President Obama Tuesday night signed into law legislation that provides a stopgap, 31-day extension of federal subsidies of COBRA health care premiums.

The measure was approved earlier Tuesday by the Senate on a 78-19 vote, while the House cleared it last week.

Under H.R. 4691, the 65%, 15-month premium subsidy for laid-off workers is extended to those involuntarily terminated from March 1 through March 31.

Without the extension, employees laid off after Feb. 28 would have been ineligible for the subsidy.

The measure also will allow employees to receive the subsidy if they first lost group coverage due to a reduction in hours and then were terminated after enactment of the legislation, if certain conditions are met.

Meanwhile, the Senate Wednesday will continue consideration of legislation, H.R. 4213, that would extend the premium subsidy to employees laid off through Dec. 31, 2010.

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: 2010 COBRA Benefits, 2010 COBRA Benefits Extension, 2010 COBRA Subsidy Deadline, 65% COBRA Subsidy Extension, COBRA Extentension, COBRA Health Care Premium Subsidy Deadline, COBRA Subsidy Extension

As we head into July, the federal debate has become more defined as four of the five Congressional committees with jurisdiction over health reform have released draft health reform bills. On June 19th , the Education and Labor, Energy and Commerce, and Ways and Means Committees in the House of Representatives released a joint tri-committee draft health reform bill. Earlier in June, the Senate Health, Education, Labor, and Pensions (HELP) Committee released its health reform bill. The final committee with jurisdiction over health reform, the Senate Finance Committee, is expected to release its health reform bill soon after the 4th of July Congressional recess. House and Senate leadership hope to pass legislation in their respective chambers before August and get a final compromise bill to the President in October. Key components of the recently released House tri-committee bill include:

National Health Insurance Exchange: By 2013, a National Health Insurance Exchange is to be established to replace the current individual health insurance market and provide an option for employers and public program enrollees in Medicaid and the Children’s Health Insurance Program (CHIP). States would be allowed to apply to the federal government to establish state or regional exchanges. The Exchange is to establish health plan standards, facilitate the provision of comparative information, enrollment, billing, and other administrative functions, administer coverage subsidies, and respond to consumer grievances.

Public Plan: No later than 2013, the Department of Health and Human Services is to develop and offer a Public Plan through the Exchange to compete with private insurers. The Public Plan is to comply with the same requirements as other private health plans participating in the Exchange, but provider payments from the Public Plan are to be similar to Medicare rates and providers participating in Medicare would be required to participate in the Public Plan for five years. The federal government would provide start up funding for the Public Plan, but it must become self-sustaining after initial start up.

Insurance Market Reform: The legislation requires changes to the individual and group markets that prohibit pre-existing condition exclusions, prohibit premium rating based on health status, gender, or occupation and limit rating by age, require guarantee issue and renewal of coverage, require a medical loss ratio of 85 percent, prohibit annual or lifetime benefit limits and limit annual cost sharing, establish a Benefits Advisory Committee to recommend a minimum benefit package and three additional standard benefit plans, and establish a risk spreading mechanism to minimize unequal risk selection in health plans.

Coverage Mandates: By 2013, all individuals would be required to have health insurance coverage. Those not complying with the mandate are to be assessed a tax up to the cost of the minimum benefit plan. Exceptions to the mandate are granted for religious objection and financial hardship. Employers would be required to provide 72.5 percent for single coverage and 65 percent for family coverage of the lowest cost minimum benefit set plan or pay an eight percent tax on wages. Certain small businesses with payroll below a set level would be exempt.

Coverage Subsidies: Sliding scale subsidies varying by income would be available through the Exchange for individuals and families with incomes below 400 percent of the federal poverty level ($88,000 for a family of four) so that premiums would not exceed 10 percent of income. Sliding scale subsidies varying by employee income and employer size worth up to 50 percent of premium would be available to employers with less than 25 employees whose average wage is below $40,000.

Medicaid Reform: The legislation expands Medicaid eligibility for all individuals to 133 percent of the federal poverty level ($14,000 for an individual) and requires an 85 percent medical loss ratio for Medicaid managed care organizations. It also establishes new preventive services benefits, increases payments for primary care, and implements a medical home pilot project to reduce costs and improve outcomes through use of preventive services and care coordination.

