studies by think tanks like Rand and the Urban Institute show that insured people consume twice as much health care as the uninsured. So all other things being equal, 32 million people will suddenly be doubling their use of health-care resources. In a state such as Texas, where one out of every four working age adults is currently uninsured, the rationing problem will be monumental.

Even if health plans in the exchange are identical to health plans at work, the subsidies available can only be described as bizarre. In general, the more you make, the greater the subsidy at work and the lower the subsidy in the exchange. People earning more than $100,000 get no subsidy in the exchange. But employer premiums avoid federal and state income taxes as well as payroll taxes, which means government is paying almost half the cost of the insurance. That implies that the best way to maximize employee subsidies is to completely reorganize the economic structure of firms.

Take a hotel with maids, waitresses, busboys and custodians all earning $10 or $15 an hour. These employees can qualify for completely free Medicaid coverage or highly subsidized insurance in the exchange.

So the ideal arrangement is for the hotel to fire the lower-paid employees—simply cutting their plans is not an option since federal law requires nondiscrimination in offering health benefits—and contract for their labor from firms that employ them but pay fines instead of providing health insurance. The hotel could then provide health insurance for all the remaining, higher-paid employees.

Ultimately, we could see a complete restructuring of American industry, with firms dissolving and emerging based on government subsidies.

[…]

Goodman, John C. (president and CEO of the National Center for Policy Analysis). “Goodbye, Employer-Sponsored Insurance”. Wall Street Journal (Opinion). May 21, 2010. Available online as of 2010-05-21.

General

The new health care law promises to extend coverage to millions of Americans and to cut costs by cultivating healthy habits and preventive care. But could its emphasis on wellness undermine one of its central achievements: putting an end to the practice of charging sick people more for health insurance?

[…]

“On the one hand, it’s a great idea — let’s encourage people to be healthy,” said Timothy Stoltzfus Jost, a law professor at Washington and Lee University specializing in health and a consumer representative to the National Association of Insurance Commissioners. “But if I have pretty serious asthma, there are a lot of wellness programs that I can’t be a part of. Isn’t this going to mean people who are already unhealthy are going to pay higher premiums?”

Though the law promises to end discrimination in coverage based on health status, Mr. Jost called the wellness provisions “a loophole big enough to drive a semi through,” adding, “Insurers know darn well this will allow them to continue to underwrite based on health status.” Many consumer advocates worry that premiums will be raised significantly across the board first, and then individual discounts will be applied.

The law does include several provisions intended to protect against discrimination in implementing wellness programs. The programs must have “a reasonable chance” of improving health or preventing disease, and cannot be “a subterfuge for discriminating based on a health status factor.”

If people have a medical condition that precludes them from achieving one goal, they must be offered a “reasonable alternative standard,” the law says.

[…]

Premium discounts for people who achieve health objectives — or who are thin, have normal blood pressure or do not smoke to begin with — are minor adjustments, she said, adding, “All the employer would be doing is taking the numbers and doing a little bit of rebalancing of some of the imbalance.”

Currently, discounts pegged to specific health outcomes cannot exceed 20 percent of an employee’s premiums; the law lifts that cap in 2014, allowing for discounts of 30 percent and possibly up to 50 percent in the cost of individual or family health care premiums. It also calls for applying wellness discounts in the individual market; an initial demonstration project involving 10 states is to be started by July 2014.

The money at stake is substantial, according to an analysis by two Harvard researchers, Kristin Voigt and Harald Schmidt. A 30 percent discount translates to $1,447 a year on an average individual policy, or $4,013 for a family policy, they calculated; a 50 percent discount is worth $2,412 for an individual and $6,688 for a family. Dr. Schmidt and Dr. Voigt said they were concerned that workers with low incomes would be disproportionately affected by penalties, since they tend to suffer from more ill health; the policies might also have the effect of driving sicker people away from certain jobs.

Under the new law, employees who meet health benchmarks could also be rewarded with waivers of co-payments and deductibles, or the absence of surcharges that would presumably be charged to other workers.

[…]

Rabin, Roni Caryn. “Could Health Overhaul Incentives Hurt Some?” New York Times. April 12, 2010 (Page D5, New York edition, April 13, 2010). Available online as of 2010-04-18.

It is often said that the new health care law will affect almost every American in some way. And, perhaps fittingly if unintentionally, no one may be more affected than members of Congress themselves.

In a new report, the Congressional Research Service says the law may have significant unintended consequences for the “personal health insurance coverage” of senators, representatives and their staff members.

For example, it says, the law may “remove members of Congress and Congressional staff” from their current coverage, in the Federal Employees Health Benefits Program, before any alternatives are available.

The confusion raises the inevitable question: If they did not know exactly what they were doing to themselves, did lawmakers who wrote and passed the bill fully grasp the details of how it would influence the lives of other Americans?

[…]

“It is unclear whether members of Congress and Congressional staff who are currently participating in F.E.H.B.P. may be able to retain this coverage,” the research service said in an 8,100-word memorandum.

And even if current members of Congress can stay in the popular program for federal employees, that option will probably not be available to newly elected lawmakers, the report says.

Moreover, it says, the strictures of the new law will apply to staff members who work in the personal office of a member of Congress. But they may or may not apply to people who work on the staff of Congressional committees and in “leadership offices” like those of the House speaker and the Democratic and Republican leaders and whips in the two chambers.

These seemingly technical questions will affect 535 members of Congress and thousands of Congressional employees. But the issue also has immense symbolic and political importance. Lawmakers of both parties have repeatedly said their goal is to provide all Americans with access to health insurance as good as what Congress has.

[…]

The new exchanges do not have to be in operation until 2014. But because of a possible “drafting error,” the report says, Congress did not specify an effective date for the section excluding lawmakers from the existing program.

Under well-established canons of statutory interpretation, the report said, “a law takes effect on the date of its enactment” unless Congress clearly specifies otherwise. And Congress did not specify any other effective date for this part of the health care law. The law was enacted when President Obama signed it three weeks ago.

In addition, the report says, Congress did not designate anyone to resolve these “ambiguities” or to help arrange health insurance for members of Congress in the future.

“This omission, whether intentional or inadvertent, raises questions regarding interpretation and implementation that cannot be definitively resolved by the Congressional Research Service,” the report says. “The statute does not appear to be self-executing, but rather seems to require an administrating or implementing authority that is not specifically provided for by the statutory text.”

[…]

“The whole point is to make sure political leaders live under the laws they pass for everyone else,” Mr. Grassley said Tuesday. “In this case, after the committee completed its work, the coverage provision was redrafted by others, and that’s where mistakes were made. Congress can and should act to correct the mistakes.”

The federal employees program, created in 1959, now provides coverage to eight million people and, according to the Congressional Research Service, is the largest employer-sponsored health insurance program in the country.

Pear, Robert. “Baffled by Health Plan? So Are Some Lawmakers”. New York Times. April 12, 2010. (Page A14, New York edition, April 13, 2010). Available online as of 2010-04-18.

[…]

This is the Democrats' best play, but Republicans need to recognize how weak the Democrats' hand really is. First, most of the benefits in the bill don't kick in until 2014 – three election cycles from now. The charge that Republicans are “taking away your benefits” will hardly ring true for Americans who don't yet enjoy those benefits. Second, with all the backroom deals the Democrats cut to pass their bill, including with the pharmaceutical industry and insurance industry, it should be hard for them to argue that Republicans are the ones in bed with big business. Third, recent polls show that large majorities of Americans think the legislation will push the country further into debt, make the quality of their own care worse and increase their own health-care costs. There is no danger in pledging to repeal a bill that Americans believe will explode the deficit, lower the quality of care and increase care costs for many.

Finally, Democrats face a massive enthusiasm gap on health care. Polls show that supporters of Obamacare are lukewarm, while the opponents are vehement. Many see Obamacare as just one element of a larger campaign by the Democrats to transform our country in the image of Europe by dramatically expanding the size and reach of the federal government. They want Republicans to repeal those efforts, not simply tinker around the edges.

[…]

Thiessen, Marc A. “Are Republicans losing their nerve on repeal?”. Washington Post (op-ed). April 13, 2010. Available online as of 2010-04-13.

Revere America, a public interest group headed by former New York Governor George Pataki (R) which tries to promote freedom and a free market, attempted to place an add opposing health care reform on cable news network MSNBC, only to have the ad rejected.

The organization said it has had no problem getting the ad on other networks and in local markets in various locations around the country.

In a letter to MSNBC protesting the turndown, Pataki detailed the network’s reasoning. It wrote, “After reading the script again, there is an implied link between taking away freedoms and Obama Care. Please explain how Obama Care is being linked to taking away freedoms.”

Pataki responded, “I find it incredible that such a question would be asked. I assume that MSNBC is aware of the fact that 19 states are engaged in lawsuits that focus specifically on the mandate to purchase health insurance that Obama Care includes.”

