Judge Says that the House GOP Can Sue the President

The Los Angeles Times reports that House Republicans won the opening round in a lawsuit against President Obama over their claim that his administration spent money for health insurers under the Affordable Care Act without receiving needed approval by Congress. U.S. District Judge Rosemary Collyer ruled Wednesday that the lawmakers have the legal standing to sue. The Constitution “could not be more clear: ‘No Money shall be drawn from the Treasury but in consequence of Appropriations made by Law’,” she said, quoting a key provision. “Neither the president nor his officers can authorize appropriations; the assent of the House of Representatives is required before any public monies are spent.”

The judge rejected pleas by Obama’s lawyers to dismiss the House lawsuit on the grounds it involved a political dispute, not a legal one. Collyer said that the House claimed it would suffer an “institutional injury” if the president and his aides could spend money on their own authority. Her ruling is only the first step, however. She told lawyers she would hear arguments in the fall on whether the administration’s action violated the Constitution. If Collyer, a judicial appointee of President George W. Bush, were to decide in favor of the House on the merits, Obama’s lawyers would appeal to the U.S. Court of Appeals for the District of Columbia Circuit, where Democratic appointees are in the majority. From there, the case could move to the Supreme Court. Unless the dispute moves with unusual speed, a final decision might not come until after Obama has left office. Nonetheless, Collyer’s initial ruling is a victory for House Speaker John A. Boehner, and it is likely to be seen as endorsing the GOP’s view that Obama overstepped his authority. In a statement, Boehner said he was “grateful to the court for ruling that this historic overreach can be challenged by the coequal branch of government with the sole power to create or change the law. The president’s unilateral change to Obamacare was unprecedented and outside the powers granted to his office under our Constitution.”

The White House said it would seek an immediate appeal. “The law is clear that Congress cannot try to settle garden variety disputes with the executive branch in court,” said Deputy Press Secretary Jen Friedman. “This case is just another partisan attack — this one, paid for by the taxpayers — and we believe the courts will ultimately dismiss it.” Many lawyers saw the House suit as unprecedented. In the past, courts have regularly said lawmakers do not have standing to turn their political fights into legal battles. Last summer, when the House voted to sue Obama, many legal experts predicted the suit would be tossed at the first stage. Boehner had first alleged that Obama’s aides had violated the law when they waived several deadlines under the Affordable Care Act.

But more recently, the lawyers for the House focused on a little-known dispute over how to reimburse health insurers who take on more low-income policyholders. The Affordable Care Act said these insurers would be reimbursed for waiving copayments and other costs for these new policyholders, but it did not make clear whether this money would be provided automatically or instead would require an annual appropriation from Congress. So far, the administration has spent $4 billion, and the total spending is expected to reach $175 billion over a decade. After the Republican-led House refused to appropriate money, Health and Human Services Secretary Sylvia Mathews Burwell decided the reimbursements were mandatory under the law and could be provided despite the lack of an appropriation.

Law professor Jonathan Turley, the lead counsel for the House, said the judge’s ruling means the court will decide “an issue that drives to the very heart of our constitutional system: the control of the legislative branch over the power of the purse.” Despite the setback, health law experts do not see this case as posing a major challenge to the future of Obama’s healthcare law. If spending for the reimbursements were cut off, insurers might have to raise premiums somewhat. Other experts say the insurance companies could turn to a federal claims court to seek reimbursements. For the full article, visit latimes.com.

Fresh Data on ACA Show the Effects of Health Reform

The uninsured rate reached a new low in the first full year of the ACA health insurance marketplace operation. A smaller share of Californians delayed or skipped necessary medical care, according to a survey by the California HealthCare Foundation (CHFC). The survey also found the following:

  • The number of uninsured Californians under 65 dropped 12%, falling from 16% of the population in 2013 to 14% in 2014, a new low.
  • Notable decreases in uninsured rates were found among people living below 138% of the federal poverty level and among African Americans.
  • The share of the population age 18 to 64 enrolled in Medi-Cal rose by 52%.
  • The share of uninsured Californians reporting cost as the reason for lacking coverage dropped from 53% to 43%, although lack of affordability remains the most common reason cited for going without insurance.
  • Most non-elderly adults who went without necessary care said it was because they couldn’t get an appointment.
  • In certain regions, such as Northern/Sierra counties, more people had a hard time finding primary care physicians and specialists who accept new patients or their insurance than in 2013.