Medicare Reform: The legislation restructures provider payment rates and requires the Department of Health and Human Services to develop new payment methods to promote coordinated care and reward quality and efficiency in areas such as hospital readmissions, post-acute care, imaging, and primary care. The bill reduces payment rates and establishes an 85 percent medical loss ratio for Medicare Advantage plans. The legislation also eliminates the coverage gap (donut hole) in Part D by 2023 and reauthorizes Special Needs Plans (SNPs) that integrate care for beneficiaries with coverage through Medicaid and Medicare.

Other Health System Reforms: The legislation also makes investments in the health care workforce to improve access to primary care, makes investments in prevention and public health programs, establishes national centers for quality improvement and comparative effectiveness research, establishes mechanisms to simplify administrative functions, and enhances efforts to reduce fraud, waste, and abuse.

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: House Health Committee bill, House Health Subcomittee, House insurance bill, House of representative insurance proposal

The House and Senate have approved a compromise budget resolution that sets parameters for spending and revenue legislation. As requested by the President, the budget resolution includes a reserve fund for health care reform initiatives that must be deficit-neutral for fiscal years 2009 through 2014 or fiscal years 2009 through 2019. The resolution allows Medicare physician payment legislation, that would likely prevent cuts to physician payment rates for two years, to be exempt from the deficit-neutral requirement.

The budget resolution also allows for the ability to consider health care reform legislation under the reconciliation process. Reconciliation is a procedure that Congress may use to make it easier to pass budget bills related to tax and entitlement spending programs. A reconciliation bill can not be filibustered as debate is limited to 20 hours, and this allows a bill to be passed quickly with a simple majority vote.

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: Health care reform, health care reform agreement

I used to respect Rush Limbaugh, but he’s turned into a babbling shock jock that will say anything for ratings.

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: Limbaugh on health care, Rush Limbaugh and Ted Kennedy, Rush Limbaugh health care

The U.S. House and Senate will vote on a compromise $790 billion stimulus package that includes subsidies for 65% of the COBRA health insurance premiums paid by laid-off workers, under a hard-fought conference report unveiled late Feb. 12.

The final version of the American Recovery and Reinvestment Act, which followed intense negotiations between leaders of the two chambers, is smaller than either the $819 billion stimulus passed by the House or the $838 billion package cleared by the Senate. Completion of the conference report for H.R. 1 sets up a planned Feb. 13 House vote, with the Senate to move the package either later in the day or over the President’s Day weekend. Following the vote, Congress will stand in recess until Feb. 23.

The final COBRA provisions, which were welcomed by the health insurance industry, are more generous than the 50% subsidy in the Senate version, but do not last as long as the 12-month subsidy included in both prior versions of the bill. Estimated to cost $24.7 billion, the provision would provide aid to an estimated 7 million involuntarily terminated between Sept. 1, 2008 and Dec. 31, 2009 to pay continue paying health insurance premiums through the 23-year-old Consolidated Omnibus Budget Reconciliation Act program.

COBRA allows employees who are terminated or leave their jobs voluntarily to remain in their former employer’s group health plan for up to 18 months, which can be extended to 36 months for those with extenuating life circumstances. Employers are permitted to charge COBRA enrollees up to 102% of the true cost of group health premiums, which average more than $1,000 per month.

According to the final report, the aid would be available for up to nine months, or until the terminated worker receives an offer of any new employer-sponsored health care coverage or becomes eligible for Medicare. Subsidies would not be available to those who earn more than $125,000 a year, or $250,000 per household.

The final version also strips out a provision opposed by the National Business Group on Health, which represents large employers, that would have allowed beneficiaries older than age 55 and those who have worked for the same employer for a decade to retain COBRA coverage until they become eligible for Medicare.

The measure also includes $17.2 billion in funding for health information technology infrastructure and an additional $2 billion in affiliated grants and loans. The bill sets a goal of seeing 90% of doctors and 70% of hospitals adopt electronic health records within the next decade, but it couples that with more stringent regulations on the transmission of identifiable health information. Insurers have protested that the bill’s notification requirements for security breaches were broadly worded, that it authorizing state attorneys general to enforce federal privacy standards and that new regulations could restrict health promotion, disease management and care coordination programs.