Revere America Spokesman Jeff Cohen added, “It's disappointing that MSNBC is deliberately blocking Revere America's ads from airing on its network, even while other networks saw no such reason to engage in censorship. We hope MSNBC will reconsider its position to not air Revere America's ads and that it will honor the spirit of the Constitution and the people's right to free speech and debate.”

[…]

“Interest group takes on MSNBC over ad rejection”. Radio Broadcating Review - Television Broadcasting Review. April 20, 2010. Available online as of 2010-04-21.

Food retailers beware – the health care reform bill signed into law by President Barack Obama last month includes new labeling requirements and caloric disclosures for restaurants.

Section 4205 of the Patient Protection and Affordable Care Act amends the Food, Drug, and Cosmetic Act to add new labeling requirements for chain restaurants with 20 or more locations doing business under the same name and offering substantially the same menu items. Food retailers with fewer than 20 locations are exempt but can choose to opt in to the requirements.

The law applies to menus and menu boards, including drive-through menu boards and self-service food, such as vending machines or salad bars.

Under the law, food retailers must declare the number of calories each standard menu item provides as it is typically prepared, and must present the required calorie information in terms of suggested caloric intake in the context of an overall diet.

Further, the calorie information must be adjacent to the name of the standard menu item as it is usually prepared and placed on the actual menu or menu board, including a drive-through menu board. It must also be in written form, available on the premises upon consumer request, and include nutrition information currently required on packaged food labels, such as the number of calories, total fat, saturated fat, sugars, cholesterol, fiber, and protein, on a per-serving basis.

Certain items are excluded, such as daily specials, condiments, and temporary menu items, such as test market items or seasonal items.

[…]

Manatt Phelps & Phillips LLP. “Health care reform includes changes to menu labeling”. American Association of Corporate Counsel. April 14, 2010. Available online as of 2010-04-21.

Less than a month after the passage of the national health reform legislation, scammers posing as insurance agents are swindling consumers with bogus health care insurance programs.

According to the Illinois Department of Insurance, counterfeit agents are knocking on doors throughout the country pretending to be from the federal government and selling “ObamaCare” insurance policies. Older Americans appear to be the primary recipients of visits from the scam artists.

Michael T. McRaith, director of the Illinois Department of Insurance, said: “Federal government employees and the Illinois Department of Insurance are working hard to implement and inform the public about national health insurance reform, some provisions of which don’t come into effect until 2014.

“Unsolicited contact, especially from door-to-door salespeople selling health insurance, is nothing more than a ruse to defraud you of your money. Whether it’s called ‘Obamacare’ or something else, there are currently no ‘special’ or ‘limited enrollment’ insurance policies to buy under the new law.”

While many significant reforms will take effect in the immediate or near future such as protection against premium increases and benefits for small businesses, consumers are advised to be suspicious of policies advertised as time-limited, of limited benefits, or necessitated by health insurance reform.

[…]

Gary Harrell, CEO and licensed insurance agent at Affordable Health Insurance Inc. in Arlington Heights, said the scams definitely put a strain on the health insurance business. He too warns consumers to be on the look-out for frauds.

“The logical thing would be to not buy from anyone who comes to your door,” Harrell said. “I am sure there will be a group of agents who sell door-to-door when the reforms are implemented in 2014, but most of our business is done over the phone or through the Internet.

[…]

Alexander, Adam. “Reform bill opens door to scams”. Medill Reports (Chicago). April 21, 2010. Available online as of 2010-04-22.

Just a month ago, I wrote a column in which I notionally looked back at what health care reform would have wrought by the year 2020. Looking back from 2020, I predicted:

Since 2010, insurance companies had been turned essentially into public utilities with the feds setting strict minimum benefits requirements. The health reform bill also limited the administrative costs of insurers, which has ended up basically guaranteeing their profits. With competition all but outlawed, the increasingly consolidated insurance industry has had very little incentive to pay for new treatment regimens outside those specified by government standard-setting agencies. Federal government health agencies have been reluctant to authorize newer treatments because they often lead to higher insurance premiums that then must be subsidized by higher taxes.

Yesterday, the New York Times reported:

Fearing that health insurance premiums may shoot up in the next few years, Senate Democrats laid a foundation on Tuesday for federal regulation of rates, four weeks after President Obama signed a law intended to rein in soaring health costs.

To start setting rates, Sen. Diane Feinstein (D-Calif.) has introduced a bill …

….that would give the secretary of health and human services the power to review premiums and block “any rate increase found to be unreasonable.”

The Times article continues:

“Water and power are essential for life,” Mrs. Feinstein said. “So they are heavily regulated, and rate increases must be approved. Health insurance is also vital for life. It too should be strictly regulated so that people can afford this basic need.”

I told you so. Damn it!

Bailey, Ronald. “Health Care Reform Horror: I Told You So”. Reason. April 22, 2010. Available online as of 2010-04-22. Hyperlinks in original.

Under Section 10101(d) of the Patient Protection and Affordable Care Act (PPACA), which became law in March 2010, insured group health plans will soon be subject to nondiscrimination rules that are similar to those that have been applicable to self-insured plans for the past 30 years. In other words, insured plans will be prohibited from discriminating in favor of highly compensated individuals. Such nondiscrimination rules will apply to calendar year plans beginning January 1, 2011.

The application of new nondiscrimination rules to insured health plans will likely affect certain welfare benefits that employers often provide to executives and other highly compensated individuals. Under the current rules, employers may adopt fully-insured executive-level welfare plans that offer medical, dental and vision benefits that are over and above the coverage provided to rank and file employees. Employers also sometimes purchase insurance policies to satisfy obligations associated with post-termination or retirement health care benefits provided to certain former executives. However, when insured health plans become subject to nondiscrimination requirements, providing such benefits to only a select group of employees will likely result in adverse tax consequences to both the executive and the employer.

Because the PPACA is new, it is currently unclear how the new nondiscrimination rules will be enforced and what consequences will apply if discrimination exists. However, given that the law may begin to be enforced in the near future, employers should examine their insured plans for evidence of discrimination, and determine what must be done to avoid continuation of any discriminatory plans into 2011.

Lange, Daniel B.; Durnwald, Michael R. (michael.durnwald@kattenlaw.com); Bridgman, Andrew E. “Health care reform: insured health plans to comply with nondiscrimination rules”. Lexology (Publication of the Association of Corporate Counsel). April 23, 2010. Available online as of 2010-04-29. Cites a printed edition.

Maybe those small-business tax credits aren’t so popular after all: Or at least that’s what the U.S. Chamber of Commerce and National Federation of Independent Business want you to believe. The groups say the tax credits won’t do much to help small business afford health insurance. The tax credits are available in full (equal to 35 percent of what a firm spends on health-insurance premiums) to companies with 10 or fewer employees and that have average salaries of $25,000 or less. Also, reduced credits are available to firms with 25 or fewer employees and with average salaries less than $50,000. The groups complain that the tax credits are available for only six years, and that the real problem is rapidly rising health costs that will likely persist far longer than six years.

[…]

A warning about “regional extension centers”: Anyone who’s been following the federal government’s push to get electronic medical records into the hands of the nation’s doctors has likely encountered the phrase “regional extension centers” and cocked an eyebrow. These centers are charged with helping small private practice docs choose, implement and train staff on EMRs, but how would they work? A new study in Health Affairs provides the answer: “Probably not too well.”

The study says that the centers will likely be too understaffed and underfunded to provide the help physicians need, American Medial News reports. Further, consultants staffing the centers should have not only technical skills, but should be experienced in working with small practices, software implementation and workflow adjustment. Suffice it to say, such people are hard to find, andthat could be the primary reason these centers will struggle to fulfill their mission. Unfortunately, extension centers look to be shaping up as wonderful fodder for the “government-can’t-do-anything-right” crowd:

Study authors also questioned the sustainability of regional extension centers due to inadequate funding. Similar projects in Massachusetts and New York spent approximately $60,000 to $80,000 per targeted physician. Proposed federal funding of regional extension centers made available under the American Recovery and Reinvestment Act of 2009 averages to about $6,400 per targeted physician.

[…]

Glenn, Brandon. “Morning Read: Maybe those small-business tax credits aren’t so popular”. MedCity News. April 29, 2010. Available online as of 2010-04-29.

Efforts to block a key provision of the new health-care overhaul law are underway in 33 states, as a growing roster of mostly Republican officials have mounted legal and legislative challenges to an eventual requirement that virtually all Americans buy health insurance or pay a penalty tax.

This Friday, seven more states will formally join a lawsuit originally filed by Florida and 12 other states in late March.

The suit, filed in a U.S. District Court in Florida, contends that Congress lacks the constitutional authority to mandate an individual's participation in an insurance plan, and that it has infringed on states' rights by requiring them to extend coverage to more low-income residents without fully funding the additional cost.