The Impact of Health Reform in California

A survey by The California HealthCare Foundation (CHCF) finds improvements in access to care in California. The uninsured rate is at a new low, and fewer Californians are delaying or skipping necessary medical care. The number of Californians under 65 without insurance dropped 12%, falling from 16% of the population in 2013 to 14% in 2014. Uninsured rates declined notably among people living below 138% of poverty line and among African Americans. The share of the California population 18 to 64 enrolled in Medi-Cal rose 52%. The proportion of uninsured Californians reporting cost as the reason for lacking coverage fell from 53% to 43%, though lack of affordability remains the most common reason cited for going without insurance.

Health Care Reform Is Triggering Benefit Changes

With Affordable Care Act deadlines imminent in 2014 and 2015, employers are saying the increased effect of health care reform on various aspects of employee benefits, according to a Prudential survey. Vishal Jain of Prudential said, “The Affordable Care Act could…usher in a new …emphasis on voluntary benefits. More employers are utilizing them for recruiting and retaining talent and employees increasingly view them as a cost-effective way to protect their family’s financial future.” With a shifting benefit landscape, carriers are now focused on being a trusted resource for employers while offering a full spectrum of services such as enrollment communications, benefit education, record keeping, and administrative services,” Jain said.

The survey reveals the following about employers:
• 49% say they are extremely or very likely to make a high-deductible health plan their only health insurance option.
• 73% say the law is having an effect on benefit service and support and 69% say there is an effect on benefit communications.

The survey reveals the following about employees:
• They are increasingly confident that more Americans will be covered under the Affordable Care Act (43%, up 7% from 2012).
• An expanding number say fewer employers will offer health insurance (44%, a 13% increase from 2012), and 38% of those employees believe their employer will drop coverage.
• About one-third have heard of but know little about public or private exchanges.

For more information, visit http://www.news.prudential.com.

Nearly 1 Million Americans Could Leave Their Jobs Because of Health Care Reform

Up to 900,000 Americans could decide to stop working because of the Affordable Care Act, according to research from the University of Chicago Booth School of Business. The study is based on the abrupt end of Tennessee’s Medicaid expansion in 2005. That year, Tennessee dropped 170,000 of its citizens from Medicaid, which was the largest Medicaid disenrollment in the history of the program.

In 1994, Tennessee’s expanded its Medicaid public health insurance program to provide for uninsured and uninsurable adults regardless of age, income or family status, becoming one of the most generous in the country. But the program was ended  nine years later, largely due to budgetary constraints. Approximately 170,000 residents lost coverage.

Those who lost coverage were disproportionately single, childless adults with incomes slightly higher than the federal poverty line. That population is very similar to uninsured Americans who are likely to gain coverage under the Affordable Care Act.

Close to half of those who lost TennCare coverage in 2005 found insurance through an employer. As soon as TennCare coverage ended, there was a spike in Google searches for “job openings” in Tennessee.

“This shows that there are many people out there who look for work simply because they need health insurance. For them, the perk matters more than the paycheck,” says Tal Gross, co-author of the paper and assistant professor of Health Policy and Management at the Mailman School.

“The fact that people are working solely to get health insurance signals a failure of the private health insurance market,” explains Matthew J. Notowidigdo, Neubauer Family Assistant Professor of Economics at the University of Chicago Booth School of Business and a study co-author. “That’s one of the reasons why the Affordable Care Act was created.”

With Medicaid rapidly expanding under the Affordable Care Act, the researchers foresee that such a progression could happen in reverse: The option of public health insurance may lead some Americans to retire or to leave their jobs. This doesn’t make the Affordable Care Act a “job killer,” as some have suggested; it just provides an alternative way to procure health insurance that doesn’t require people to work for the “perk.”

“When the Affordable Care Act is enacted, hundreds of thousands of people may choose to leave the labor force or retire earlier…because they now have access to health insurance outside of their jobs,” explains Craig Garthwaite, assistant professor at Northwestern University’s Kellogg School of Management and a study co-author. “It’s giving people important options that otherwise wouldn’t exist without the ACA. Historically, health insurance in the United States has been tightly linked to employment, and the ACA weakens that link.” For more information, contact Ethan Grove at 773-834-5161 orethan.grove@ChicagoBooth.edu.

