Reuters.com
Now that healthcare reform is becoming a reality, states are sorting out how they will pay for two of the plan's major components that will rest largely on their shoulders at the same time they are pulling out of a long economic downturn.
A study released on Wednesday uncovered one bright spot for paying for Medicaid, the healthcare plan for the poor administered by the states and paid for with matching funds from the federal government.
Under the healthcare reforms championed by President Barack Obama, states will generally see their Medicaid costs rise mildly, while they are in line for more federal dollars, according to the study.
The plan made more people eligible for Medicaid, which should have driven states' costs higher. Congress, though, included a caveat for the federal government to reimburse the costs of all new enrollees by 100 percent.
The Kaiser study found that through 2019, the year when the U.S. government will pull back and reimburse 93 percent of the costs of those participants, federal spending on Medicaid will increase by at least $443.5 billion.
On the other hand, states will see an increase of only $21.1 billion. Other increased federal funding streams will draw down the amounts states have to put into Medicaid, as well, Kaiser found.
That means that under conservative estimates, Maine's Medicaid spending will decrease 1.5 percent and Colorado's will slip 0.5 percent, according to the study. Massachusetts and Vermont, which established their own health plans, will spend 2.1 percent and 0.6 percent less, respectively.
MEDICAID ROLLS TO SWELL
When healthcare reform was working its way through Congress in November, California's chief deputy director of health care programs said the state could not afford its current Medicaid program -- let alone an expansion.
California will have the most new enrollees, at least 2.01 million people through 2019, according to the Kaiser study.
Still, the most populous state will have to pay only 1.5 percent more for Medicaid, while federal spending there on the program will rise at least 23 percent.
Texas will follow, with at least 1.8 million new enrollees. In a twist, federal funds flowing into Texas will jump 39 percent because the Lone Star state's small Medicaid program will mushroom under the new plan.
"States with low coverage today are expected to see large increases in federal spending," the report said.
According to the foundation's more conservative estimates, six states will have between half a million and a million new people enroll in Medicaid through 2019. Florida could have at least 951,622 people sign up.
Oregon will experience the largest jump in federal spending on Medicaid -- 51 percent.
Meanwhile, Mississippi will have the biggest increase in state spending at 5 percent.
STRUGGLING TO PAY FOR UPGRADES
There are many factors that will come into play as the historic healthcare reform plan unfolds in states.
"Right now, states are still in the midst of a major economic downturn facing historic declines in revenues and increased demand for public programs," Kaiser said. "Heading into health reform, some states will move quickly to promote coverage with efforts that may begin in 2010, while others may move more slowly."
When it comes to Medicaid, states are mostly concerned with administering the new system, said Raymond Scheppach, executive director of the National Governors Association. They will have to upgrade their databases, while building new databases to track the enrollees eligible for the 100 percent reimbursement -- and there is no federal funding for the technology and staff.
Many of the databases are weak because states could not afford upgrades during the longest and deepest recession since the end of World War Two. And, states will struggle to pay staff at a time when they are furloughing and laying off workers.
States are in weekly conference calls with the U.S. Health and Human Services department. The states will send representatives to meet with the federal agencies at the end of June, Scheppach said.
WORRY NO. 1: INSURANCE EXCHANGES
Medicaid, though, is not the top preoccupation for states. Their biggest concern is building the exchanges where those who do not have employer-sponsored health insurance and do not qualify for Medicaid can buy insurance, he said.
The exchanges must be fully operational by 2014.
The possibilities for how states operate the exchanges span a wide spectrum and the healthcare law left most of the decisions up to the states.
"There are not a lot of models on how exactly you do the exchanges," Scheppach said, adding that there are also expenses in offering incentives to insurance companies to participate.
STATE POLITICS STILL IN PLAY
The healthcare reform plan was politically explosive at the federal level for most of the winter and spring. Now, it is a political battle in states. Some are suing the U.S. government, or deciding what length to comply with the law, which could also drive up expenses.