[…]

Political leaders in more than a dozen states, including many that are party to the multistate lawsuit, are also attempting to follow Virginia's strategy of enacting legislation that will inevitably lead to a clash in the courts.

Arizona, where attempts to adopt a nearly identical constitutional amendment failed in 2008, succeeded in passing a statute during a special session convened after the federal law was passed.

Versions have since been approved by the legislatures of Georgia and Oklahoma and await gubernatorial signatures, according to records maintained by the American Legislative Exchange Council, a Washington group that advocates limited government and free markets and that has helped state lawmakers harmonize their efforts. On Tuesday, lawmakers in Missouri approved putting a similar law up for statewide referendum on Aug. 2. Seven more states are considering such bills, including Tennessee, where one chamber of the General Assembly has already signed off.

Leaders in Arizona, Oklahoma and Florida are also trying a third approach: putting a state constitutional amendment prohibiting the individual mandate on their ballots for November. Similar campaigns are underway in 11 more states. (Proposals to adopt legislation or constitutional amendments were unsuccessfully attempted in 15 additional states, including Maryland.)

[…]

Aizenman, N.C. “Health-care overhaul is up against long campaign across U.S.”. Washington Post. May 12, 2010. Available online as of 2010-05-12.

White House

In the speech below, delivered on 15 Mar 2010, President Obama promises “Well, a lot of those folks, your employer it’s estimated would see premiums fall by as much as 3,000 percent [sic], which means they could give you a raise.” The statement has never been retracted; in fact, the White House continues to use the statement on its website!!

The White House

Office of the Press Secretary

For Immediate Release

March 15, 2010

Remarks by the President on Health Care Reform in Strongsville, Ohio

Walter F. Ehrnfelt Recreation and Senior Center, Strongsville, Ohio

1:00 P.M. EDT

THE PRESIDENT: Hello, Ohio! (Applause.) It is good to be here in the Buckeye State. Congratulations on winning the Big Ten Championship. (Laughter.) I'm filling out my brackets now. (Laughter.) And it’s even better to be out of Washington for a little while.

AUDIENCE: O-H-I-O.

THE PRESIDENT: Yes, that kid Turner looks pretty good. You guys are doing all right.

It is wonderful to be here –

AUDIENCE MEMBER: I love you!

THE PRESIDENT: I love you back. I do. (Applause.)

Couple of people I just want to make sure I give special mention to. First of all, you already saw him, Governor Ted Strickland in the house. (Applause.) Ted is fighting every day to bring jobs and economic development to Ohio.

So is your terrific United States Senator Sherrod Brown. Love Sherrod Brown. (Applause.) Your own congressman, who is tireless on behalf of working people, Dennis Kucinich. (Applause.)

AUDIENCE MEMBER: Vote yes!

THE PRESIDENT: Did you hear that, Dennis? Go ahead, say that again.

AUDIENCE MEMBER: Vote yes!

THE PRESIDENT: A couple members of Congress are here: U.S. Representative Betty Sutton. (Applause.) U.S. Representative Marcia Fudge. (Applause.) U.S. Representative Tim Ryan. (Applause.) U.S. Representative Charlie Wilson. (Applause.)

I want to thank Mayor Tom Perciak here in Strongsville. Please, Mr. Mayor, you’re on. (Applause.) That's a good bunch of folks we got here in Ohio, working hard. Which is why I'm glad to be back – and let’s face it, it’s nice to be out of Washington once in a while. (Laughter.)

I want to thank Connie – I want to thank Connie, who introduced me. I want to thank her and her family for being here on behalf of her sister, Natoma. I don't know if everybody understood that Natoma is in the hospital right now, so Connie was filling in. It’s not easy to share such a personal story, when your sister who you love so much is sick. And so I appreciate Connie being willing to do so here today, and – (applause) – and I want everybody to understand that Connie and her sister are the reason that I’m here today. (Applause.)

See, Connie felt it was important that her sister’s story be told. But I want to just repeat what happened here. Last month, I got a letter from Connie’s sister, Natoma. She’s self-employed, she’s trying to make ends meet, and for years she’s done the responsible thing, just like most of you have. She bought insurance – she didn’t have a big employer who provided her insurance, so she bought her health insurance through the individual market.

And it was important for her to have insurance because 16 years ago, she was diagnosed with a treatable form of cancer. And even though she had been cancer-free for more than a decade, the insurance companies kept on jacking up her rates, year after year. So she increased her out-of-pocket expenses. She raised her deductible. She did everything she could to maintain her health insurance that would be there just in case she got sick, because she figured, I didn’t want to be – she didn’t want to be in a position where, if she did get sick, somebody else would have to pick up the tab; that she’d have to go to the emergency room; that the cost would be shifted onto folks through their higher insurance premiums or hospitals charging higher rates. So she tried to do the right thing.

And she upped her deductible last year to the minimum [sic], the highest possible deductible. But despite that, Natoma’s insurance company raised her premiums by more than 25 percent. And over the past year, she paid more than $6,000 in monthly premiums.

AUDIENCE: Boo!

THE PRESIDENT: She paid more than $4,000 in out-of-pocket medical costs, for co-pays and medical care and prescriptions. So all together, this woman paid $10,000 – one year. But because she never hit her deductible, her insurance company only spent $900 on her care. So the insurance company is making – getting $10,000; paying out $900. Now, what comes in the mail at the end of last year?

AUDIENCE MEMBER: A bill!

AUDIENCE MEMBER: A rate hike!

THE PRESIDENT: It’s a letter telling Natoma that her premiums would go up again by more than 40 percent.

AUDIENCE: Boo!

THE PRESIDENT: So here’s what happens. She just couldn’t afford it. She didn’t have the money. She realized that if she paid those health insurance premiums that had been jacked up by 40 percent, she couldn’t make her mortgage. And despite her desire to keep her coverage, despite her fears that she would get sick and lose the home that her parents built – she finally surrendered, she finally gave up her health insurance. She stopped paying it – she couldn’t make ends meet.

So January was her last month of being insured. Like so many responsible Americans – folks who work hard every day, who try to do the right thing – she was forced to hang her fortunes on chance. To take a chance, that’s all she could do. She hoped against hope that she would stay healthy. She feared terribly that she might not stay healthy.

That was the letter that I read to the insurance companies, including the person responsible for raising her rates. Now, I understand Natoma was pretty surprised when she found out that I had read it to these CEOs. But I thought it was important for them to understand the human dimensions of this problem. Her rates have been hiked more than 40 percent.

And this was less than two weeks ago. Unfortunately, Natoma’s worst fears were realized. And just last week, she was working on a nearby farm, walking outside – apparently, chasing after a cow – (laughter) – when she collapsed. And she was rushed to the hospital. She was very sick. She needed two blood transfusions. Doctors performed a battery of tests. And on Saturday, Natoma was diagnosed with leukemia.

Now, the reason Natoma is not here today is that she’s lying on a hospital bed, suddenly faced with this emergency – suddenly faced with the fight of her life. She expects to face more than a month of aggressive chemotherapy. She is racked with worry not only about her illness but about the costs of the tests and the treatment that she’s surely going to need to beat it.

So you want to know why I’m here, Ohio? I’m here because of Natoma. (Applause.) I’m here because of the countless others who have been forced to face the most terrifying challenges in their lives with the added burden of medical bills they can’t pay. I don't think that’s right. (Applause.) Neither do you. That’s why we need health insurance right now. Health insurance reform right now. (Applause.)

AUDIENCE: Obama! Obama! Obama! Obama!

THE PRESIDENT: I’m here because of my own mother’s story. She died of cancer, and in the last six months of her life, she was on the phone in her hospital room arguing with insurance companies instead of focusing on getting well and spending time with her family.

I’m here because of the millions who are denied coverage because of preexisting conditions or dropped from coverage when they get sick. (Applause.)

I’m here because of the small businesses who are forced to choose between health care and hiring. (Applause.)

I’m here because of the seniors unable to afford the prescriptions that they need. (Applause.)

I’m here because of the folks seeing their premiums go up 20 and 30 and 40 and 50 and 60 percent in a year. (Applause.)

Ohio, I am here because that is not the America I believe in and that’s not the America that you believe in.

AUDIENCE MEMBER: What’s your plan?

THE PRESIDENT: So when you hear people say “start over” –

AUDIENCE: No!!

THE PRESIDENT: – I want you to think about Natoma. When you hear people saying that this isn’t the “right time,” you think about what she’s going through. When you hear people talk about, well, what does this mean for the Democrats? What does this mean for the Republicans? I don’t know how the polls are doing. When you hear people more worried about the politics of it than what’s right and what’s wrong, I want you to think about Natoma and the millions of people all across this country who are looking for some help, and looking for some relief. That’s why we need health insurance reform right now. (Applause.)