However, groups such as the Blue Cross Blue Shield Association and America’s Health Insurance Plans welcomed $1.1 billion in new funding for comparative effectiveness research. The BCBSA has proposed creation of an industry-funded institute to offer recommendations on the most effective and cost-efficient medical treatments.

“With comparative effectiveness, patients and providers will be able to assess drugs, technologies, and treatment options and make decisions that best reflect the patients’ needs and preferences,” AHIP President Karen Ignagni said in a statement. “We applaud efforts to address this important priority in the current economic recovery bills.”

The final package mostly eliminates a $54 billion provision, seen as potentially beneficial particularly to financial guaranty and mortgage guaranty insurers, that would have allowed corporations to carry back net operating losses for 2008 and 2009 against taxes paid in the prior five years. The final version offers a much more limited, $947 million carryback open only to businesses with gross receipts of less than $15 million, which could potentially be helpful to some agencies and small carriers.

Other small business tax provisions of potential benefit to agencies include $41 million to allow a one-time write-off of up to $125,000 in capital expenses; $829 million for raising the small business stock sale capital gains exclusion to 75% from 50%; and $415 million to temporarily reduce the built-in gains holding period for S corporations from 10 years to seven years.

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: COBRA, COBRA laws, COBRA legislation, COBRA stimulus package, COBRA subsidy

With Michigan’s governor looking on, President Barack Obama reauthorized an expanded health insurance program for children this afternoon, calling it a “down payment on my commitment” to ensure coverage for every American.

The $74-billion reauthorization of the state Childrens’ Health Insurance Program — representing an increase of about $33 billion over the next five years — represented what Obama called “one of the highest responsibilities we have.”

SCHIP already covers about 7 million kids; congressional estimates are that the additional money should allow the states to cover about 4 million more, including legal immigrant children in some cases. The House approved the legislation on a vote of 290-135 earlier today.

President George W. Bush had vetoed the expansion twice in the last Congress.

Obama said parents without insurance for their children are often forced into decisions they should never have to make — “how long to put off that doctor’s appointment, whether to fill that prescription, whether to let a child play outside, knowing that all it takes is one accident, one injury, to send your family into financial ruin.”

“This is not who we are,” added Obama. “We are not a nation that leaves struggling families to fend for themselves.”

Also attending the bill signing at the White House this afternoon from Michigan were Rep. John Dingell, a Dearborn Democrat, and U.S. Sen. Debbie Stabenow.

In Michigan, the additional funding could result in more than 71,000 additional kids receiving basic health care coverage, according to the Families USA, a health care advocacy group based in Washington, D.C. Right now, about 114,000 children in Michigan receive health care through Michigan’s SCHIP program, known as MiChild.

“Enactment of this bill represents a clear example of the change voters demanded last fall,” said Rep. Gary Peters, a Bloomfield Township Democrat who last fall defeated Republican Joe Knollenberg, who was criticized in some quarters for voting against the legislation last year. “Thousands of Michigan kids went without health care for years while Washington bickered.”

But there remained concerns that waivers to the states could result in them authorizing funding for children whose families would otherwise qualify for private health insurance. Midland Republican Dave Camp — the ranking Republican on the House Ways and Means Committee — said in some cases families making up to $88,000 a year could be eligible for free healthcare and that private coverage could be eliminated for some 2.4 million people. But while waivers could be granted to allow states to offer coverage to families making more, there is nothing in the legislation that requires it.

Among Michigan’s delegation, all the Democrats voted for the legislation, as did four Republicans — Candice Miller of Harrison Township, Thad McCotter of Livonia, Vern Ehlers of Grand Rapids and Fred Upton of St. Joseph. Voting against were Republicans Camp, Mike Rogers of Brighton and Pete Hoekstra of Holland.

In all Democrats voted 250-2 in favor of the bill; among Republicans, 40 were supportive and 133 against.

In Michigan, the program covers kids ineligible for Medicaid whose families have incomes less than twice the national poverty level — $44,100 for a family of four. And while Michigan’s program has provided coverage to childless adults with incomes of less than 35% of the poverty level — $3,790.50 — the legislation phases out that coverage (though it includes a provision to provide SCHIP coverage to pregnant women).

The legislation would be paid for through a 62-cent-a-pack increase in the federal excise tax on cigarettes, which would hike that tax from 39 cents a pack to $1.01. It also raises taxes on other tobacco products. The congressional Joint Committee on Taxation estimates that will increase federal revenues by $71.4 billion — covering most of the cost — during the next five years.