On Monday, the federal government asked the U.S. District Court for the Eastern District of Virginia to dismiss a lawsuit from Virginia, saying federal law trumps state law. The U.S. government also contended it has the right to regulate commerce such as health insurance under the Constitution.
But Virginia's attorney general would not back down, calling the health law's stipulation that all Americans have insurance unconstitutional.
"We contend that if a person decides not to buy health insurance, that person -- by definition -- is not engaging in commerce, and should not be subject to a federal mandate," Attorney General Ken Cuccinelli said in a statement.
The state will respond to the motion to dismiss by June 7.
In November, too, states will have gubernatorial elections. The National Governors Association expects 24 new governors to move into office, and have to take over the reins of healthcare reform.
(Reporting by Lisa Lambert; Editing by Jan Paschal)
Thursday, May 27, 2010
Healthcare reform costs shift to cash-strapped states
Tuesday, May 25, 2010
Bribe your workers to be healthy
By Sonya Stinson, CNNMoney.com -- Want to reward -- or bribe -- your workers for healthy lifestyle choices? Provisions in the new reform law offer aid, and even some cash, to small businesses that run wellness and prevention programs for their employees.
Starting next year, the law authorizes grants totaling $200 million over five years for small companies that start wellness programs focused on efforts such as nutrition, smoking cessation, physical fitness and stress management. Companies with fewer than 100 employees qualify for the grants, which will be administered by the Department of Health and Human Services, but only new wellness initiatives -- those launched after March 23, 2010, the date the heath reform bill was enacted -- are eligible.
The law has another boon for prevention efforts: Beginning in 2014, employers will be able to offer reward payments of up to 30% of the cost of insurance coverage (up from the current 20%) to workers who participate in such programs and meet certain health-related benchmarks.
Business groups like the U.S. Chamber of Commerce and the National Federation of Independent Business have opposed the most prominent aspects of President Obama's health care reform, while labor unions and organizations like AARP have been among its biggest cheerleaders. But on the discount provision, the two sides switch teams.
NFIB sees the change as "a positive development," says Amanda Austin, the group's director of federal public policy. "From an employer perspective, there is certainly an interest to be able to incentivize and reward employees for engaging in healthy behaviors." A July 2009 survey by Health2 Resources, an industry PR firm, found that insurance premium reductions are the most popular wellness program incentive among employers.
On the other hand, the Partnership for Prevention, a Washington nonprofit that lobbies for wellness polices and research, is cautious about tying workplace prevention programs to insurance discounts.
"There is concern about whether an incentive for some will end up being a disincentive for others, or whether a benefit for some will end up being an unfair penalty on others," says Robert Gould, the organization's CEO.
Gould is similarly wary about the grants provision.
"It is not an enormous amount of money, nor is it guaranteed to be spent," Gould says. "It's authorized in the legislation, but it has to be appropriated. We'll be encouraging the appropriation, but it's going to be a fight, given the obvious issues with the [federal] budget. But it is the right idea."
But Austin and Gould both agree that the grants authorization is a good effort toward closing the opportunity gap between small and large employers implementing wellness plans.
"We are very interested in it, and we look forward to seeing how this plays out and what exactly we need to do to qualify to get some of this money to the small employers in the community," Austin says.
Front Range Internet CEO Bill Ward would welcome government help to make such programs more affordable. Based in fitness-conscious Fort Collins, Colo., Front Range took home the Wellness Council of America's top small business workplace wellness award last year.
But budget constraints have forced cutbacks each year since the program started in 2007.
Front Range, which has a staff of around 40 people, initially offered a broad menu of activities, from on-site yoga classes to a smoking cessation program and a softball team. Now, instead of focusing on on-site programs, the company uses a point system to reward workers who participate in health and fitness activities on their own. Employees who rack up 100 points during a designated six-month period get $10 off their insurance premiums for each of the following six months.
Front Range spent $1,830 on its wellness program in 2009, including $1,300 in premium discounts paid as reimbursements to employees. The company is considering offering some on-site exercise classes again, but this time for a small fee.
