The National Association of Manufacturers has signed on with a letter to Congress from members of Health Choices Coalition, urging legislators to overturn the ban on use of employees’ Flexible Spending Accounts for over-the-counter drugs. OTC drugs are effective and FSAs are effective, providing an important measure of consumer control over health-care spending, yet last year’s health care law limited the accounts.

The Consumer Healthcare Products Association issued a release on the issue earlier this week. Excerpt:

“This issue is about empowering millions of American consumers to cost-effectively manage their families’ healthcare needs,” said CHPA Vice President of Government Affairs Bill Head. “The availability of OTC medicines through an employer-sponsored FSA provides valuable cost-savings to consumers, increases worker productivity, and encourages smart healthcare decisions by both employers and employees — all of which are consistent with the goals of healthcare reform.”

Prior to January, OTC medicines were eligible for reimbursement under FSAs and other tax-preferred savings accounts. An estimated 19 million working American families purchased these cost-effective medications through their FSAs. (continue reading…)

One year ago today, President Obama signed the Patient Protection and Affordable Care Act (PPACA), the great federal restructuring of U.S. health care. The law’s value in protecting patients is suspect, and it’s doing little to make health care affordable. So, after a year of implementation what has been the real effect?

PPACA: Neither Protective, Nor Affordable

We know that the promise of being able to keep our health plan if we like it was an empty one, and even the Administration’s own actuary admits this fact. When asked during a hearing in the House Budget Committee whether the health care law really allows people to keep the plans they like, Rick Foster stated that claim was “not true in all cases.”

We also know the bulk of the funding for the new entitlement program is based on fuzzy math at best and outright deception at worst. In a stunning admission before the House Energy and Commerce Committee, the Secretary of Health and Human Services admitted the Administration is counting reductions in Medicare spending as a credit to extending the solvency of the program while also using the same funds to “pay for” a large portion of the expected costs of PPACA. This double-counting allowed the Administration to claim the legislation would save the nation more than $100 billion over the next 10 years — a statement with as much veracity as the promise our health plans wouldn’t change.

As the law enters its second year of implementation, the National Association of Manufacturers will be watching several issues sure to emerge in 2011: the essential benefits package and accountable care organizations (ACO). The essential benefits package defines for all Americans what coverage must purchase in order to avoid penalties under the law. It’s easy to predict how this will turn out: All single men will have to buy a plan that covers pre-natal and post-natal care and all single women will have to have a policy that covers prostate cancer. This is not to say these aren’t important things to cover, but the inequity is clear.

What’s also clear is how the process of determining what is an essential benefit will be manipulated by well-meaning interest groups that will gauge their importance and influence on policymakers based on whether their particular disease category is included as an essential benefit. Special-interest coverage is hardly a strategy for controlling health care costs.

While accountable care organizations (ACOs) seem to be an attractive idea in some health care policy circles, there are some (this author included) who believe the consolidation and integration of hospitals and physician practices could do irreparable harm to competition in the marketplace. ACOs may work fine in a single-payer system like Medicare, but it could wreak havoc on negotiations for payment rates and the establishment of networks in a private market which depends on competition in order to arrive at a mutually agreed upon price for services. In small to medium-sized communities, this consolidation could lead to oligopolies or monopolies in health care services. Such an outcome would raise prices and make care less affordable.

Many proponents believed, and continue to believe, Americans will warm to the law once they see all the great things and reap all the rewards of the centralized command-and-control this law will bestow upon us. The results so far leave us cold. (continue reading…)

Even though the Senate voted on party lines Wednesday to retain the 2011 Patient Protection and Affordable Care Act, a large bipartisan majority voted 81-17 to end the 1099 reporting requirement that had employers up in arms. Intended as a revenue generating measure, the provision would have required businesses to file 1099 tax forms on any transactions with suppliers that exceeded $600 in a year. Paperwork nightmare would be too kind of a description.

In the 111th Congress, Sen. Mike Johanns (R-NE) led the fight to kill the measure, arguing that any revenue shortfall that resulted could be made up by reallocating funds that the federal government had yet to appropriate. Senate Democratic leadership instead wanted to raise taxes on companies with foreign earnings or oil company revenues.

Sen. Debbie Stabenow (D-MI) sponsored yesterday’s amendment to end the 1099 reporting requirement, but it’s Johanns’ arguments that carried the day. From Bizjournals.com:

[The] Senate’s decision to tap unspent money to pay for the cost of 1099 repeal makes it much more likely to be agreed to by the House, which already passed total repeal of health care reform. Business groups hope 1099 repeal is enacted quickly because businesses would need time to change their accounting systems if the requirement does go into effect next year.

Business groups opposed the tax increases in the Democratic amendment, contending raising taxes on oil companies would increase energy costs.

