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Business Roundtable edges away from health reform plan

By: Jeanne Cummings
December 11, 2009 06:26 PM EST

Without fundamental changes to the current health reform plans, the White House and congressional Democrats risk losing the last major corporate group that is standing by their effort: The Business Roundtable.

In an interview with POLITICO on Friday, Roundtable President John Castellani raised concerns about the effectiveness of cost containment provisions in the proposal, and the timing of various fees and taxes that ultimately could be passed on to employers that provide insurance to workers.

“If these areas aren’t improved the reform effort will not work and we need something that works,” said Castellani.

Castellani wouldn’t say how long the group is giving Democrats to fix the bill, but said, “We are going to be much louder and much more insistent on improving” the legislation.

Castellani’s comments are significant because the White House, including President Barack Obama <> , has often contrasted the Roundtable’s cooperative role with that of the U.S. Chamber of Commerce, which is lobbying hard against the plan.

The Roundtable has 161 CEO members who oversee the largest corporations in America. Combined they have nearly $6 trillion in revenues and more than 12 million employees. They alone provide health care to more than 35 million workers and their families, which makes them one of the biggest stakeholders in the current debate.

By staying at the table, the Roundtable has lent credibility to arguments by congressional Democrats and the White House that the reform measure will not dramatically disrupt the private sector, or bring an end to employer-sponsored insurance programs.

In addition, the Roundtable’s mostly quiet engagement has given some cover to lower profile, but still influential, business trade associations who have also decided to not to fight the reform legislation.

The Roundtable’s hardening position came after a board meeting held in Washington this week. While the group discussed other legislative issues, “we kept coming back to this every time we had a chance. It consumed the preponderance of the day,” Castellani said.

No threats were made, he said, but it’s clear that the CEOs see the time coming when they may need to shift to a more aggressive position – either for or against the measure.

If the Roundtable becomes a hostile player, the White House and Congress could face a relentless wave of big-name CEOs on television panning the measure and, potentially, the mobilization of millions of workers against it.

“What our members decided is that they want us to continue to make this bill better. We will defer passing judgment on it, but it is not good enough” today, he said.

Senate Democrats and the White House sought to downplay the potential rift. “We are working through these issues with them and they are being very constructive,” said one White House official.

A senior Senate aide, likewise, noted that a package of amendments drafted by Sen. Mark Warner (D-Va.) and about a dozen other freshmen addressing some of the Roundtable’s concerns is already on the table.

Castellani applauded that measure, but outlined a list of desired changes that goes well beyond it.
Among the changes sought by the Roundtable regarding cost containment are:

• Access to data collected by the Centers for Medicare and Medicaid Services that can be used to identify cost-effective treatments, efficient hospitals and best performing physicians, which could help businesses develop more efficient and effective private insurance packages for their employees.

“Right now that data sits there and nobody has access to it,” said Castellani. “You know more about the cost and quality of a flat screen TV than you do about heart-bypass surgery.”

• An expansion of the authority of the proposed Independent Medicare Advisory Board so that it can search for cost savings in all health care sectors. The current legislation exempts some groups from scrutiny, including hospitals. In addition, the board should be charged to search for efficiency measures in the private sector that can replicated in the Medicare system.

• An acceleration and expansion of pilot programs aimed at changing the way Medicare reimburses doctors and hospitals by providing bundled payments to cover patient testing and consultations rather than paying for each service delivered, which critics say leads to unnecessary treatment.

All of those changes are aimed at driving Medicare costs down and ensuring that any proposed savings from that system aren’t simply shifted and extracted from private insurance policies holders.

Among the revisions the Roundtable will press for on the financing side of the reform measure, are:

• An exemption for self-insuring employers from a tax imposed on all insurance providers. The levy emerged at the 11th hour in the Senate deliberations. Castellani said some senators called to apologize “for the surprise.” The Roundtable argues that it should be exempt because corporations already are facing a tax on the so-called Cadillac insurance packages they may offer – and are already doing the right thing by offering insurance to their workers.

• An adjustment or bridge that would ease the cost squeeze caused by the timing of new fees and insurance reforms and the onset of new customers.

As written now, health insurers will be required to begin providing insurance without regard to previous health conditions as soon as the legislation is enacted.

In order to afford to do that, the industry needs revenue from the millions of new customers – many of them young and healthy -- that the legislation will drive their way.

However, Roundtable members worry that the penalty for not buying insurance is so slight that many healthy people won’t get insurance.

The proposed reform measure includes a sliding scale of fees – ranging from $95 for those who don’t buy insurance in 2014 to $750 in 2016.

Consequently, health insurers are likely to pass on the costs of treating any sicker new customers on to businesses that provide private insurance to their workers.

A similar lag between the influx of new customers and a new insurance product tax could prompt another shift of costs to the business sector, Castellani said.

He is urging senators to, among other things, require individuals to buy catastrophic insurance immediately.

In the interview, Castellani said the work by the Senate and the White House on these issues will drive the Roundtable’s ultimate decision on whether to endorse the measure or not.