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: Child health insurance legistlation, children's health insurance program, kids health insurance program, SCHIP

HEALTH care drained the federal budget of more than $1 trillion this year. That includes direct health care programs like Medicare, plus insurance for federal employees and the cost of excluding employer health-care contributions from workers’ taxable incomes. If present trends continue, in 10 years the number will almost double.

President-elect Barack Obama has proposed some good ideas for cutting health care costs, but his proposals will not create the savings we need.

He has suggested, for example, that electronic medical records could save Americans nearly $80 billion per year. But information technology cannot bring meaningful savings if it is used in a health care system that regularly rewards waste and punishes efficiency, as ours does.

Similarly, Mr. Obama proposes to save more than $80 billion per year by better management of chronic conditions like high blood pressure, heart disease, diabetes and asthma, and by preventing more diseases in the first place. It is true that most American doctors are weak on prevention and chronic disease management. But they will not improve until they are given economic incentives to buy the equipment and hire the personnel they need to actually deliver these services.

The only truly promising way to save money is to change the way health care is organized and delivered. In the United States, 85 percent of doctors work in small, fee-for-service practices. Many of these doctors are very good and hard-working. But they are autonomous, not members of teams. They do not systematically share information with one another. They are unable and unwilling to be held accountable for the quality and cost of the care they deliver.

The employment-based health insurance system has created this situation by not encouraging people to consider the value for their money when they choose doctors.

Some American medical practices do emphasize economy. They are very large, multispecialty group practices in which doctors work together to improve quality and keep costs low. Their doctors share values and cultures of teamwork. They keep comprehensive electronic medical records, they share information, and they emphasize disease prevention and chronic disease management as a matter of course.

These doctors are usually paid salaries, not fees for services. Research and experience suggests that these practices — which exist in all regions of the country, including both rural and urban communities — can reduce costs by 30 percent.

And a few employers — some universities and companies, the federal government, the state governments in Wisconsin and California — allow their workers to choose such practices, and then keep the money saved by that choice. At least 70 percent of employees offered this option choose it, even when it involves restrictions on doctor selection.

Unless all Americans are given this choice — along with the right to keep the savings — we will not be able to get health care costs under control. But making this change won’t be easy. Employers and insurance companies are likely to resist it. Doctors and consumers will have to change. It will take time.

Right now, most employers offer workers no choice of insurance companies. They say it would be too expensive to administer more than one. And insurance companies offer employers better deals when they can be the sole supplier.

Even at companies where employees have choices, many employers pay 80 percent to 100 percent of the premiums of an employee’s chosen plan, so there is little opportunity for the employee to realize savings. This market does not reward cost-conscious behavior. The tax code makes this problem worse by exempting employer contributions to health insurance from taxes, no matter how large they are.

Efficient, organized medical systems need to be able to compete with — and ultimately replace — the fee-for-service model. Working with Congress, the next president should establish a national health-insurance exchange, through which people can choose among several competing health plans, including those affiliated with organized systems of care. Individuals could then select which plan they judge best to meet their needs, and save money by choosing less expensive options. The insurers in the exchange would agree to accept all who want to enroll, and to charge their same price to all individuals, no matter the state of their health.

Then, to ensure that enough people participate in the health-insurance exchange, Mr. Obama and Congress should phase in a requirement that the tax-free status of employer contributions to health care be dependent on employers buying health care for their workers through the exchange — and making fixed-dollar contributions, so workers can reap the savings when they choose less expensive plans. All employees would have a wide range of choices, with an incentive to be cost-conscious. (Eventually, the government should help everyone buy insurance through the exchange, regardless of employment.)

Right now, Mr. Obama’s plan is to create an exchange through which people who have difficulty buying affordable health insurance could buy coverage. Unfortunately, participation in exchanges cannot be voluntary. Voluntary exchanges have been tried and failed. The first people to join are the sickest, which drives up the premiums.

To make exchanges work, a broad sample of people, healthy and sick, must be included so that health risks can be spread widely. Large exchanges would also lower the administrative costs for insurers.

By combining organized systems of medical care with the competition created by a health insurance exchange, Mr. Obama could achieve large savings. In 10 years, costs could be reduced by 30 percent, saving more than $700 billion a year — all driven by incentives and voluntary actions.