Part of what makes this issue difficult is most of us do have health insurance, we still do. And so – and so we kind of feel like, well, I don’t know, it’s kind of working for me; I’m not worrying too much. But what we have to understand is that what’s happened to Natoma, there but for the grace of God go any one of us. (Applause.) Anybody here, if you lost your job right now and after the COBRA ran out –

(Audience member faints.)

THE PRESIDENT: It looks like we’ve got somebody who might’ve fainted down there, so if we’ve got a medic. No, no, no. Hold on. I’m talking about there’s somebody who might’ve fainted right down here, so if we can get a medic just back here. They’re probably okay. Just give her or him some space.

AUDIENCE MEMBER: Hope you have insurance. (Laughter.)

THE PRESIDENT: So let’s just think about – think about if you lost your job right now. How many people here might have had a preexisting condition that would mean it’d be very hard to get health insurance on the individual market? Think about if you wanted to change jobs. Think about if you wanted to start your own business but you suddenly had to give up your health insurance on your job. Think about what happens if a child of yours, heaven forbid, got diagnosed with something that made it hard for them to insure.

For so many people, it may not be a problem right now but it’s going to be a problem later, at any point. And even if you’ve got good health insurance, what’s happening to your premiums? What’s happening to your co-payments? What’s happening to your deductible? They’re all going up. That’s money straight out of your pocket.

So the bottom line is this: The status quo on health care is simply unsustainable. (Applause.) We can’t have – we can’t have a system that works better for the insurance companies than it does for the American people. (Applause.)

And we know what will happen if we fail to act. We know that our government will be plunged deeper into debt. We know that millions more people will lose their coverage. We know that rising costs will saddle millions more families with unaffordable expenses. And a lot of small businesses are just going to drop their coverage altogether. That’s already what’s been happening.

A study came out just yesterday – this is a nonpartisan study – it’s found that without reform, premiums could more than double for individuals and families over the next decade. Family policies could go to an average of $25,000 or more. Can you afford that?

AUDIENCE: No!

THE PRESIDENT: You think your employer can afford that?

AUDIENCE: No!

THE PRESIDENT: Your employer can’t sustain that. So what’s going to happen is, they’re basically – more and more of them are just going to say, you know what? You’re on your own on this.

We have debated this issue now for more than a year. Every proposal has been put on the table. Every argument has been made. I know a lot of people view this as a partisan issue, but, look, the fact is both parties have a lot of areas where we agree – it’s just politics are getting in the way of actually getting it done. (Applause.)

Somebody asked what’s our plan. Let me describe exactly what we’re doing, because we’ve ended up with a proposal that incorporates the best ideas from Democrats and Republicans, even though Republicans don’t give us any credit. (Laughter.) That’s all right.

You know, if you think about the debate around health care reform, there were some who wanted to scrap the system of private insurance and replace it with government-run care. And, look, that works in a number of places, but I did not see that being practical to help right away for people who really need it.

And on the other end of the spectrum, and this is what a lot of the Republicans are saying right now, there are those who simply believe that the answer is to unleash the insurance industry, to deregulate them further, provide them less oversight and fewer rules.

AUDIENCE: Boo!

THE PRESIDENT: This is called the fox-guarding-the-henhouse approach to health insurance reform. (Laughter.) So what it would do is it would give insurance companies more leeway to raise premiums, more leeway to deny care. It would segment the market further. It would be good if you were rich and healthy. You’d save money. But if you’re an ordinary person, if you get older, if you get a little sicker, you’d be paying more.

Now, I don’t believe we should give the government or insurance companies more control over health care in America. I believe it’s time to give you, the American people, more control over your own health insurance. (Applause.)

And that’s what our proposal does. Our proposal builds on the current system where most Americans get their health insurance from their employer. So if you like your plan, you can keep your plan. If you like your doctor, you can keep your doctor. I don't want to interfere with people’s relationships between them and their doctors.

Essentially, here’s what my proposal would change: three things about the current health care system, but three important things.

Number one, it would end the worst practices of the insurance companies. (Applause.) All right? This is like a patient’s bill of rights on steroids. (Laughter.) Within the first year of signing health care reform, thousands of uninsured Americans with preexisting conditions will be able to purchase health insurance for the first time in their lives or the first time since they got sick. (Applause.) This year, insurance companies will be banned forever from denying coverage to children with preexisting conditions. So parents can have a little bit of security. (Applause.) This year, under this legislation, insurance companies will be banned from dropping your coverage when you get sick. Those practices would end. (Applause.)

With this reform package, all new insurance plans would be required to offer free preventive care to their customers starting this year – so free check-ups to catch preventable diseases on the front end. That’s a smart thing to do. (Applause.) Starting this year, if you buy a new plan, there won’t be lifetime or restrictive annual limits on the amount of care you receive from your insurance companies, so you won’t be surprised by the fine print that says suddenly they’ve stopped paying and you now suddenly are $50,000 or $100,000 or $200,000 out of pocket. That won’t – that will not happen if this becomes law this year. (Applause.)

I see – I see some young people in the audience. (Applause.) If you’re an uninsured young adult, you will be able to stay on your parents’ policy until you’re 26 years old under this law. (Applause.)

So number one – number one is insurance reform. The second thing that this plan would change about the current system is this: For the first time, uninsured individuals, small businesses, they’d have the same kind of choice of private health insurance that members of Congress get for themselves. (Applause.) Understand if this reform becomes law, members of Congress, they’ll be getting their insurance from the same place that the uninsured get theirs, because if it’s good enough for the American people, it’s good enough for the people who send us to Washington. (Applause.)

So basically what would happen is, we’d set up a pool of people; millions of people across the country would all buy into these pools that give them more negotiating power. If you work for a big company, you’ve got a better insurance deal because you’ve got more bargaining power as a whole. We want you to have all the bargaining power that the federal employees have, that big companies have, so you’ll be able to buy in or a small business will be able to buy into this pool. And that will lower rates, it’s estimated, by up to 14 to 20 percent over what you’re currently getting. That’s money out of pocket.

And what my proposal says is if you still can’t afford the insurance in this new marketplace, then we’re going to offer you tax credits to do so. And that will add up to the largest middle-class tax cut for health care in history. That’s what we’re going to do. (Applause.)

Now, when I was talking about this at that health care summit, some of you saw it – I sat there for about seven hours; I know you guys watched the whole thing. (Laughter.) But some of these folks said, well, we just – that’s a nice idea but we just can’t afford to do that. Look, I want everybody to understand – the wealthiest among us can already buy the best insurance there is. The least well among us, the poorest among us, they get their health care through Medicaid. So it’s the middle class, it’s working people that are getting squeezed, and that’s who we have to help, and we can afford to do it. (Applause.)

Now, it is true that providing these tax credits to middle class families and small businesses, that’s going to cost some money. It’s going to cost about $100 billion per year. But most of this comes from the nearly $2.5 trillion a year that Americans already spend on health care. It’s just right now, a lot of that money is being spent badly.

So with this plan, we’re going to make sure the dollars we make – the dollars that we spend on health care are going to make insurance more affordable and more secure. And we’re going to eliminate wasteful taxpayer subsidies that currently go to insurance company. Insurance companies are making billions of dollars on subsidies from you, the taxpayer. And if we take those subsidies away, we can use them to help folks like Natoma get health insurance so she doesn’t lose her house. (Applause.)

And, yes, we will set a new fee on insurance companies because they stand to gain millions more customers who are buying insurance. There’s nothing wrong with them giving something back. But here’s the bottom line: Our proposal is paid for – which, by the way, is more than can be said for our colleagues on the other side of the aisle when they passed that big prescription drug plan that cost about as much as my health care plan and they didn’t pay for any of it and it went straight to the deficit. And now they’re up there on their high horse talking about, well, we don’t want to expand the deficit. This plan doesn’t expand the deficit. Their plan expanded the deficit. That’s why we pay for what we do. That’s the responsible thing to do. (Applause.)

Now, so let me talk about the third thing, which is my proposal would bring down the cost of health care for families, for businesses, and for the federal government. So Americans buying comparable coverage to what they have today – I already said this – would see premiums fall by 14 to 20 percent – that’s not my numbers, that’s what the nonpartisan Congressional Budget Office says – for Americans who get their insurance through the workplace. How many people are getting insurance through their jobs right now? Raise your hands. All right. Well, a lot of those folks, your employer it’s estimated would see premiums fall by as much as 3,000 percent [sic], which means they could give you a raise. (Applause.)

We have incorporated most of the serious ideas from across the political spectrum about how to contain the rising costs of health care. We go after waste and abuse in the system, especially in Medicare. Our cost-cutting measures would reduce most people’s premiums and bring down our deficit by up to a trillion dollars over the next two decades. Those aren’t my numbers. Those are the numbers determined by the Congressional Budget Office. They’re the referee. That’s what they say, not what I say.