Asked when the Roundtable may make its final assessment, Castellani demurred. “At some point we will either know that these objectives can’t be met or can be met,” he said, “and at that point we’ll make a decision.”


December 11, 2009 Posted by | Federal Government, healthcare | , , , , , , , | Leave a comment

Shifting Retiree Health Care Costs

Employers Continue to Shift Health Costs to Retirees

Average annual medical coverage costs
Employee/Retiree Only Employee/Retiree Plus One Family Composite* Average Increase from 2009
Active employees $5,184 $10,488 $14,988 $10,188 7%
Retirees under age 65 $7,596 $14,988 $19,596 $13,956 6%
Retirees age 65 and older $3,840 $7,848 NA $6,204 4%

*Composite (employee/retiree only, employee/retiree plus one and family combined)

Source: Towers Perrin’s 2010 Retiree Health Care Cost Survey Shows Continuing Affordability and Access Concerns

December 11, 2009 Posted by | Cost, healthcare | , , , | Leave a comment

Health Care Taxes a Plenty

Impact on Small Biz

Minnesota’s Citizens Council on Health Care has published a paper by Twila Brase and Linda Gorman on the impact on small business of the current reform proposals, including these:

New Taxes – New taxes and assessments are imposed on business for failure to provide coverage, employee use of tax credits, waiting periods for insurance eligibility, funding for state health insurance exchanges, high-income individuals.

Play or Pay – The House bill penalizes businesses that do not provide health benefits with taxes at 2 – 8% of payroll. These rates are not indexed for inflation.

Limits Business Expansion – The House bill’s tax on high-income individuals is expected to act as a direct tax on business expansion since many small business owners finance expansion using income reported on their individual tax returns. The tax includes a 5.4% increase in capital gains tax. In addition, high-income earners will pay the planned increase in the payroll tax at a higher rate: 3.4%.

Definitions Matter – The definition of ‘large employer’ and ‘small employer’ are important. They determine which taxes, penalties, and requirements apply.

Waiting Period Prohibited – The Senate Bill limits waiting periods for employee coverage to 90 days and fines employers who have 1-2 month waiting periods.

Reporting Requirements – Both bills require government reporting of company and employee health insurance status, including details specific to each employee.

HSAs and Whistleblowers – The Senate bill threatens health savings accounts. The House bill provides whistleblower protections to employees.


Citizens Council on Health Care

December 11, 2009 Posted by | Federal Government, healthcare | , , | Leave a comment

Know Who You Are Making a Deal With

Special Interests Rattled

All of this is rattling the special interests that thought they were cagey enough to cut deals that would stick with the Democrats. Just how much do these guys get paid for being idiots? The AMA and the AHA are suddenly worried about a big expansion of Medicare payment rates to a whole new population on top of the big expansion of Medicaid payments. PhRMA is looking at the rebirth of its worst fear – “reimportation” of drugs from price-controlled countries.  Even AARP is nervous about the “Independent Medicare Advisory Board (IMAB)” which would be empowered to cut Medicare benefits almost unilaterally.

The Washington Post summarizes all this nicely in an article headlined, “Deals cut with health groups may be at peril.” The article says, “On the floor and behind closed doors, the Senate wrestled Saturday with amendments that would impose additional cost-control requirements on hospitals, doctors and drug companies, squeezing out savings beyond the considerable sums those groups had already volunteered to give up.”

It goes on to cite an amendment sponsored by Senators Lieberman, Specter, and Collins that would “impose stiff penalties on hospitals with high infection rates.” And one sponsored by Sen. Dorgan that would, “permit U.S. pharmacies and drug wholesalers to import lower-priced medications from other countries, including Canada.” There is also an amendment sponsored by Sen. Nelson that “would transfer about 6 million seniors eligible for Medicare into the Medicaid program, which pays much lower prices for the same drugs.” And AARP is going up against the White House in opposing the IMAB. The Post writes, “Senior White House officials view the board as a critical component of health reform, the enforcement mechanism to guarantee that all the well-intentioned ideas for making hospitals and doctors more efficient translate into savings for the government.”

Washington Post

December 11, 2009 Posted by | drugs, Federal Government, healthcare, hospitals | , , , , | Leave a comment

More on the Individual Mandate

In a recent release by the Actuary of CMS, the analysis shows that the current Senate health care bill will leave 24 million uninsured in 2019 when the bill is fully implemented. Now read this piece —

The amazing thing is that a mandate is so superfluous. CNNMoney reports on a recent study by that found “Half of Individual Policyholders Paid $132 or Less per Month.” The story goes on to say, “According to the report, in 2009 the median non-group health insurance premium for an individual in the United States was $1,584 per year ($132 per month) and the average deductible was $2,326. Combined, annual premiums and deductibles account for approximately 7.7 percent of median household income for 2008 ($50,303) as reported by the US Census Bureau.”

Now, if individuals got the same tax break as employers and if there were a back-up mechanism for high-risk applicants, we might dramatically reduce the numbers of uninsured without turning the Constitution on its head.