By ALAIN ENTHOVEN
Published: December 27, 2008

Tweet This Post Buzz This Post Digg This Post Stumble This Post

By choosing former Senate Majority Leader Tom Daschle to head his healthcare reform effort, President-elect Barack Obama got more than an old congressional hand with a policy book on his resume.

Obama has also picked up a hardheaded political strategy for his push to overhaul the nation’s healthcare system. Guided by lessons from President Clinton’s healthcare debacle 15 years ago, Daschle has put a premium on cooperation between the White House, Congress and major healthcare interest groups, many of whom agree that major action on healthcare is vital.

Daschle, who will lead both the Department of Health and Human Services and a new White House Office of Health Reform, favors moving decisively to seize political momentum and, if necessary, cut off opposition, something he said Clinton failed to do in 1993.

He thinks delays by the Clinton administration and soft support from the left in the early 1990s allowed Republicans and industry groups such as insurers to kill the Clinton plan with a well-organized political campaign that made voters afraid of reform.

Daschle is urging a far more aggressive push by those advocating systemic change.

“This means going on the offensive,” he wrote in “Critical,” his recent book about healthcare, in which he singled out drug makers and insurers as potential obstacles to a successful overhaul.

“We cannot assume that the public recognizes the distortions and fallacies peddled by the reform opponents; we have to educate people on the emptiness of the anti-reform rhetoric,” he said.

Daschle has even suggested using the Senate’s rules to prevent opponents from filibustering healthcare legislation, a move that one senior Republican staff member warned would make it “extremely difficult” to get any GOP support for major reform.

Daschle, who declined to be interviewed, has specific — and potentially controversial — ideas about how to reshape the healthcare system.

Among other things, he envisions a new federal agency, which he calls a Federal Health Board, with the authority to set guidelines for what treatments and procedures are most cost-effective.

Daschle argues that the board, which would have authority over federally funded healthcare programs such as Medicare, would insulate medical decisions from political meddling by Congress and could help design a system for achieving universal coverage.

He also has called for a mandate to require all Americans to get health insurance and for the creation of a public insurance program to cover people who don’t get private insurance.

But more importantly, Daschle has provided a virtual road map for the kind of campaign the Obama White House and its allies will probably pursue in their effort to avoid the pitfalls that doomed Clinton’s effort.

“Most of the compelling lessons from 1993 and 1994 are political lessons,” said John McDonough, a senior health advisor to Sen. Edward M. Kennedy (D-Mass.) who helped develop Massachusetts’ groundbreaking overhaul and is drafting healthcare legislation that Kennedy plans to introduce next year.

Obama absorbed one of those lessons during the presidential campaign, carefully emphasizing that any reform effort would allow voters to keep their health coverage if they were satisfied with it.

Many in Washington, including Daschle, think Clinton made a crucial error by allowing his opponents to portray his plan as a threat to the healthcare Americans had.

The insurance industry famously exploited that perception with its “Harry and Louise” ads, featuring a couple fretting that the federal government would take away their ability to choose coverage.
Since election day, Daschle has been working hard to avoid another misstep he and others think helped sink Clinton.

In 1993, the White House wrote a massive healthcare bill after then-First Lady Hillary Rodham Clinton led a months-long task force that was widely perceived as shutting out key players in the debate, including congressional leaders.

“Relying so heavily on the task force certainly contributed to the eventual defeat of the president’s plan,” Daschle wrote in his book, noting that the process “only bred resentment among the people who weren’t invited to participate, and produced a ‘compromise’ without the input of key stakeholders.”

Today, Daschle talks frequently with interest groups and senior lawmakers, who in turn have taken pains to reciprocate with supportive comments about the new administration’s early moves. “There clearly is an openness to listen,” American Medical Assn. President Nancy Nielsen said Friday. “Fifteen years ago, physicians felt excluded.”

On Capitol Hill, Kennedy and Senate Finance Committee Chairman Max Baucus (D-Mont.) have received the new administration’s explicit blessing to develop healthcare legislation.

And Baucus, who had a rocky relationship with Daschle when the two were in the Senate together, recently praised the South Dakota Democrat for recognizing the need for congressional involvement. For his part, Obama has signaled his intent to tackle healthcare reform soon after he takes office — another difference from 1993, when Clinton waited nearly a year before his healthcare legislation was introduced in Congress.