Unions Say the ACA Hurts Workers

Three major U.S. unions sent a scathing letter to Democratic leaders in Congress, warning that unless changes are made, President Obama’s health care reform plan will destroy the foundation of the 40 hour work week for the American middle class. According to union leaders, without an equitable fix, the ACA will shatter hard-earned health benefits and destroy the foundation of the 40-hour workweek that is the backbone of the American middle class.

The unions complain that the law creates an incentive for employers to keep employees’ work hours below 30 hours a week. Numerous employers have already started cutting workers’ hours to avoid this obligation; and many of them are doing so openly. The impact is two-fold: fewer hours means less pay while also losing health benefits.

Second, millions of Americans are covered by non-profit health insurance plans like the ones in which most union members participate. Under the ACA, our employees will not be eligible for subsidies afforded other citizens. But these plans will be taxed to pay for those subsidies. These restrictions will make non-profit plans unsustainable; and will undermine the health-care market of viable alternatives to the big health insurance companies, according to the letter.

Union leaders say that common-sense corrections to ACA implementation would allow union members to keep their health plans and benefits just as the President has pledged.

Employer Coverage to Remain Strong Post Reform

For businesses that employ 81% of workers with health insurance, offering health coverage will continue to make economic sense post health reform, according to a study from the National Institute for Health Care Reform. The study was conducted by University of Minnesota researchers working with the Center for Studying Health System Change (HSC).

Economic incentives to offer coverage will remain strong for many businesses under health reform, especially larger, higher-wage firms. However, incentives will weaken for small and low-wage employers – the very establishments that were most likely to drop coverage because of rising costs.

Post-reform, employer premium contributions remain tax-exempt. Also, beginning in 2014, there will be a penalty on larger employers that do not offer affordable health insurance. There will also be premium tax credits for lower-income people to purchase insurance in new state exchanges if they don’t have access to affordable employer coverage.

After 2014, the largest firms (500 or more workers) will have an average incentive of $2,503 per employee to offer coverage. The smallest firms (fewer than 50 workers) will face a lower average economic incentive of $990 per employee. This is mainly because these smaller employers will be exempt from the penalty for not offering coverage.

There will be economic incentives to offer insurance to workers in many industries. The exceptions are workers in accommodation, food services, entertainment and recreation, agriculture, forestry, fishing because of the greater eligibility of these workers for exchange subsidies. Employers with a union presence will have a large economic incentive to offer coverage after 2014. For more information, visithttp://www.nihcr.org.

Open Enrollment Season Foreshadows Significant Changes in 2014

As employees make their open enrollment selections, they are likely to see only minimal plan changes compared to last year. However, employees can expect significant change in 2014 and beyond with mounting cost pressures, health care reform, the emergence of new network configurations, and the rapid development of new health care delivery models, according to a survey by experts at Towers Watson.

Sixty-three percent of employers expect little or no change to their health benefit plan design or employee premium subsidies for 2013. Yet 2014 promises to be a different story, with 42% of employers considering changes to plan options and 31% considering reductions in subsidization of coverage for spouses or dependents. Likewise, the percentages of companies planning to use spousal waivers or surcharges when an employee’s spouse has access to employer-provided coverage elsewhere is expected to increase moderately in 2013, but grow significantly in 2014.

The survey projects a 5.3% net increase in total health benefit plan costs after any plan changes are taken into account, increasing the average cost per active employee from $10,925 in 2012 to $11,507 in 2013. Of the 2013 total, employees will pay an average of $2,596, or 22.6%, up from $2,436 in 2012.

The year 2013 is a bridge to an emerging health care landscape, said Randall Abbott, senior health care consulting leader at Towers Watson. Employers are working to deliver greater value for each dollar spent on health care in response to continued cost escalation, the rapidly changing provider marketplace and the many provisions of health care reform. This will translate into new plan options, new approaches to care delivery, and a marked shift to narrow provider networks.

Next year, employees should be on the lookout  for new health care plan designs that encourage them to make more informed decisions or bear a greater financial burden for their healthcare. Employees will see new plans emerging with different levels of coverage based on cost or quality, new networks of high-quality providers, and new modes of care delivery, such as retail care, telemedicine, and employer-sponsored onsite health coaching. They can also expect more interactive tools for selecting medical providers and services based on price and quality. Employers will offer incentives for using high-performance networks. Employers will make employees more accountable for their personal health decisions.