"It's putting it more on the employee, but at least it's making it available even if we can't really contribute to it as much as we would like to," says Kristi Siedow Thompson, the company's design and marketing coordinator.
CEO Ward says he would love to see government support for expanding such programs at small firms like his.
"I would hope that some flavor of that kind of policy would be enacted and funded," he says. "We would certainly want to try to be a part of it."
To write a note to the editor about this article, click here.
Sunday, May 23, 2010
Tax Credit to Pay Third of Small-Business Health Cost (Update1)
By Drew Armstrong, Businessweek.com (Bloomberg) -- As many as four million small businesses in the U.S. may qualify for tax credits to recover more than a third of the cost of providing medical care for employees, under a program created by the health overhaul law.
Businesses with less than 25 full-time employees each will be eligible, according to a U.S. Treasury Department fact sheet made public today. Enterprises that qualify will get 35 percent of the cost of employee health-care premiums reimbursed by the government, beginning this year, and 50 percent starting in 2014, the fact sheet said.
The health law was signed in March by President Barack Obama. The administration estimates the credit will save small businesses $40 billion through 2019. For example, a restaurant with 10 employees, each earning an average of $25,000 a year, might offer insurance costing $6,000 a worker. The credit in that case would be $21,000, the fact sheet said. A tax credit reduces liability for federal tax.
“We know that small businesses want it, because right now half of the small businesses between three and 10 people don’t provide health care, and they’re looking for it,” Karen Mills, the head of the Small Business Administration, said on a conference call today.
To be eligible, companies have to pay, up front, at least half the cost of employees’ insurance premiums. Only companies with 25 or fewer workers may take the credit, and the average salary of the employees must be less than $50,000, the SBA said in a statement.
Counting Workers
Small businesses can accrue the tax credits for dental and vision care, on top of standard health insurance, according to the guidance. The program also lets businesses use any of three ways to calculate how many employees will be eligible toward the credit, and use the one most favorable to their getting insurance.
The new rules “will make it easier for small-business owners to determine whether they’re eligible for the new tax credit,” Labor Secretary Hilda Solis said on the call.
The guidance will help more businesses take advantage of the credit, though most of the businesses that take the credit will be ones already offering health coverage, said James Gelfand, director of health policy for the U.S. Chamber of Commerce, the lobby group that represents business interests in Washington.
“We still think that this credit isn’t great,” Gelfand said. “It’s too small, and most firms won’t be eligible for it.”
The administration doesn’t have an estimate of how many eligible small businesses will use the credit, said Michael Mancuda, assistant secretary for tax policy at the Treasury Department.
--Editors: Jeffrey Tannenbaum, Angela Zimm
To contact the reporter on this story: Drew Armstrong in Washington at darmstrong17@bloomberg.net.
To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net.
Friday, May 21, 2010
Healthcare Issues (An NJBIA Issue Network)
Small employers will have their ability to buy multiple health insurance plans for employees curtailed in the next few months. Currently, many small employers choose to offer their employees more than one health insurance plan. This might be a lower cost HMO and a more expensive point of service (POS) plan with an out-of-network option.
The rule change made by the New Jersey Small Employer Health Coverage Board (SEH) would restrict small employers’ purchasing options to as few as just one health insurance plan, unless a health insurance carrier opts to allow the small employer more options.Specifically, the board voted to require health insurance carriers to issue only one health insurance plan, of the many they offer, to a small employer. It will be the health insurance carrier’s option to choose to sell more than one plan. Health insurance carriers will still offer a variety of plans, but the new rule will limit how many of these plans an employer could choose to offer its employees.
I am interested in your comments on this new policy. Does your company currently offer more than one plan to employees? If yes, are the plans issued by the same carrier or different carriers?
Please share your comments with me via e-mail at cstearns@njbia.org or by calling me at the office (609) 393-7707 x-260. I look forward to hearing from you.