By then, the administration had expended significant political capital balancing the federal budget and trying to pass the controversial North American Free Trade Agreement, a move that alienated many Democrats and liberal interest groups.

On Thursday, Obama said he wanted swift action. “It’s hard to overstate the urgency of this work,” he said. Taking another page from Daschle’s political playbook, the president-elect carefully framed a healthcare overhaul as an economic necessity and a moral imperative.

“Day after day,” he said, “we witness the disgrace of parents unable to take a sick child to the doctor, seniors unable to afford their medicines, people who wind up in emergency rooms because they have nowhere else to turn.”

Original excerpt from Los Angeles Times

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: healthcare reform, Obama healthcare, Tom Daschle, universal health care

Health care reform is near the top of the list for incoming President Barack Obama and congressional Democrats, but a majority of U.S. voters (58%) oppose any kind of government-controlled health plan if it means they have to change their own insurance coverage.

Twenty-five percent (25%) say they would support such a plan even if they had to change their own coverage, according to a new Rasmussen Reports national telephone survey. Sixteen percent (16%) are undecided.

In a survey in July, 68% of Americans rated health care in this country as fair or poor, but a near identical number (69%) gave good or excellent marks to their own health insurance coverage and were very reluctant to change it.

Republicans are more emphatic than Democrats in the new survey. Seventy-seven percent (77%) of GOP voters oppose a government plan if they have to change their own health insurance , while 12% favor such a plan and 11% are undecided. By comparison, just 43% of Democrats are against a plan that makes them change their own coverage, and 36% support it. But more than one-out-of-five Democrats (21%) are undecided.

Among unaffiliated voters, 59% are against a health plan that forces them to change their own coverage, while 25% are in favor of it, with 16% not sure.

(Want a free daily e-mail update? If it’s in the news, it’s in our polls).

Fifty-nine percent (59%) of white voters don’t want a plan that makes them change their health insurance, but only 45% of African-Americans agree. Thirty-five percent (35%) of black voters support such a plan, along with 25% of whites.

Generally speaking, the older the voter, the higher the level of opposition to a plan that means they have to change their health insurance coverage. Married voters also are far more opposed to such a plan than unmarried voters.

Earlier this year, only 29% of American adults favored a national health insurance program overseen by the federal government.

Voters consistently trusted Democrats and Obama more on the issue of health care than Republicans and their presidential nominee John McCain during the campaign season. Obama’s performance as president-elect continues to draw record high numbers in the Rasmussen Reports daily Presidential Approval Index.

In the latest survey, voters are more closely divided when asked about helping those who cannot get insurance even if it means an increase in their own incomes taxes. Forty-six percent (46%) oppose a government-controlled health plan for those who cannot get insurance if it means a personal tax increase, but 42% favor such a plan despite the additional cost to themselves. Twelve percent (12%) aren’t sure.

Fifty-one percent (51%) of male voters oppose a health plan that raises their taxes, compared to 42% of women. A plurality of female voters (47%) support such a plan versus 37% of men.

The partisan divide on this question is enormous. Sixty-two percent (62%) of Democratic voters support a government health plan for those who cannot get insurance if it means an increase in their income taxes, but only 20% of Republicans agree. Sixty-nine percent (69%) of GOP voters oppose that kind of plan, along with just 24% of Democrats. Unaffiliated voters by 11 points come down against a plan that raises their taxes.

The gap between black and white voters is also substantial. Seventy-four percent (74%) of African-Americans support a government plan for those without insurance even if their own taxes go up, compared to 39% of whites. Forty-nine percent (49%) of white voters oppose an insurance plan that raises their taxes, along with just 17% of blacks.

Please sign up for the Rasmussen Reports daily e-mail update (it’s free)… let us keep you up to date with the latest public opinion news.

This national telephone survey of 1,000 Likely Voters was conducted by Rasmussen Reports December 5-6, 2008. The margin of sampling error for the survey is /- 3 percentage points with a 95% level of confidence.

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: barack obama healthcare, democrats healthcare, health care politics, healthcare reform, republicans healthcare

Medicare is trying to curb an opaque industry practice that inflates what some older and disabled people pay for medicines under the federal insurance program’s prescription-drug plan.

