The Affordable Care Act has a provision in it that is commonly referred to as the “Cadillac Tax.” Well, it’s not a tax on the storied line of cars manufactured by GM, it’s a tax on employee benefits – a 40 percent tax on the benefits employees receive over a certain value – it should be called the Employee Benefits Tax (EBT). (continue reading…)
As Members of the 114th Congress descend on Washington for orientation, and the 113th Congress convenes for the upcoming lame duck session, manufacturers stand ready to work with our leaders to advance policies that will enable us to continue to grow and create jobs. Manufacturers believe that now is the time to set aside the differences that have resulted in gridlock, and focus on the pro-growth policies that brought voters to the polls. Simply put, it is time to govern and grow. (continue reading…)
Two important reports about Medicare Part D came out this week and reaffirmed once again that the program is a success. Each year, Medicare Today and KRC Research conduct a survey of Medicare Part D beneficiaries every year and this year’s results showed it continues to be extremely popular with 86 percent of seniors saying they are satisfied with the program. The Congressional Budget Office also issued a report titled “Competition and the Cost of Medicare’s Prescription Drug Program.”
The CBO report showed that competition within the Medicare Part D program is an important part of how the program has held down spending and remains successful overall. In fact, the program continues to operate at a cost significantly lower than initial projections – nearly 50 percent below what CBO projected when the program was created. The report also pointed out flaws in proposals to import Medicaid-style rebates for medicines purchased by low-income Part D beneficiaries that have been pushed by President Obama and others. The CBO acknowledged that implementing Medicaid rebates in the Part D program may decrease the cost of some drugs in the short-term, but it is not a permanent solution to lowering costs of prescription drugs and may reduce choices for seniors, reduce incentives for innovation and increase premiums.
As I’ve said before, Medicare Part D should be looked at as a model for reform and the results of these two reports confirm that to be the case. Real competition and real choices lead to real solutions for affordable and accessible healthcare.
Arguably the biggest outstanding question about the Affordable Care Act is what effect it will have on employer-sponsored insurance (ESI) coverage. According to the Bureau of Labor Statistics, 156 million Americans receive coverage through their employer or their spouse’s employer.
Many employers had to change the benefit structure of their plans to comply with the mandates contained in the ACA, but the larger question looming is whether employers continue to provide coverage at all in the coming years? The frightening thing about this question is no one really knows and there is a wide variance in the estimates out there:
- One analysis done by the Urban Institute comes to the conclusion that the employer mandate is pretty meaningless and there would be little impact on the decision of employers to provide coverage or not. They estimate that roughly 200,000 fewer employers will provide coverage.
- Another analysis done by S&P Capital IQ estimates that 90 percent of employers will decide to stop providing employees health coverage in the next six years. That translates to over 100 million Americans moving to the health insurance exchanges because their ESI has gone away.
- Yet another estimate from Dr. Ezekiel Emanuel, one of the principal architects of the ACA, predicts that 80 percent of employers will suspend offering ESI in the next ten years. If he is right, it’s likely the smaller employers in the fully-insured market that would represent the 80 percent of employers deciding to stop offering coverage.
The two higher estimates are astounding numbers that signal an enormous disruption to millions of Americans in the coming years. As a country we have to determine whether such a dramatic transformation of how we all get health insurance coverage is acceptable – intended or not. Even if the estimates are off by half, we have a fog of uncertainty looming that employers and millions of their employees are going to navigate through in the coming years.
Ninety-seven percent of NAM members provide health coverage to their employees and most, if not all, I speak to want to continue providing that benefit. According to the BLS, manufacturers generally are more likely to offer coverage and their employees are more likely to accept health benefits compared to other sectors of our economy.
The ACA substantially changed the dynamics by increasing regulatory burdens and costs. If 90 percent of employers decide to stop offering coverage, it’s very reasonable to expect some of those employers will be manufacturers. It should be abundantly clear to everyone what forced them to make that decision.
To my mind there is no rejoicing in the decision reached by a federal appeals court this morning. The decision determined that subsidies given to those enrolled in federally-facilitated exchanges (FFE) are unlawful because the Affordable Care Act (ACA) law clearly states the subsidies are for those in state-based exchanges. This decision is a severe blow to the Administration and supporters of the ACA as a majority of the exchanges up and running around the country are now ineligible for subsidies to offset the cost of coverage.
The reason there is little to rejoice about this decision is the origins of the decision began about five years ago, before the ACA was the law of the land. What it demonstrates to me is that the legislative process matters and is ignored at the executive’s peril. It also shows us that bad things are more likely to happen when one party decides to effectively cut the other out of the process. Remember, the House was forced to take up the poorly written Senate version of healthcare reform, because Senator Ted Kennedy was replaced by a Republican during a special election held due to his death in 2009, which reduced the Senate Democratic Majority to 59.
Further exacerbating the situation, the White House insisted today that the subsidies will continue to be distributed – in clear contradiction to a federal court decision. The Jacksonian reaction to effectively ignore the decision is only going to create more trouble and puts the millions of Americans who are caught in the middle of this fight in a position of accepting something the federal judiciary has deemed unlawful.
It’s long past time for the President and his administration to accept that the legislative process is integral to the functioning of our government and is not something to be ignored or tolerated. It’s also time for Congress to be legislators.