Now, the opponents of reform, they’ve tried to make a lot of different arguments to stop these changes. You remember. First, they said, well, there’s a government takeover of health care. Well, that wasn’t true. Well, that wasn’t true. Then they said, well, what about death panels? Well, that turned out – that didn’t turn out to be true.

You know, the most insidious argument they’re making is the idea that somehow this would hurt Medicare. I know we’ve got some seniors here with us today – I couldn’t tell; you guys look great. (Laughter.) I wouldn’t have guessed. But want to tell you directly: This proposal adds almost a decade of solvency to Medicare. (Applause.) This proposal would close the gap in prescription drug coverage, called the doughnut hole – you know something about that – that sticks seniors with thousands of dollars in drug costs. This proposal will over time help to reduce the costs of Medicare that you pay every month. This proposal would make preventive care free so you don’t have to pay out-of-pocket for tests to keep you healthy. (Applause.)

So yes, we’re going after the waste, the fraud, the abuse in Medicare. We are eliminating some of the insurance subsidies that should be going to your care. That’s because these dollars should be spent on care for seniors, not on the care and feeding of the insurance companies through sweetheart deals. And every senior should know there is no cutting of your guaranteed Medicare benefits. Period. No “ifs,” “ands,” or “buts.” (Applause.) This proposal makes Medicare stronger, it makes the coverage better, and it makes the finances more secure. And anybody who says otherwise is either misinformed – or they’re trying to misinform you. Don’t let them hoodwink you. They’re trying to hoodwink you. (Laughter.)

So, look, Ohio, that’s the proposal. And I believe Congress owes the American people a final up or down vote. (Applause.) We need an up or down vote. It’s time to vote. And now as we get closer to the vote, there is a lot of hand-wringing going on. We hear a lot of people in Washington talking about politics, talking about what this means in November, talking about the poll numbers for Democrats and Republicans.

AUDIENCE MEMBER: We need courage!

THE PRESIDENT: We need courage. (Applause.) Did you hear what somebody just said? (Applause.) That’s what we need. That’s why I came here today. We need courage. (Applause.)

We need courage. You know, in the end, this debate is about far more than politics. It comes down to what kind of country do we want to be. It’s about the millions of lives that would be touched and, in some cases, saved, by making health insurance more secure and more affordable. (Applause.) It’s about a woman who’s lying in a hospital bed who just wants to be able to pay for the care she needs. And the truth is, what’s at stake in this debate, it’s not just our ability to solve this problem; it’s about our ability to solve any problem.

I was talking to Dennis Kucinich on the way over here about this. I said, you know what? It’s been such a long time since we made government on the side of ordinary working folks – (applause) – where we did something for them that relieved some of their struggles; that made folks who work hard every day and are doing the right thing and who are looking out for the families and contributing to their communities, that just gave them a little bit of a better chance to live out their American Dream.

The American people want to know if it’s still possible for Washington to look out for these interests, for their future. So what they’re looking for is some courage. They’re waiting for us to act. They’re waiting for us to lead. They don’t want us putting our finger out to the wind. They don’t want us reading polls. They want us to look and see what is the best thing for America, and then do what’s right. (Applause.) And as long as I hold this office, I intend to provide that leadership. And I know these members of Congress are going to provide that leadership. I don’t know about the politics, but I know what’s the right thing to do. And so I’m calling on Congress to pass these reforms – and I’m going to sign them into law. I want some courage. I want us to do the right thing, Ohio. And with your help, we’re going to make it happen.

God bless you, and God bless the United States of America. (Applause.)

END 1:33 P.M. EDT

Obama, Barack (President of the United States). Remarks by the President on Health Care Reform in Strongsville, Ohio, Walter F. Ehrnfelt Recreation and Senior Center, Strongsville, Ohio. March 15, 2010. Available online as of 2010-04-11. Also available on video from CNN.

It may be sunny and spring in Washington, but a sort of political inversion has taken hold in the weekend's polling:

President Barack Obama's job approval rating has slid to 45 percent today in the Gallup Poll's daily tracking, a rolling average of the past three days' surveys.

That's a new low in the Gallup tracks – which found the president's approval rating at a previous low of 46 percent in early March.

And the day's results repeat a finding that the president's ratings have seen before: More people voicing disapproval for his performance (48 percent) than approval.

[…]

Silva, Mark. “Obama's Job Approval: New Gallup Low”. Chicago Tribune. April 12, 2010. Available online as of 2010-04-13. Hyperlink in original.

Three weeks after Congress passed its new national health care plan, support for repeal of the measure has risen four points to 58%. That includes 50% of U.S. voters who strongly favor repeal.

The latest Rasmussen Reports telephone survey of likely voters nationwide finds 38% still oppose repeal, including 32% who strongly oppose it.

For the previous two weeks following passage of the controversial plan, 54% of voters have favored repeal and 42% have opposed it.

[…]

Generally speaking, the partisan and demographic breakdowns have shifted little since passage of the health care bill. Those groups who opposed the bill tend to support repeal and those who supported the bill oppose repeal.

Most voters have believed for months that the quality of health care will suffer if the plan becomes law and that costs will go up.

Voters strongly believe the health care reform plan will cost more than official estimates, and 78% expect an increase in taxes on the middle class to pay for it.

[…]

“Health Care Law: Support for Repeal of Health Care Plan Up to 58%”. Rasmussen Reports. April 12, 2010. Available online as of 2010-04-13.

Treasury

Internal Revenue Service agents already try to catch tax cheats and moonshiners. Under the proposed health care legislation, they would get another assignment: checking to see whether Americans have health insurance.

[…]

The CBO estimated the IRS would need $5 billion to $10 billion in the first decade to cover the costs of its expanded role. The IRS' annual budget is currently $11.5 billion.

Neither the House nor Senate bill includes funding for the IRS, but money could be added by House and Senate negotiators.

[…]

Howard Gleckman of the Urban Institute, an economics and social policy think tank, sees the IRS' proposed new role as a part of a historical pattern. “We are always asking the IRS to do all kinds of social engineering,” he said, such as tax credits for new homeowners and renewable-energy companies.

[…]

Despite concerns over whether IRS will be up to the job in the health bills, Gerard Anderson, health policy professor at Johns Hopkins University, said: “The IRS seems like the only logical enforcement mechanism.”

Galewitz and Weaver report for Kaiser Health News, an editorially independent news service and a program of the Kaiser Family Foundation, a non-partisan health care policy research organization. Neither KFF nor KHN is affiliated with Kaiser Permanente.

Galewitz, Phil; Weaver, Christopher (Kaiser Health News). “Health bills could expand IRS role”. USA Today. January 4, 2010. Available online as of 2010-04-08.

See also video of testimony of the IRS Commissioner before House Ways & Means Committee.

Individuals who don’t purchase health insurance may lose their tax refunds according to IRS Commissioner Doug Shulman. After acknowledging the recently passed health-care bill limits the agency’s options for enforcing the individual mandate, Shulman told reporters that the most likely way to penalize individuals that don’t comply is by reducing or confiscating their tax refunds.

Speaking at the National Press Club on Monday, Shulman downplayed the IRS’s role in enforcing the recent overhaul of the health insurance industry by claiming the agency would not aggressively target individuals who don’t purchase coverage. He noted that the health-care bill expressly forbids the agency from freezing bank accounts, seizing assets or pursuing criminal charges, but when pressed said the IRS would most likely use tax refund offsets to penalize those that don’t comply with the mandate. The IRS uses refund offsets to collect from individuals that owe the federal government a delinquent debt.

“These are not the kinds of things we send agents out about,” Shulman said. “These are things where you get a letter from us. Congress was very careful to make sure there was nothing too punitive in this bill.”

Many reports have claimed that enforcement of the individual mandate will be non-existent, but Shulman’s answers indicate differently. According to BusinessWeek, starting in 2015 Americans who don’t purchase insurance will be subject to a fine of $325 and that sum increases to $695 in 2016. However, the commissioner seemed confident that in most cases individuals would either receive subsidies to purchase insurance or simply do so on their own in order to comply with the law.

[…]

He also said it is too early to know what additional resources or how many employees the IRS will need to enforce compliance with the mandate and clarified his reasons for using a professional tax preparer.

[…]

Nagesh, Gautham. “IRS Chief: Buy Health Insurance or Lose Your Tax Refund”. Daily Caller. April 6, 2010, 4:01 AM. Available online as of 2010-04-06. Hyperlinks in original.

One of the most contentious aspects of the health care reform law signed by President Obama on March 23 was the requirement that all Americans obtain health insurance that provides “minimum essential coverage,” whether or not they want it.

Because the Patient Protection and Affordable Care Act requires the Internal Revenue Service to enforce compliance, critics say it will result in a significant expansion of the tax collection agency.

