On the rise

Re­form could help curb soar­ing costs: study

Modern Healthcare - - The Week In Healthcare - Re­becca Ve­sely

Pol­i­cy­mak­ers con­tinue to grap­ple with how to sus­tain em­ployer-based health cov­er­age while busi­nesses say they’re strug­gling un­der the ris­ing cost of premi­ums and new fed­eral re­quire­ments. As in­surance premi­ums con­tinue to rise far faster than wages, more fo­cus needs to be placed in ad­dress­ing the un­der­ly­ing costs of care, ex­perts say. The Com­mon­wealth Fund con- and fam­i­lies have been giv­ing up wages to hold onto their health in­surance.”

The re­port is the lat­est in a steady stream of find­ings that health­care premi­ums are es­ca­lat­ing at an alarm­ing rate, and more of the costs are be­ing shoul­dered by work­ers. Last month, Mod­ern Health­care found in an an­nual Health­care Pur­chas­ing Power sur­vey of large em­ploy­ers that cost-shift­ing to work­ers in the form of Com­mit­tee on Com­merce, Sci­ence and Trans­porta­tion took on this is­sue in a hear­ing last week on “mini-med” health plans, or limited ben­e­fit plans, which pro­vide cov­er­age to about 1 mil­lion low-wage work­ers.

Mini-med plans are ex­pected to be ex­tinct by 2014, when the ex­changes are up and run­ning and low-wage work­ers can qual­ify for fed­eral sub­si­dies to buy in­surance. But un­til then, their mer­its are be­ing hotly de­bated. Sen. Jay Rock­e­feller (D-W.Va.), out­go­ing com­mit­tee chair­man, held the hear­ing as part of an on­go­ing in­ves­ti­ga­tion into these plans.

In the mean­time, more than 100 em­ploy­ers and in­sur­ers of­fer­ing mini-med plans have qual­i­fied for one-year waivers from HHS in meet­ing new rules, ef­fec­tive in Jan­uary, re­quir­ing in­sur­ers to spend 80 cents of ev­ery mem­ber pre­mium dol­lar on pa­tient care or qual­ity im­prove­ments for small-group and in­di­vid­ual plans, and 85 cents per dol­lar on large-group plans.

McDon­ald’s was among the first em­ploy­ers to request such a waiver. The fast-food gi­ant of­fers three mini-med plans with an­nual spend­ing caps of be­tween $2,000 and 10,000 a year. The com­pany also of­fers more com­pre­hen­sive in­surance at a higher price.

Hourly McDon­ald’s work­ers are only will­ing to pay be­tween $5 and $20 per week for in­surance, tes­ti­fied Rich Flo­er­sch, ex­ec­u­tive vice pres­i­dent of hu­man re­sources at the com­pany. The chal­lenge is find­ing cov­er­age that works at this price range, and mini-med plans fit the bill, he said.

Some agree with McDon­ald’s that min­imed plans are one an­swer to the ris­ing costs of health­care. “Limited ben­e­fit plans pro­vide a level of ben­e­fits many Amer­i­cans rely on, and the loss of cov­er­age would make them worse off,” said Devon Her­rick, se­nior fel­low at the Na­tional Cen­ter for Pol­icy Anal­y­sis, a freemar­ket think tank. Her­rick added that com­pre­hen­sive ben­e­fit pack­ages, re­quired by the re­form law start­ing in 2014, could fur­ther erode wages.

Some mem­bers of Congress have been try­ing to ex­tend re­lief to em­ploy­ers. Last week, the Se­nate con­sid­ered two bills to re­peal a pro­vi­sion in the re­form law re­quir­ing busi­nesses to file 1099 tax forms on each pur­chase over $600. Both mea­sures failed be­cause the pro­vi­sion is ex­pected to gen­er­ate about $19 bil­lion in rev­enue for the fed­eral govern­ment over 10 years.

And Thurs­day, the Trea­sury Depart­ment is­sued guid­ance on a 35% tax credit for em­ploy­ers with fewer than 25 work­ers to pay for health­care costs. The rules make clear that a wide range of the small­est em­ploy­ers with var­i­ous health cov­er­age ar­range­ments can qual­ify.

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