Employees will get more information and choices than ever. The next few years will mark a major reshaping of how health care is delivered, said Ron Fontanetta, senior health care consulting leader at Towers Watson. The use of reward or penalties based on biometric outcomes (achieving a target BMI and cholesterol level) could skyrocket in the next two years. Thirteen percent of employers use such incentives; 9% plan to add them in 2013; and another 52% are considering them for 2014 or 2015.

Six percent of employers plan to add account-based health plans in 2013 and another 19% are considering adding them in 2014 or 2015. While 12% offer an ABHP as their only plan option, this percentage could climb to 46% by 2014.

Fifty-nine percent of employers are somewhat likely to very likely to stop sponsoring retiree medical plans for post-65 retirees in 2014 or 2015. Instead, many employers will direct retirees to private Medicare exchanges. For more information, visit towerswatson.com.

Costs Continue to Rise for Employee Health Benefits

In related news, the cost of claims continues to rise in employer-sponsored health plans, according to a survey of more than 70 insurance companies by Wells Fargo Insurance. Although rates remain consistent compared to six months ago, overall claim costs will continue to increase in the high single digits next year. The Wells Fargo Insurance Employee Benefits Survey was conducted between July and August 2012.

Dan Gowen of Wells Fargo Insurance said, “Despite ongoing efforts to control healthcare expenses insurers are not expecting a drop in claim costs for 2013. This means that employer premiums will likely rise; it’s also likely that consumers may pay more for their share of employer-sponsored healthcare plans. Employers seeking to minimize cost increases should explore more sophisticated ways to maintain and improve the health risk of employees and maximize their benefit investment.”

The survey also found that dental cost trends are lower than medical trends due to lack of cost shifting from public to private plans and a negative cost impact from improvements in the dental technology field. Finally, survey results indicate that prescription costs are down slightly, due to greater availability and the use of generic drugs.

Reflecting claim activity over a six-month period, the following are expected increases in the national average cost of claims:

• HMOs – 8.5%
• Point-of-sale (POS) – 8.7%
• PPOs and consumer driver health plans – 9.3%
• Exclusive provider organizations (EPO) – 9.4%
• Indemnity plans – 10.2%
• Prescription plans – 7.6%

In addition to healthcare reform provisions, claim trends are influenced by price inflation or deflation (changes in unit prices for the same services), increased or decreased use of services, population age, benefit design, changes in provider treatment patterns, improvements in technology and drug therapies, and cost shifting. For more information, visit www.wellsfargo.com/wfis.

Health Spending Grows Faster Than Expected

At a growth rate of 4.6%, U.S. health care spending for people with employer-sponsored coverage grew faster than expected in 2011, according to the Health Care Cost Institute (HCCI). Health care spending growth had been on a downward trajectory for those with employer-sponsored insurance – from 5.8% in 2009 to 3.8 % in 2010. And with a sluggish economy, many experts expected a modest growth rate for 2011.

But, prices rose for all major health care categories including hospital stays, outpatient care, procedures, and prescriptions. Prices rose fastest for outpatient care.

HCCI Executive Director David Newman said, “Prices continue be the main culprit for rising health care costs. If we are really going to get health care spending under control, we have to better understand why those prices are rising and the implications those increases have for the U.S. health care budget.”

A slowdown in prescription spending partly offset overall health care spending. Prescription costs grew just 1% from 2010 to 2011, rising to $773 per capita. Brand name prescription prices rose 17.7% to an average of $268 per prescription. But the use of brand name prescriptions fell nearly 13%. Generic prices fell 7.2% to an average of $33 per prescription while the use of generics rose 3.4%.

In 2011, the growth rate of spending on children increased 2.1 percentage points to 7.7%, which is more than twice the growth rate of spending for people aged 19 to 44 and 55 to 64.

Cost sharing remains stable among patients and payers. Spending on health care was split between consumers and insurance companies in much the same way as in previous years, with insurers paying for 83.8% of total expenditures and insured enrollees paying 16.2%. Payers contributed $3,812 per person in 2011.

In 2011, people with employer-sponsored insurance used more outpatient services and had more procedures than in 2010. Emergency room visits increased 3.7%. However, patients had fewer hospitals stays and prescriptions filled.

In 2011, out-of-pocket spending reached $735 per person – a $32 increase from 2010. Costs covered by insurance grew at nearly the same rate. Spending grew fastest for outpatient services, for people ages 18 and younger, and for people in the Northeast. Spending grew the slowest for prescriptions. For more information, visit http://www.healthcostinstitute.org/2011report

Last Updated 09/22/2021

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