Medicare Part D, introduced in 2006 to extend drug coverage to beneficiaries, is provided through private health-insurance companies. Many insurers in turn contract with so-called pharmacy-benefit managers to administer their plans. Among other functions, these PBMs negotiate lower drug prices with pharmacies. But some companies, under a practice allowed by Medicare, then charge a higher price to health insurers and, ultimately, the government.

This approach is called “lock-in pricing” because the insurers pay the PBMs a set amount for the drugs, even if that differs from what the drugs really cost at the pharmacy. Lock-in-pricing can boost costs for Medicare beneficiaries because they pay a percentage of their drug costs. Also, the practice can more quickly drive consumers into the notorious gap in coverage known as the doughnut hole, where they generally must begin paying the full cost of their medicines. The doughnut hole kicks in when total drug expenditures by the beneficiary and the plan reach $2,510. Medicare drug plans start paying again once total expenditures reach $5,726.

Lock-in pricing “has a detrimental effect on the beneficiary because it pushes him into the coverage gap faster,” says Abby Block, director of the arm of the government’s Centers for Medicare and Medicaid Services (CMS) that runs the drug benefit. Under a current Medicare proposal, PBMs would be allowed to continue claiming the higher prices for reimbursement. But beneficiaries’ own drug costs would be calculated without the extra amounts included.

Pharmacy-benefit managers — including Express Scripts Inc., Medco Health Solutions Inc., and units of CVS Caremark Corp. and UnitedHealth Group Inc. — carry out their functions behind the scenes, including developing lists of covered drugs, maintaining networks of participating pharmacies and paying the pharmacies when beneficiaries buy drugs.

CMS figures that 19% of the hundreds of Medicare drug plans are using lock-in pricing this year, affecting 14% of the 25.8 million enrollees in the Medicare drug program. Other plans use what is known as pass-through pricing, in which PBMs charge insurers the same prices they pay the pharmacies.
CUTTING COSTS

Ways to control costs in a Medicare drug plan:
• Compare drug costs in different plans using the Prescription Drug Plan Finder at medicare.gov/mpdpf.
• Track your drug expenses and progress toward the ‘doughnut hole’ using your explanation of benefits.
• When possible, use generics, which tend to cost less than branded medicines.

Patients who take lots of drugs are most affected by lock-in pricing. For example, one female patient who last year regularly took six generics and two branded drugs had average monthly costs of about $256, according to the patient’s explanation of benefits. At that rate, the patient was on track to reach the doughnut hole in October. But without the PBM’s higher charge based on lock-in pricing, the patient would have paid $215 a month on average for the same drugs — and she wouldn’t have hit the doughnut hole until December, according to an analysis of data provided by the patient’s pharmacist.

The price spreads tend to be much greater for generics than for branded drugs. That’s because generics are much cheaper for pharmacies to acquire, making it easier for PBMs to negotiate down the prices they pay and less noticeable to patients and insurers when the extra costs are included.

PBMs that administer lock-in pricing plans argue that the method is common in the private insurance market and should be available for Medicare as well. Some PBMs say the extra money they make under the pricing method provides funds to encourage more consumers to use lower-cost generic drugs. Express Scripts, for instance, says it analyzes beneficiaries’ drug-purchasing habits and sends patients letters to explain how changes in their purchasing habits could lower their costs. And some companies, including UnitedHealth and CVS Caremark, which operate both as PBMs and insurers, have warned that if those extra amounts aren’t included in drugs’ costs, insurance plans that would be affected by any change may have to increase premiums, the monthly price that seniors pay for the plans.

To be sure, a large majority of older people are satisfied with their Medicare drug-benefit plan and say they are paying less for drugs than they were before the benefit existed, when seniors relied on a hodgepodge of private and public drug benefits, or made do without coverage. In a Wall Street Journal Online/Harris Interactive survey over the Internet of 571 U.S. adults age 65 or older, published in December, some 75% of respondents said their plan had saved them money and 83% said their plan was easy to use. Some 12% said they had to pay the full price for medicines because they had hit the doughnut hole.

The Kaiser Family Foundation projected this spring that the average premium for most Medicare Part D plans would rise nearly 17% to $31.99 a month in 2008 from $27.39 a month last year. That follows an average premium increase of 5.6% in 2007 from a year earlier.