“This amendment will cost good-paying manufacturing jobs,” said Aric Newhouse, senior vice president at the National Association of Manufacturers. “Discriminatory tax policies that pick ‘winners’ and ‘losers’ and pit industry sectors against each other undermine U.S. competitiveness, innovation and job growth.”

The Senate vote Wednesday not only ends a horrible, anti-competitive tax provision, it also demonstrates that the 2010 health care law is not sacrosanct. Whether bit by bit or in one fell swoop, the ill-conceived and badly structured law can be repealed. After that, Congress can start again and get it right.

The National Association of Manufacturers on Tuesday sent a “Key Vote” letter to U.S. Senators urging support for the amendment by Sen. Mitch McConnell (R-KY) to the FAA reauthorization bill that would repeal the 2010 Patient Protection and Affordable Care Act. The NAM argues:

The vast majority of American manufacturers, including 97 percent of NAM member companies, voluntarily offer health benefits not only to attract a skilled workforce, but because they believe it is the right thing to do for their employees. Our members support proposals that reduce soaring health costs, improve the efficiency of the current system and enhance the quality of care.

Conversely, manufacturers oppose proposals that make it more expensive or more difficult for employers to offer health benefits. Legislation enacted in 2010 – specifically the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act – will drive up manufacturers’ health care costs and force many companies to consider abandoning the generous benefits they currently offer.

We remain adamantly opposed to the new laws’ employer mandates, industry-specific fees, Medicare hospital insurance tax increases, reporting requirements, excise taxes and limits on Flexible Spending Accounts – all of which will place more burdens on America’s job creators. Our nation can and must do much better at finding a health care solution, and the 2010 legislation should be repealed.

Key Votes are identified by a committee of representative manufacturers from small and large companies, and are used by the NAM to determine a member of Congress’ voting record on issues critical to the manufacturing economy.

Sen. McConnell, the Senate Republican leader, announced his amendment on the floor Tuesday, noting that a federal judge in Florida had just ruled the entire law unconstitutional.

The NAM also issued a statement from Aric Newhouse, senior vice president for policy and governmental relations, “Manufacturers: Health Care Laws Will Cost Jobs and Stifle Growth.”

The National Association of Manufacturers on Tuesday sent a “Key Vote” letter to House members urging support of H.R. 2, the bill to repeal the Patient Protection and Affordable Care Act. From the letter:

The vast majority of American manufacturers, including 97 percent of NAM member companies, voluntarily offer health benefits not only to attract a skilled workforce, but because they believe it is the right thing to do for their employees. Our members support proposals that reduce soaring health costs, improve the efficiency of the current system and enhance the quality of care.

Conversely, manufacturers oppose proposals that make it more expensive or more difficult for employers to offer health benefits. Legislation enacted in 2010 – specifically the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act – will drive up manufacturers’ health care costs and force many companies to consider abandoning the generous benefits they currently offer.

We remain adamantly opposed to the new laws’ employer mandates, industry-specific fees, Medicare hospital insurance tax increases, reporting requirements, excise taxes and limits on Flexible Spending Accounts – all of which will place more burdens on America’s job creators. Our nation can and must do much better at finding a health care solution, and the 2010 legislation should be repealed.

Determined by a committee presenting NAM members of all sizes, Key Votes are used to rate a member of Congress’ record on manufacturing-related issues.

Writing at National Review’s The Corner blog, Yuval Levin dissects the op-ed response from Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius to the federal judge striking down the individual mandate in the federal health care law. Like us, Levin can find no legal or constitutional argument in their Washington Post column, “Health reform will survive its legal fight,” just a weak case made on policy grounds.

Levin writes:

Their argument, in essence, is that the government has the right to do anything it wants to in the health-care arena because all human beings get sick, and their getting sick can have economic consequences. The choice of some not to purchase insurance means that when they get sick they might incur some costs that would have to be shouldered by others. “For decades,” Holder and Sebelius write, “Supreme Court decisions have made clear that the Constitution allows Congress to adopt rules to deal with such harmful economic effects.” And the way the new health-care law would “deal with” such harmful effects is to make it illegal to make the choice not to purchase insurance. Simple.

  (continue reading…)

Thursday’s Halloween-themed comic strip.

The Patient Protection and Affordable Care Act, the new health care law, is sickening small business with its requirement that companies file IRS 1099 forms to report every purchase 0f $600 or more. Yes, that’s a lot of reporting, a lot of paperwork.

Reuters has a good report on the ins and outs of this stomach-churning provision, “1099 tax rule may bring big pain to small business“:

Who will it affect?
It will affect all businesses, including sole proprietors, consultants, self-employed people and freelancers, who are considered businesses for tax purposes, but may not think of themselves that way. It also will apply to charities and other tax-exempt organizations. The National Taxpayer Advocate, based on Internal Revenue Service data, figures that it will affect 26 million sole proprietorships, 4 million S corporations, 2 million C corporations, 3 million partnerships, 2 million farms, 1 million charities and other tax-exempt organizations, and likely more than 100,000 federal, state and local government entities. All told, that’s more than 38 million taxpayers and taxpaying entities.

