Health Care Update

By February 27, 2006Health Care

A “Fair Share” of Disappointment for Some … Progress for Many – the recent legislative override of Maryland Governor Robert Ehrlich’s veto of the so-called “Fair Share Health Care” (a.k.a. the Wal-Mart) bill (and the subsequent introduction of a follow-on bill covering employers of all sizes) might lead some to believe the Union-led state campaign to mandate health benefits is inevitable. We disagree – as the evidence in several other states bears out. Click here to view a status report from the friendly folks at Wal-Mart showing the successful defense against “Fair Share” bills (actually patently unfair for workers and employers alike) in the states of: Washington, New Hampshire, Wisconsin, Indiana, Missouri, Kansas, and Virginia.

We have no room for overconfidence, but clearly there is reason to be encouraged for the additional fights ahead. As I’ve noted before, no employer of any size should feel safe from the reach of these mandates. This Union-led effort is manifestly anti-employer in both form and content.

Health Care Spending to Reach $4 Trillion by 2015 – one out of every five dollars in the U.S. economy. Current projections (given our aging population and sagging waistlines) are that health care spending will grow from today’s $1.9 trillion system to a staggering $4 trillion by the year 2015. This fate is not certain in our view; changing the emphasis of our health care system from treatment to prevention could help mitigate the growth in health care costs to a more sustainable level.

We issued a press release on the implications of these new reports on employer-based coverage. Also, be sure to visit the NAM’s HC5 Coalition on Catastrophic and Chronic Health Care Costs for more information on how to counteract the trend of ever-rising health care costs.

Villains and Snake Oil Cures – for those of you fond of finding villains in health care, it’s the hospitals that the Health Affairs report fingers as the leading culprit. Growth in hospital costs (7.9% last year) is projected to outpace the economy [5.1% predicted growth] from 2006-2015. Certainly the aging of America accounts for some of this, but will we really need all those new urban hospital beds? What about rural America? Why not spend more to keep people out of hospitals in the future?

And for those of you who think this would be a lot easier if it could all be dumped on someone else (or even fixed as a percentage of payroll), you might want to rethink those assumptions. Not only does it not solve the cost increase problem, but it would also create delays in health care (ala Canada) and reduced quality from a less responsive system (ala England). Ultimately it would create a hollow kind of competition on an artificially leveled playing field.

Employers compete on many levels and should continue to compete for workers based on the attractiveness of their workplace, salary and benefit offerings. Don’t buy the artificial “level playing field” argument.

Second Medicare Rx Report Card Posts ImprovementHHS Secretary Leavitt has released his second report on the new Medicare drug benefit. Not even Families USA’s Ron Pollack (surely one of the most sour of sourpuss health care commentators) can hide that enrollment is growing (to 25.4 million; 4.9 million self-enrolled) and start-up pains are easing. Secretary Leavitt and CMS Administrator Mark McClellan and their tireless teams can justly be proud of this achievement. I saw it in action myself recently in a script I filled for my mother-in-law.

HHS/CMS continue to urge beneficiaries to exercise common sense. Enrolling early in the month before coverage is expected to start can help prevent an unpleasant glitch at the pharmacy counter. This allows for their applications to be processed and their coverage to flow smoothly. Good things will come to those who wait appropriately.

Retiree Health Plan Subsidies Begin to Flow – look out for a great wailing and beating of breasts from both the employer-hater and the “mini-Medicare” crowds. Employers covering 6.4 million retirees (331 of the nation’s 500 largest employers provide retiree health coverage to around 7 million retirees) have applied for the Medicare drug subsidy. Others have taken other routes to providing drug coverage.

Some of these subsidy payments will be quite large: GM alone will receive about $1.1 billion over the next four years. One should consider, however, that GM carries 18% of the nation’s retiree health burden ($77 billion) by itself and will make cash payments of $18 billion for retiree health care over the next four years … a burden that otherwise would have piled onto Uncle Sam’s load, perhaps helping to break our collective back.

Don’t lose sight of the need to help keep employer dollars in retiree health care – it’s still a bargain well made.

Kudos for Wal-Mart – for taking steps to expand and liberalize their benefit offerings for part-time workers and children. It will never be enough to satisfy some critics (see the level-playing field crowd) but it does represent a continued effort by Wal-Mart to provide the best benefits possible.

Their in-store clinics for both employees and non-employees (in test in Arkansas, Oklahoma, and Indiana; nine clinics in all) for routine care are welcome and will bear watching. As I noted above, it’s not so much how much we spend on health care but how well we spend it. Hopefully Wal-Mart and others will continue to push the frontier towards employee-wide screening and preventative care. These in-store clinics could well be the front line in that effort.

New Medicare Secondary Payer Rule – issued as both an interim and proposed final rule on Feb. 24. The new rule clarifies that Medicare can go after anyone (including employers) in the fight to recover money that Medicare shouldn’t have paid as primary in the first place. As I’ve noted before, the principle is fine (hopefully Medicare will get it (who pays what) right the first time, most all of the time), but the execution of the recovery efforts has been badly flawed in past practice. Medicare has often hired contractors to dun employers for these payments, frequently bewildering employers for years-old claims for former employees.

Medicare Secondary Payer is consequently a much despised program in the employer community. Hopefully Medicare’s new interim rule will lead to a more cooperative and compliance-assistance oriented outlook. Please don’t send the bill collectors out after us again….

Here is the cite for the interim/proposed final rule courtesy of Eric Oxfeld of UWC — Strategic Services on Unemployment & Workers’ Compensation and the National Foundation for Unemployment Compensation & Workers’ Compensation.

[Federal Register: February 24, 2006 (Volume 71, Number 37)] [Rules and Regulations] [Page 9466-9471] From the Federal Register Online via GPO Access [] [DOCID:fr24fe06-16]

Sen. Santorum’s Long-Term Care Accounts – Sen. Rick Santorum (R-PA) has introduced S. 2281, the Aging with Respect and Dignity Act of 2005, to provide for tax-advantaged saving and spending for long-term care services. He would also allow employers to offer long-term care insurance on a pre-tax basis and allow FSA funds to pay for long-term care services for family members. We support Sen. Santorum’s efforts.

There are those who fear that a multiplicity of accounts (remember the RHMBAs? [Retiree Health Medical Benefit Accounts]) will crowd out all saving. I’m not sure I buy that; we Americans have larger “spend now/don’t save for later” issues. Ideally many of the concepts of the Santorum bill will be incorporated into enhanced HSAs as they continue to improve. The saving aspects of HSAs are greatly hampered under existing law.

In the meantime, the Santorum bill proposes many helpful changes to promote saving for future long-term care needs (a ticking time-bomb threat that grows largely unmet year by year). We commend his efforts.

Canadian Drug Sales to Americans Fall – by as much as 30% since the new Medicare drug coverage came on line. Lest we sympathize too much with the industry that has spammed our mailboxes (never so much “enhancement” in history; will it affect the planet’s tilt?), we might note that other Canadians may celebrate the reduction of drain on their own pharmaceutical supply.

Ten states plus the District of Columbia still operate illegal web sites to access Canadian drugs. Nevada is in the process of launching a site. There is no free lunch in health care, no matter how much certain state politicians might claim otherwise. The new stats are a very positive trend.

On the Road Again – I’ll be on the road and out of the office Feb. 28 through March 3, returning to the office March 6th. I’ll be attending the NAM Board Meeting in Phoenix/Scottsdale this week. I may be able to engineer a report from the road … NAM members are preparing to tackle health care in a big way at this meeting.