The difference between what PBMs pay pharmacies and what they are reimbursed by insurers under lock-in pricing is generally a secret. Medicare itself doesn’t have this information and therefore doesn’t estimate the total cost of the practice.

For consumers it may be possible to determine the size of the price differences under lock-in pricing by looking at the full cost of your drug listed on your explanation of benefits, and asking your pharmacy how much it was paid. But many pharmacists are prohibited from disclosing pricing information under terms of their contracts with PBMs.

“It is absolutely unacceptable for any government benefit program to be based on questionable [numbers] or numbers that aren’t transparent or easily understood by a beneficiary,” says Michael Burgess, director of the New York State Office for the Aging, who says he was unaware of the issue until recently.

An analysis of explanation-of-benefits documents from consumers and payment data from pharmacies shows that the size of the price differences varies widely from as low as just a few dollars to well over $100. In one case, a patient filled a prescription for a 90-day supply, or 270 pills, of the generic antinausea medication prochlorperazine. The difference between what the PBM, Express Scripts, paid the pharmacy and the price that showed up on the patient’s explanation of benefits was $146.53.

Express Scripts spokesman Steve Littlejohn said it is “extremely rare” for price differences to get above $100, and it occurred in this case because the patient purchased the drug at a quantity greater than is typically prescribed. Broadly, Mr. Littlejohn said that PBM pricing on generics “is very competitive, and is generally far better than [uninsured] cash-paying customers obtain on their own.” He added that the differences on costs of branded drugs are much slimmer and that overall the company’s per-prescription profit margin is a “single digit” percentage.

Medicare has been battling lock-in pricing almost since the inception of the drug-benefit program. But efforts to curtail or stop the practice have faced numerous delays, amid intense lobbying on the subject.

“We thought we had a clear policy” barring lock-in pricing when the drug benefit was created, says Ms. Block of CMS. “We learned that there were different ways of interpreting a policy statement,” she adds.

Under Medicare’s current proposal, PBMs wouldn’t be able to hide the extra costs of drugs. Instead, they would have to declare the extra amounts as “administrative” costs that an insurance plan pays the PBM. Patients’ own drug costs would be calculated without the extra amount included, thereby easing the burden on consumers.

Although the proposal wouldn’t prohibit lock-in pricing, health-cost experts say the transparency and accounting that would be needed to include the extra costs as a separate “administrative” item could effectively curb the practice. CMS hopes to finalize its proposed regulation late this summer to go into effect in 2010.

The PBM trade group, the Pharmaceutical Care Management Association, opposes the CMS proposal because it says insurers should be able to choose what type of pricing they want. The drug benefit “program is working,” says Mark Merritt, the group’s chief executive. “Unless it can be decisively shown that one model offers more end savings for consumers or is decisively able to manage drug [costs] better for the program, we think there ought to be flexibility and choices.”

A spokeswoman for CVS Caremark, which administers Medicare drug plans as a PBM and also sponsors plans through its SilverScript Insurance Co. subsidiary, says lock-in pricing is used in its SilverScript plans and is also common in other Medicare plans for which CVS Caremark serves as the PBM. UnitedHealth says it uses lock-in pricing on United Rx Basic and United Rx Value Medicare plans.

Not all major PBMs use lock-in pricing in Medicare, including Medco Health and Humana Inc., an insurer that acts as its own PBM for its Medicare plans. Humana spokesman Tom Noland says pass-through pricing, the alternative to lock-in pricing, gives patients “the full benefit of our negotiated discounted rates with network pharmacies and also promotes transparency of pricing.”

In the meantime, Medicare drug-benefit participants buying drugs should consider checking low-price sellers of generic medications, such as Costco Wholesale Corp. and Wal-Mart Stores Inc., to see if their retail prices are lower than those in the insurance plan.

That is what Len Steinberg of Scottsdale, Ariz., did, and he found that Costco’s retail price for his generic nasal spray was about half of the drug’s total cost under his plan.

Mr. Steinberg, a 73-year-old retired employee-benefits consultant, says he now pays cash for certain cheap generics at Sam’s Club and Costco, rather than using his drug coverage. That allows him to avoid the doughnut hole and continue receiving coverage for his more expensive branded medications, he says.

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: Congress, healthcare, Medicare, Medicare Bill, Medicare Part D, PBM, pharmacies, prescription, prescription drugs, Rx, seniors