Republicans on the House Ways and Means Committee estimated in a March report the IRS could require as many as 16,500 additional examiners, agents and other employees to implement the law.

But IRS Commissioner Douglas Shulman said, “It's way too early to say exactly what we're going to need three or four years from now for the actual full implementation.” In remarks following a speech at the National Press Club in Washington on April 5, Shulman said new processes and technology could negate the need for substantial staff increases.

“None of the individual tax provisions come into play this year,” he said. “This is all down the road, most of them coming into play for 2013 and 2014.”

What's more, the agency is limited in the actions it can take to enforce compliance. “Congress was very careful to make sure that there was nothing too punitive in this bill,” Shulman said. “There's no criminal sanctions for not paying this, and there's no ability to levy a bank account or do seizures or [use] some of the other tools” available to the agency for enforcing laws.

[…]

The controversy over health reform didn't end when President Obama signed the law. So far, 18 states have joined a lawsuit filed on March 23 challenging the constitutionality of the law's requirement that individuals purchase health insurance. While the eventual outcome of that suit is uncertain, the IRS already has begun implementing other aspects of the law, including tax credit provisions for small businesses to help them buy insurance for employees and new taxes on some parts of the health care industry.

“The IRS tries to stay out of the political fray,” Shulman said.

Peters, Katherine McIntire. “Health care reform law's impact on IRS is uncertain”. Government Executive. April 9, 2010. Available online as of 2010-04-09. Hyperlinks in original.

Taxpayers earning less than $200,000 a year will pay roughly $3.9 billion more in taxes — in 2019 alone — due to healthcare reform, according to the Joint Committee on Taxation, Congress's official scorekeeper.

The new law raises $15.2 billion over 10 years by limiting the medical expense deduction, a provision widely used by taxpayers who either have a serious illness or are older.

Taxpayers can currently deduct medical expenses in excess of 7.5 percent of their adjusted gross income. Starting in 2013, most taxpayers will only be able to deduct expenses greater than 10 percent of AGI. Older taxpayers are hit by this threshold increase in 2017.

Once the law is fully implemented in 2019, the JCT estimates the deduction limitation will affect 14.8 million taxpayers — 14.7 million of them will earn less than $200,000 a year. These taxpayers are single and joint filers, as well as heads of households.

[…]

The healthcare law contains tax breaks for individuals purchasing health insurance, but the breaks phase out for those making $88,000 a year.

[…]

Couples earning less than $250,000 will also nicked by the tax, but the exact number is unclear. The JCT lumps this income level in with those making at least $500,000. It estimates that 58,000 taxpayers earning between $200,000 and $500,000 annually will pay $74 million more in taxes in 2019.

About 5,000 taxpayers earning over $500,000 a year will pay $43 million more in tax because of the limitation.

[…]

When asked, Shields did not say the information in the article was inaccurate. Her comments were added to the story after its original posting.

The JCT figures were supplied to The Hill by Senate Republican staffers. The numbers were calculated in December but have not been materially altered. The JCT does not comment to the press on its calculations.

President Barack Obama in his Saturday radio address said the healthcare law keeps his campaign pledge to not raise taxes on the middle class. In his bid for the White House, he promised that individuals earning less than $200,000 and joint filers earning less than $250,000 would not see a tax increase under his watch.

Heflin, Jay. “JCT: Healthcare law to sock middle class with a $3.9 billion tax increase in 2019”. The Hill. April 12, 2010. Available online as of 2010-04-13.

Lockheed Martin, the world's largest defense contractor, said Wednesday that profits fell 18 percent in the first quarter compared with the same period a year ago, a decline related largely to changes in federal tax policy brought on by the recently passed health reform law.

The Bethesda company reported it earned $547 million ($1.45 per share), down from $666 million ($1.68) in the first quarter a year earlier.

The company attributed its lower earnings in part to “an unusual charge” related to legislation that ended a tax deduction for benefit costs reimbursed under Medicare Part D. The charge decreased earnings by $96 million, according to Lockheed.

[…]

Censer, Marjorie. “Lockheed Martin reports 1Q loss, cites charge related to health-care reform”. Washington Post April 21, 2010, 11:48 AM ET. Available online as of 2010-04-21.

The Internal Revenue Service this week began mailing postcards to more than 144 thousand small businesses and tax-exempt organizations in New Jersey to make them aware of the benefits of the recently enacted small business health care tax credit. More than four million postcards will be mailed nationwide.

Included in the Patient Protection and Affordable Care Act approved by Congress last month and signed into law by President Obama, the credit is one of the first health care reform provisions to go into effect. The credit, which takes effect this year, is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.

“We want to make sure small employers across the nation realize that—effective this tax year—they may be eligible for a valuable new tax credit. Our postcard mailing—which is targeted at small employers—is intended to get the attention of small employers and encourage them to find out more,” IRS Commissioner Doug Shulman said. “We urge every small employer to take advantage of this credit if they qualify.”

In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees in 2010. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ low- and moderate-income workers.

For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. The maximum credit goes to smaller employers—those with 10 or fewer full-time equivalent (FTE) employees—paying annual average wages of $25,000 or less. Because the eligibility rules are based in part on the number of FTEs, not the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals. The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more.

Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011. For tax-exempt organizations, the IRS will provide further information on how to claim the credit.

“IRS Reaches Out To Small Business Employers About New Health Care Tax Credit”. (New Jersey) News-Record. April 22, 2010. Available online as of 2010-04-22.

[…]

Starting in 2014, the agency will have another task: making sure all Americans have health insurance. Under the law, Americans who can afford health insurance but refuse to buy it will face a fine of up to $695 or 2.5% of their income, whichever is higher. More than 4 million Americans could be subject to penalties of up to $1,000 by 2016 if they fail to obtain health insurance, the Congressional Budget Office said last week.

The IRS will be the enforcer — sort of.

While the IRS can impose liens or levies, seize property or seek jail time against people who don't pay taxes, it's barred from taking such actions against taxpayers who ignore the insurance mandate. In the arsenal instead: the ability to withhold refunds from taxpayers who decline to pay the penalty, IRS Commissioner Doug Shulman said this month.

Still, compliance with the health reform law will be largely voluntary, says Timothy Jost, a law professor at Washington and Lee University. “By taking criminal sanctions and liens and levies off the table, the IRS' hands are tied, to a considerable extent.”

The IRS is “being put in a position where it will be sending notices that will annoy people” and not much else, says James Maule, professor of law at Villanova University and author of the tax blog MauledAgain. “It's basically designed for failure.”

[…]

In this political environment, even a defanged IRS stirs up powerful emotions. Among the concerns about the IRS' role in the health care reform law:

  • The law will lead to a dramatic expansion of the IRS. The Congressional Budget Office has estimated that the IRS will need an additional $5 billion to $10 billion over the next 10 years to administer the health care law. That projection has fired up activists who believe the IRS should be downsized, or abolished. […]
  • The law will make it more difficult for the IRS to carry out its primary job of collecting taxes. Only 64% of taxpayers who called the IRS during last year's tax-filing season reached an IRS representative, according to a report by the IRS' national taxpayer advocate. The IRS' modest goal for this year was to answer 71% of taxpayer calls. Even more callers could have trouble getting through when the IRS takes on its obligations under the health care law, Sen. Charles Grassley, R-Iowa, said at an April 15 Senate Finance Committee hearing. […]
  • The IRS does a poor job of managing social programs. Critics of the legislation say problems with the Earned Income Tax Credit, a federal program that provides tax rebates to low-income working families, illustrate the pitfalls of putting the IRS in charge of administering health care reform. The EITC program “has one of the highest fraud and abuse rates of any tax provision out there,” Grassley said at the April 15 hearing. In tax year 2006, the latest year available, IRS made $10 billion to $12 billion in erroneous EITC payments, according to a study by the Treasury Department's inspector general. […]

[…]

Starting in 2014, insurers will be required to send the IRS a document showing that the taxpayer has insurance coverage. The IRS will match taxpayers' returns with information it receives from insurers, and individuals who don't have insurance will receive a letter explaining how much they owe in penalties.

Those who ignore the letter could have the penalty withheld from their refunds — but that will only be effective if they're due a refund. Self-employed taxpayers, who are among the individuals most likely to go without insurance, often don't get refunds because their wages aren't subject to withholding.

[…]

Still, Jost believes the actual number of insurance scofflaws will be relatively small. People who receive health insurance through their jobs — about 57% of workers — won't be affected. Taxpayers older than 65 won't be subject to the new requirement because they're covered by Medicare. And many self-employed people, along with workers who don't have employer-provided coverage, meet the income requirements for tax credits, so they'll have an incentive to get insurance, he says.

That leaves doctors, lawyers, accountants and other self-employed people with high incomes, Jost says. Many of these taxpayers have complex tax returns that include numerous tax deductions and credits, Jost says. “Unless they are just deeply principled people who think this is the greatest offense in the history of this country, they are not going to want to mix it up with the IRS,” he says.