December 11, 2009 Posted by | Federal Government, healthcare | , , , | Leave a comment

Individual Mandate – Legal Considerations

Heritage Foundation just released a landmark legal analysis of the constitutional issues around an individual mandate. Written by Randy Barnett, Nathaniel Stewart and Todd Gaziano, the analysis argues that a personal mandate is both “unprecedented and inconstitutional.”

The paper argues that Congress has never – ever – tried to do something like this. Not even in times of war when national survival was a stake did it force farmers to grow food for the troops or workers to build tanks. “And what Congress cannot do during wartime, with national survival at stake, it cannot do in peacetime simply to avoid the political cost of raising taxes to pay for desired government programs.”

It accuses members of Congress of a breach in their duty “to determine the constitutionality of legislation independently of how the Supreme Court has ruled or may rule in the future.” It is not enough to pass laws willy-nilly just because they think it would be a swell idea. This is still a government of limited and enumerated powers, and forcing people to buy something they don’t wish to buy ain’t one of those powers.


Heritage Foundation

December 11, 2009 Posted by | Federal Government, healthcare | , , | Leave a comment

Medication Errors – Do You Know Your Meds?

Hospital patients are unsure of drugs they are taking
A study found 44% of hospital patients believed they were being given a drug when, in fact, it had not been prescribed. Data showed 96% of patients could not remember one or more of the medications prescribed for them during their hospital stay. The lead researcher said communicating with patients can help add a layer of protection against medication errors. Yahoo!/HealthDay News (12/10)

December 11, 2009 Posted by | drugs, healthcare | , , , | Leave a comment

Many More Hurdles Until It is a Viable Bill

Sen. Olympia Snowe (R-Maine) said Thursday that she does not support the Medicare buy-in because it would “aggravate an already-serious problem” with the program – the low reimbursement rates for hospitals and doctors.
“I have serious concerns,” Snowe told reporters. “I just think that is the wrong direction to take.”
Snowe said she could not see a way for Senate Democratic leaders to even tweak the proposal to win her vote.
“I can’t see it,” said Snowe, who met Wednesday with President Barack Obama. “I am talking to a lot of my providers this afternoon and I know they are mighty unhappy.”
Asked if it meant she would oppose the health care bill, Snowe said: “Among other issues. There would be other issues. That is part of it.”
Another key undecided moderate, Sen. Joe Lieberman (I-Vt.), said Thursday that his level of unease with the Medicare buy in is also rising.
“I am increasingly troubled about the proposal,” Lieberman said. “I am worried about what impact it will have on the Medicare program’s fiscal viability and also what effect it will have on the premiums paid by people benefiting from Medicare now and whether the whole thing is viable. If you separate it from Medicare, it will be an extremely expensive program.”
The concerns from Lieberman and Snowe suggest that Senate Majority Leader Harry Reid (D-Nev.) may not be able to use the public option compromise struck Tuesday to stitch together 60 votes for the bill
Senators say they are still waiting on details from Reid and the Congressional Budget Office about the proposal, which would allow people 55 to 64 years old to purchase coverage in the insurance program for the elderly.
It is unlikely Reid will be able to lock in those votes until the CBO returns its cost estimate, which isn’t expected until the weekend at the earliest. The timetable leaves little wiggle room for Reid to complete the bill before Christmas.
Sen. Evan Bayh (D-Ind.) said he considered it an “interesting proposal,” but was reserving judgment.
“I would kind of like to see how it works,” Bayh said.

December 11, 2009 Posted by | Federal Government, healthcare | , , , , | Leave a comment

Health Care Cost Shifting is the Largest Risk to the American People

Senate Democrats Mull Changing Medicare Expansion Plans. The AP (12/11, Werner) reports Senate Democrats “are considering changing a proposed expansion of Medicare to address complaints from doctors and hospitals and defray costs for consumers, officials said Thursday, two days after party leaders hailed it as part of a breakthrough for health care.” Under the plan, “uninsured individuals ages 55 to 64 could purchase coverage under Medicare.” But the American Hospital Association and American Medical Association “have both criticized the proposed Medicare expansion since it was announced Tuesday night, saying the program pays health care providers less than private insurance companies, and warning against increasing the number of patients.”

December 11, 2009 Posted by | Cost, Federal Government, healthcare | , , , , | Leave a comment

What Happened to Reducing the Cost of Health Care

The New York Times (12/11, A31, Herszenhorn, Pear) reports Senate Democrats “have provided few details about their latest health care proposal, but this much seems clear: Anyone who wants to buy the same health benefits as members of Congress, or to buy coverage through Medicare, should be prepared to fork over a large chunk of cash.” Congressional Budget Office data show “a family of four earning $54,000 in 2016, when the health legislation is fully in effect, would be eligible for a subsidy of $10,100 to help defray the cost of insurance under the health legislation being debated by the Senate.” One of the “most popular federal plans, a nationwide Blue Cross and Blue Shield policy, is projected to cost more than $20,000,” which would “leave the family earning $54,000…with monthly premium costs of more than $825.”

December 11, 2009 Posted by | Cost, Federal Government, healthcare | , , , , | Leave a comment