The story notes the NAM’s concerns, especially as the law will create all sort of disparate record-keeping and reporting requirements — an exemption for credit card purchases, but not cash?

“It’s a headache, there are increased costs, and I think there is also significant concern about how they will implement it,” says Dena Battle, director of tax policy at the National Association of Manufacturers, one of the business groups that has pushed for repeal. “Any time you have these ‘tax gap’ provisions, there are gigantic unintended consequences.”

Earlier Shopfloor posts:

• Senate Votes to Continue IRS Paperwork Nightmare
• The Only Fix for this Filing Burden is Repeal
• Get Rid of This Business-Crushing IRS Filing Mandate

John Engler, president of the National Association of Manufacturers, on Thursday spoke at the Integrated Care Summit in Washington, a conference sponsored by the Care Continuum Alliance.

The Alliance recently changed its name from the Disease Management Association of America, a fact that Engler played off on as he introduced the afternoon plenary session. From his (edited) remarks:

I observe there’s another high profile name change that’s actually been under way since President Obama signed the health care bill back in March. The law, the official name is “The Patient Protection and Affordable Care Act.”

I don’t know if you’ve noticed, maybe you have, but it has not escaped our attention that the Administration rarely now refers to the law by its full title.

At the White House website and actually in the materials from Health and Human Services, the law is called just, “The Affordable Care Act.” Some of us are a little concerned, and the jury’s still out on that: Will it be more affordable or less affordable? I think the work that we’re doing needs to be fought for and defended, because that’s how we do make it more affordable.

We certainly don’t think that we can drop the emphasis on “patient” from the policy discussion, because that prospective patient in the manufacturing world is our employee, and you want to be very focused with that employee. That prospective patient – hopefully they don’t become patient – you want them to be the priority, front and center.

At the same time, I can say for our manufacturers there is the suspicion – and I think through the provider community – that if we simply stand aside and say, well, somehow government or agencies of the government, they’re going to be the leaders in innovation or implementing integrated care, we’re bound for disappointment.

You’ve got to have the innovation, the ideas, the experience, the wisdom, if you will, from public and private employers and the health care experts who have worked with them – people who have actually put programs to work, actually run something on the ground, interacted with people on a daily basis.

During the consideration of health reform, we were assured repeatedly by President Obama and proponents of the behemoth euphemistically called the Patient Protection and Affordable Care Act (PPACA) that if we liked our health insurance we could keep it.  Many opponents of the bill, including the National Association of Manufacturers, never bought that talking point and now we know for a fact the promise will not be kept.

Ostensibly, the intent of health reform was to insure the uninsured and protect the coverage of those who get health insurance from their employer.  Instead, what we got is a looming crisis for as many as 170 million Americans who could lose their coverage because their employer can’t afford to provide it anymore or inadvertently runs afoul of the government.  Now that’s reform.

The “grandfather rule” issued by the Department of Health and Humans Services (HHS) in June essentially read like a cynical attempt to make good on a promise never intended to be kept.  (HHS news release, fact sheet, rule.) In a technical sense, if your plan doesn’t change at all from what it looked like on March 23, 2010, you can keep it – but how realistic is that?  Not very, and they know it.

In fact, the HHS itself acknowledges that up to 70 percent of all employers will either lose their health plan by violating the new federal regulations or forgo grandfather status on their own within the first three years.

Under the rules for so-called “grandfathered plans,” small businesses that purchase health insurance for their employees have been stripped of the single most important tool they have to keep their rates in line – the ability to shop around and negotiate with multiple health insurance companies to get the best coverage they can afford.  If an employer switches insurance companies now, they lose their grandfather status.

If employers decide to stick it out with their current plan, other tools to keep costs in check have been taken away as well.  Increase co-payments beyond limits set in the regulation?  Lose your grandfathering.  Increase employee cost-sharing for premiums beyond what the government tells you?  Lose your grandfathering.  And the HHS isn’t done yet.

HHS has asked for comments on whether a plan should lose its grandfather status if it changes their prescription drug coverage or the network of physicians and hospitals beneficiaries can see.  These are common alterations insurers and employers look to for cost control so their employees can afford the coverage.  The NAM will be submitting comments to the HHS today on these and other issues raised by the rule. [UPDATE: Here are the NAM's comments.]

Unless significant changes are made, it seems clear what the end goal is with the so-called “grandfather rule” – design it to effectively ensure that within three years all current employer-based plans will go the way of the Dodo.

 Joe Trauger is the NAM’s Vice President for Human Resources Policy.