And what will happen to taxpayers who defy the mandate? Not much, Jost predicts:

“I think it's going to be a small number of wealthy people who are going to be determined to fight this, and the IRS will just ignore them.”

Keith disputes the notion that taxpayers who disregard the law will get a free pass. The IRS will have up to 10 years to withhold refunds from individuals who owe penalties, he says. Even if they aren't ordinarily due a refund, he says, “any time they overpay, those monies will be available.”

Block, Sandra. “IRS lacks clout to enforce mandatory health insurance”. USA Today. April 29, 2010. Available online as of 2010-04-29. Emphasis added.

HHS

Health and Human Services Secretary Kathleen Sebelius said that most of the 14 state attorneys-general who have filed legal challenges against the new health care law requiring every American to buy health insurance are doing so because they aspire to “higher office.”

Speaking at the National Pres Club in Washington on Tuesday, Sebelius also said the Obama administration is confident that the law will withstand the challenges.

[…]

Sebelius, the former governor of Kansas, said, “Well, I think that the vast majority of lawsuits have been filed by attorneys general in states where they have also had some interest in higher office – and in consultation with our legal team and their consultation with the Justice Department, first of all, we are confident that the law is on solid constitutional ground, on firm grounds.”

[…]

Later in the question-and-answer session, Sebelius called the new health care law a “state friendly bill” but added that it will create “new costs” for states. She argued that these new costs are “far balanced” by “new benefits” to the states’ citizens.

[…]

“There’s no question that as the market begins to expand in 2014, a part of the bill makes that health care coverage a partnership between the states and federal government, but for the three years following 2014, the federal government picks up 100 percent of the bill,” said Sebelius. “And after that, states start paying a share, which rises to the top total of 10 percent by 2020. So, there are some new costs in insurance expansion borne by the state. But I would argue that those costs are far balanced by new benefits to states.”

Sebelius then gave examples of what she called “new benefits to the states.”

She said: “Less spending on compensated care, which states spend on each and every day; saving from reduced insurance paper work; more resources from the federal government to cover children in every state; more money back from the drug callback; more money to crack down on fraud and abuse and that doesn’t even count the people who get better care, live healthier lives and end up as more productive workers.” […]

Ballasy, Nicholas. “HHS Secretary Says State AGs Are Challenging Health Care Law to Further Their Political Careers”. CNS News. April 7, 2010. Available online as of 2010-04-07.

The Obama administration does not plan to seek additional money in next year's Health and Human Services Department budget to implement the new U.S. healthcare reform law, HHS Secretary Kathleen Sebelius said on Wednesday.

Testifying before a House of Representatives Appropriations subcommittee, Sebelius said the $911 billion HHS budget request for fiscal year 2011, which begins Oct. 1, remains the same even after Congress passed the healthcare overhaul.

The law, which among other things aims to expand health insurance coverage to more than 30 million uninsured people, gave HHS vast new responsibilities. The roughly $1 trillion legislation included $1 billion for HHS to implement the law.

The nonpartisan Congressional Budget Office estimated that HHS could need as much as $2 billion a year over the next 10 years to cover the cost of putting in place insurance market reforms and changes to federal health programs under the law, which was passed by Congress and signed by Obama last month.

Republican Representative Todd Tiahrt predicted that the administration will end up asking for more money to implement the law.

Tiahrt indicated that the $5 billion in the law to finance temporary state-based high-risk pools for uninsured people with pre-existing medical conditions will not be enough. Some healthcare analysts also have said more money will be needed.

“It is very clear the president hasn't asked for enough money to implement his healthcare plan,” Tiahrt said.

Sebelius declined to say whether the money provided for high-risk pools will be enough, telling the panel it was not yet clear how many people will participate in the insurance pools. The program is set to expire in 2014 when new insurance exchanges, in which people and businesses can shop for medical coverage, are scheduled to be in operation.

Sebelius told the panel that her department plans to move aggressively to ensure that the insurance exchanges are in place by the 2014 deadline.

Smith, Donna. “Sebelius seeks no new money for US healthcare law”. Reuters. April 21, 2010. Available online as of 2010-04-21.

[…]

In his push for the health care bill, President Barack Obama said the legislation would end such industry practices. Making the case for reform in a September address to Congress, Obama specifically cited the cancellation of Robin Beaton's health insurance. Aides to the president, who requested they not be identified, told Reuters that no one in the White House knew WellPoint was systematically singling out breast cancer patients like her.

Many critics worry the new law will not lead to an end of these practices. Some state and federal regulators – as well as investigators, congressional staffers and academic experts – say the health care legislation lacks teeth, at least in terms of enforcement or regulatory powers to either stop or even substantially reduce rescission.

“People have this idea that someone is going to flip a switch and rescission and other bad insurance practices are going to end,” says Peter Harbage, a former health care adviser to the Clinton administration. “Insurers will find ways to undermine the protections in the new law, just as they did with the old law. Enforcement is the key.”

In a statement to Reuters, WellPoint said various specified criteria trigger rescission investigations, including certain types of medical claims. The company said it changed its rescission practices to ensure they are handled appropriately after a 2006 review of its policies prompted by public concern over rescission.

WellPoint also said it created a committee that includes a physician for making rescission decisions. The company also noted that it established a single point of contact for members undergoing an investigation and enacted an appeals process for applicants who disagree with the original determination.

During the recent legislative process for the reform law, however, lobbyists for WellPoint and other top insurance companies successfully fought proposed provisions of the legislation. In particular, they complained about rules that would have made it more difficult for the companies to fairly – or unfairly – cancel policyholders.

For example, an early version of the health care bill passed by the House of Representatives would have created a Federal Office of Health Insurance Oversight to monitor and regulate insurance practices like rescission. WellPoint lobbyists pressed for the proposed agency to not be included in the final bill signed into law by the president.

They also helped quash proposed provisions that would have required a third party review of its or any other insurance company's decision to cancel a customer's policy.

The new law does leave open the possibility of reform in this area, these sources say. The reason, they say, is that much of the new legislation is essentially a roadmap, with regulations to be decided later.

“The lack of specificity doesn't mean that nothing is going to be done,” said a senior congressional staffer who has played a key role in the health reform debate, “The law grants HHS (the Department of Health and Human Services) the discretion to promulgate regulations. This is very much a work in progress.”

Among other things, the staffer said, the White House could revisit proposing tough new regulations requiring third party review of policy cancellations.

[…]

Krauskopf, Lewis. “Exclusive: WellPoint routinely targets breast cancer patients”. Reuters. April 22, 2010. Available online as of 2010-04-22.

Justice Department

The healthcare reform law passed by Congress last month has yet another surprise for corporate legal and compliance departments: It allows yet more whistleblower lawsuits to be filed against corporations under the False Claims Act.

Formally known as the Patient Protection and Affordable Care Act, the healthcare law sharply narrows the definition of “publicly disclosed information” under the FCA. That, in turn, expands the range of complaints whistleblowers can bring under the FCA and thwarts companies’ ability to get such claims dismissed, legal experts say.

The False Claims Act is the federal government’s main tool for combating fraud in government contracting. It was originally passed during the Civil War, but went largely unused until amendments in 1986 allowed private citizens to file “qui tam” lawsuits on behalf of the government and then collect a portion of the proceeds in any settlement. Since then, the government has recovered more than $24 billion under the FCA, including $2.4 billion in 2009. The large majority of that $2.4 billion was recovered through qui tam suits, according to Justice Department statistics.

One key defense against qui tam lawsuits has been to argue that the whistleblower’s complaint is based on publicly available information, and therefore isn’t “whistleblowing” per se. By narrowing the definition of publicly available information, such a defense becomes that much harder to make.

“The changes open the floodgates to more qui tam plaintiffs,” says Peter Hutt, a partner in the law firm Akin Gump Strauss Hauer & Feld.

The healthcare reform law went into effect March 23. In addition to the FCA amendments, it also provides $250 million in funding over the next decade to investigate and prosecute healthcare fraud. But because the FCA applies to any company that does business with the government, the changes slipped into the healthcare law will reverberate far beyond the healthcare sector itself.

[…]

The amendments change the definition of “publicly disclosed information” in several ways. First, the amended FCA now requires that the government be party in a proceeding for that hearing to constitute public disclosure. That means any information disclosed in litigation between private parties can now be fodder for a qui tam lawsuit under the False Claims Act, according to a legal bulletin from White and Case.