In NAM’s quarterly surveys of members, health care costs consistently rank as the top business challenge for manufacturers. The concerns of these companies are well-founded given the avalanche of new rules, regulations and requirements as the rollout of the Affordable Care Act continues.
It’s particularly challenging for many small and medium-size business owners who, in addition to everything else, are feeling the hit of a new fee on health insurers, also known as the health insurance tax (HIT), which translates into higher insurance premium costs for small businesses and their employees. In a June 4th op-ed in The Boston Globe, “Small business picks up Obamacare tab,” Tom Stemberg, the co-founder and former CEO of Staples, spells out the devastating impact of this tax on businesses operating on tight margins and the workers they hire. His column echoes what the NAM is hearing every day from our members – and unfortunately, it seems that it will get more and more difficult for them as implementation proceeds.
Stemberg knows firsthand the challenges facing smaller businesses and what it takes to succeed and grow—and we agree with him wholeheartedly that it’s time to repeal the Health Insurance Tax.
Earlier this week a representative from the IRS commented on the complexities associated with the Affordable Care Act (ACA). Specifically the reporting requirements employers will have to comply with next year. Supposedly, the requirements have already been “streamlined”, but even the administration admits they are still onerous and frustrating for employers and employees alike.
For example, although the actual fines for the employer mandate for small companies were delayed until 2016, employers are still being asked to report the information used to determine whether an employer faces penalties, causing significant confusion. In the Administration’s own words, “We still get questions as to why all this information is required.” If the “why” of reporting isn’t complicated enough, the “how” is certain to present even more problems.
A representative from the IRS, referencing the example of an employee who may have switched jobs within the same company moving from a self-insured to a fully insured plan, stated, “If you give me [a form] that says what their offer of coverage was from January to June and then another that July to December, the second one that comes in is going to bump the first and we are going to assume you didn’t offer them anything for the first six months.”
Although the administration is calling this “transition relief” it creates more confusion and uncertainty for employers, especially smaller businesses who do not have the capacity to manage this ever-changing landscape. Significant modifications need to be made to the law to make it manageable for manufacturers and we look forward to working with congress and the administration to make those changes.
It’s no secret that manufacturers are at best uncertain about what the Affordable Care Act is going to do to their businesses. Countless delays in implementation, moving goalposts on requirements, and a continuing spike in health care costs have left manufacturers heads spinning.
In the latest segment of the webinar series titled, “ACA University,” the NAM and the Council for Affordable Health Care (CAHC) came together today to help offer a bit of clarity to what has been one of the haziest crystal balls in public policy history. They brought in experts from Ernst & Young to discuss the requirements of the ACA as well as the significant taxes and fees that come along with the health care law.
Over 150 people tuned in to hear NAM VP of Human Resources Policy Joe Trauger, NAM VP of Tax and Domestic Economic Policy Dorothy Coleman, CAHC President Joel White and Ernst & Young’s Anne Phelps and Sarah Egge offer their thoughts on what’s coming down the ACA pipeline.
They detailed the punitive, job killing taxes and fees that manufacturers are facing – including the medical device tax that has already cost 33,000 jobs and may end up eliminating 165,000 jobs from our economy. Additionally, manufacturers are looking at $3.3 billion in costs from the reinsurance fees – which punishes companies that provide their own insurance without any benefit under the program.
Manufacturers are leading business in providing health benefits to their employees, but the ACA is making it harder and harder to do so. In the end, there were are a great many answers provided by today’s webinar, but it’s clear that many more questions remain.
On Monday, the Administration walked back almost all of a proposed regulation that would have significantly damaged the Medicare Part D Program. The NAM had filed comments three days before asking for withdrawal of the proposed rule. The Administration, responding to significant criticism about the proposal stated, “Given the complexities of these issues and stakeholder input, we do not plan to finalize these proposals at this time.” This is a positive step forward in the ongoing effort to preserve the Part D program – one of the rare government programs that is popular and runs significantly under budget.
This is, however, a short-term victory. The Administration also noted that they may revisit the proposal in the future. The NAM will remain vigilant against the changes outlined in the January 10 Proposed Rule. Many of the issues presented were a clear violation of legislative intent and would have increased costs to manufacturers through cost-shifting and program expansion.
A link to the NAM comment can be found here.
The NAM filed comments today with the Centers for Medicare and Medicaid Services (CMS) on “Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs,” asking for withdrawal of the proposed rule while highlighting serious changes that would alter the programs and ultimately increase costs. Of specific interest is an interpretation of the law that opens the door for government intervention into negotiations of plans – a clear overreach of the legislation that was intended to prevent government interference in these private sector negotiations.
In addition, the rule places mandates on mail order companies, reduces the number of protected classes of drugs provided under Part D, and reduces the ability of plans to negotiate with preferred pharmacies. All of these significant policy changes will increase the costs to Medicare, and in turn, increase the cost to manufacturers who use these programs. These changes are contrary to legislative intent and undermine the stability of successful programs. Instead of tearing down a popular program that is fiscally sound we should be looking to replicate similar solutions elsewhere.
Medicare policy should be based on sound health outcomes combined with robust fiscal management. The current debate looks too much at old politics and not enough a new answers.