Second, information disclosed in state hearings, audits, reports, or investigations can also be the basis for a qui tam suit. That resolves a dispute among federal appeals courts, which had reached different conclusions about whether such information fit under the public-disclosure defense, says Jeremy Frey, a partner in the law firm Pepper Hamilton. […]

Finally, more whistleblowers will qualify as an “original source” under the law, since the amendments no longer require an original source to have “direct and independent knowledge” of the alleged fraud. Instead, that person only needs “knowledge that is independent of and materially adds to” the publicly disclosed allegations, and he must have voluntarily provided the information to the government before filing a qui tam claim.

[…]

Aguilar, Melissa Klein. “Healthcare Reform Expands False Claims Liability”. Compliance Week. April 13, 2010.

Congress

Fearing that health insurance premiums may shoot up in the next few years, Senate Democrats laid a foundation on Tuesday for federal regulation of rates, four weeks after President Obama signed a law intended to rein in soaring health costs.

After a hearing on the issue, the chairman of the Senate health committee, Tom Harkin, Democrat of Iowa, said he intended to move this year on legislation that would “provide an important check on unjustified premiums.”

Mr. Harkin praised a bill introduced by Senator Dianne Feinstein, Democrat of California, that would give the secretary of health and human services the power to review premiums and block “any rate increase found to be unreasonable.” Under the bill, the federal government could regulate rates in states where state officials did not have “sufficient authority and capability” to do so.

[…]

Michael T. McRaith, director of the Illinois Department of Insurance, told Congress on Tuesday, “There is a distinct possibility that less responsible companies will raise rates to price out people who are sick or might become sick between now and 2014.”

Mr. McRaith said he and the governor of Illinois, Pat Quinn, a Democrat, “unequivocally support state-based insurance regulation,” because local officials understand local markets.

[…]

Karen M. Ignagni, president of America’s Health Insurance Plans, a trade group for insurers, said Congress should let the new law work before piling on additional requirements.

Congress, she said, has largely ignored the cause of rising premiums: the explosive growth of medical costs and the power of hospitals and other health care providers to dictate prices.

Ms. Ignagni said the law imposed new requirements, taxes and fees on health plans, which could further drive up costs.

Senator Lamar Alexander of Tennessee, the No. 3 Republican in the Senate, said: “Health insurance companies’ profits for one year equal about two days of health care spending in the United States. So even if we were to take away all the profits of the so-called greedy insurance companies, that would still leave 363 days a year when health care costs are expanding at a rate our country cannot afford.”

Grace-Marie Turner, president of the Galen Institute, a research center that advocates free-market health policies, said the Democrats’ proposal was unlikely to succeed in lowering insurance costs.

“Capping premiums without recognizing the forces that are driving up costs would be like tightening the lid on a pressure cooker while the heat is being turned up,” Mrs. Turner said.

[…]

Some securities analysts say they doubt that insurers can sustain such gains after major provisions of the new law take effect.

Pear, Robert. “Senate Bill Sets a Plan to Regulate Premiums”. New Yort Times. April 20, 2010 (Page A15 of New York Edition dated April 21, 2010). Available online as of 2010-04-21.

International

Browsing through her NHS records, Helen Wilkinson stopped short. There, in front of her in black and white, was an entry labelling her an alcoholic. She began to panic. Who else could have seen the incriminating information? Would it affect her career? How had this awful mistake been made?

'I went ballistic,' she says. 'As a former NHS manager, I know a lot of people who work in the health service. They could all have seen it. It was awful.'

A local councillor from High Wycombe, Buckinghamshire, Wilkinson had gone into hospital for a surgical procedure. But an erroneous entry made on her file in 1988 had subsequently been added to her computerised records - and these could now be easily accessed by tens of thousands of medical workers.

She is just one of thousands of patients who have unwittingly become victims of the new NHS computer system. Beset by blunders, the national database of patient records is now four years late and some £10bn over-budget. Worse still, it appears that civil liberties campaigners' worst fears are now also being realised.

Wilkinson was able to amend her records - after a two-year battle, during which her MP raised her case in Parliament. But the terrifying truth is that had she not checked her details, she might never have known of the mistake - which could have blighted her life.

Indeed, last month it emerged that as many as 140,000 non-medical staff, including porters, cleaners and receptionists have access to sensitive NHS patient files.

Crucially, these auxiliary staff do not need patient consent or to inform clinicians before opening the data. This disturbing lack of privacy protection has been revealed by a Freedom of Information survey carried out by the campaign group Big Brother Watch.

Indeed, my own investigation into the state of the NHS computer project has discovered a litany of frightening errors that go to the very heart of the debate regarding patient confidentiality.

Most worryingly, I was told that private detectives are selling top-secret patient information on the black market for up to £300 a time. They claim they can reveal ex-directory numbers and private addresses, along with other personal medical details.

[…]

And despite scares regarding erroneous information on the records, the system is now even being used to record controversial End of Life Plans, which detail a patient's requests if they ever find themselves critically ill and needing life support.

Alarmingly, this means that if you were taken to A&E and the wrong details were accessed, or had been incorrectly inputted on the system, you would not be revived.

Unsurprisingly, a backlash against the new database is now under way. As the NHS begins the mammoth - and costly - task of informing patients that their records are being computerised, consumer organisations report hundreds of thousands of enquiries from people hoping to opt out of the system altogether.

[…]

'Imagine a doctor or professor leaving a laptop on a plane that includes the entire nation's health records,' said Anderson. 'It's not impossible.'

Then there is the risk that the computer system will go down, perhaps because of power cuts, taking with it vital patient records and the entire NHS appointments system. The scale of that possibility could be truly mind-boggling.

No wonder, then, that hundreds of thousands across Britain are already considering opting out.

Indeed, Helen Wilkinson, who set up anti-database organisation The Big Opt Out after finding a potentially disastrous mistake in her own records, is being overwhelmed by calls from concerned patients.

'More and more people are getting behind the campaign,' she says. 'By filling in a letter from our website and sending it to your GP, you can opt out, too. So far, hundreds of thousands of people have contacted us or downloaded a form.

Of course, computers are today an essential tool in medicine and computerised records will inevitably help save lives. But, as Helen Wilkinson says, the question is whether the Government can be trusted with the technology.

'When it comes to this sort of personal information, it has demonstrated only too clearly that it cannot be trusted,' she says. 'Its record on keeping data secure is frankly appalling.'

Brennan, Zoe. “For sale: Your most intimate secrets… thanks to the national NHS database” Daily Mail (London). April 22, 2010. Available online as of 2010-04-22. Emphasis added. Excellent article with historical notes.

While Washington plans to pump unprecedented sums into what critics call a government takeover of health care, Moscow is moving in the opposite direction by backing legislation that could force hospitals and other public institutions to go commercial or close.

A bill scheduled to be approved by the State Duma in a third and final reading Friday aims to overhaul the financing for medical, educational, cultural and scientific institutions by giving them for the first time a free hand in how they spend state subsidies.

But opponents warn that the “anti-socialist” reform also could lead to a drop in state subsidies, forcing hospitals, schools and even libraries to increase their numbers of paid services or reduce work hours so as to make ends meet. They say this free-market approach could ultimately hurt the population, especially in poor rural areas.

The current system of funding public institutions is based on cost sheets — detailed lists of planned expenses that the institutions submit to the authorities each year. The funding rules, which are rigid and have been unchanged for years, earmark similar funding for similar institutions regardless of the quality of their work. Leftover funds are confiscated at the end of the year — a practice that leads to wasteful spending.

“The bill is aimed at making public institutions spend state money efficiently, instead of exaggerating expenses,” said Vitaly Shuba, first deputy head of the Duma's Budget and Taxes Committee and a United Russia member.

[…]

The bill, a copy of which was obtained by The Moscow Times, adopts a laissez-faire approach instead of a micromanagement one. Subsidies for each public institution would be defined by a single line in the state budget. Leftover funds would no longer be confiscated.

Better services will lead to bigger subsidies, said Alexei Lavrov, a department head at the Finance Ministry, which drafted the bill.

Lavrov brushed off concerns that public institutions might be caught in a catch-22 of needing to boost the quality of their services to get more money, while at the same time needing more money to boost the quality of their services.

“The quality can be boosted through organizational efforts,” he said.

But critics pointed out that the bill also frees the authorities fr om bearing any responsibility if a public institution goes bankrupt.

Opponents said they found it ironic that Russia was adopting the bill at a time when the United States, its capitalist foe during the Cold War, was increasing the government's presence in health care.

[…]

“France, Germany and the United States have more socialism than Russia, while even our Constitution implies that the country has to be socialist,” Duma Deputy Sergei Obukhov, a Communist, told The Moscow Times.

The Russian Constitution defines Russia as a “social state.”

[…]

The legislation allows the state to shrink its responsibilities and obtain a new way to pressure public institutions, said Irina Gorkova, a Duma deputy with the Liberal Democratic Party.

[…]

Kraniova, Natalya. “Russia Takes 'Anti-Socialist' Approach to Health Care”. Moscow Times. April 22, 2010. Available online as of 2010-04-22.