September 10, 2014 -- An authoritative annual survey of employer-sponsored health insurance says premiums for family coverage rose only 3 percent this year but that workers are getting socked by rising deductibles.

On average employees must pay $1,217 this year before their health costs are covered. That's up 47 percent since 2009, when deductibles averaged $826.

Eighty percent of workers now pay a deductible, according to the survey by the Kaiser Family Foundation and the Health Research and Educational Trust.

The survey of some 2,000 small and large employers also found that the requirements in the health care law (PL 111-148, PL 111-152) for more generous benefits are reaching more and more workers.

"The relatively slow growth in premiums this year is good news for employers and workers, though many workers now pay more when they get sick as deductibles continue to rise and skin-in-the-game insurance gradually becomes the norm," said Kaiser Family Foundation CEO Drew Altman.

"Today, four in 10 covered workers face at least a $1,000 deductible, nearly double the share from just five years ago," said the lead author of the survey, Gary Claxton, a Kaiser vice president who directs the foundation's health care marketplace research.

Almost one in five covered workers now faces an annual deductible of at least $2,000. Writing big checks for health care expenses is particularly a facet of coverage in the small employer market.

At employers with three to 199 workers, 61 percent pay at least $1,000 in deductibles and 34 percent pay at least $2,000 in deductibles. The average deductible is $1,800.

Health experts on both sides of the aisle can point to findings in the survey to validate their policy prescriptions.

Republicans in particular have pushed the idea that individuals would shop more carefully if they had to pay more of their own money before health coverage kicks in.
A system in which high deductibles are the norm would see slower spending growth and competition that slows medical inflation, they argue.

"These findings are positive and reflect a general slowing in health care costs overall," said Maulik Joshi, president of the Health Research and Educational Trust, a research arm of the American Hospital Association.

Premium growth has moderated considerably, increasing a total of 26 percent over the past five years compared to 34 percent in the five-year period before that. Premiums were growing at a double-digit clip in the late 1990s and early 2000s, researchers noted.

They added that the 3 percent increase this year is similar to the year to year rise in workers' wages of 2.3 percent and general inflation of 2 percent.

But employer sponsored family coverage, typically paid for mostly by the company but with employees kicking in a lot too, is very expensive. Premiums averaged $16,834 in 2014 with workers paying $4,823.

Annual premiums for worker-only coverage averaged $6,024 in 2014 with workers paying $1,081.

One of the goals of the health care overhaul was to require that certain preventive benefits be covered by employers with no cost-sharing and instituting an external appeals process for workers.

Two years ago, 48 percent of covered workers weren't seeing these improvements because their plans had grandfathered status under the health law. But plans lose that status if employers change them substantially. More and more are becoming subject to the coverage requirements of the law.

The survey found that 36 percent of covered workers were in grandfathered plans last year and that this year, the percentage fell further to 26 percent. The overhaul also has forced shorter waiting periods before new workers start getting their health benefits. The average length in 2014 is 2.1 months, down from 2.3 months in 2013.

Altman says the consensus among experts is that the overall slowdown in costs partly stems from a sluggish economy holding down the use of health care, and partly from changes in insurance and health care delivery. There is "no agreement on how much of the slowdown is due to one or the other of those factors, and no one knows for sure if or when costs will begin to escalate more rapidly again," he said in a briefing on the results. That is "equally true for what will be happening to employer premiums in the future as well."

September 9, 2014 -- The full U.S. Court of Appeals for the District of Columbia recently granted an Obama administration petition to rehear a case that threw into doubt the legality of subsidies for millions of Americans buying insurance coverage on the federal website www.healthcare.gov.

The decision vacated an order by a three-judge panel on the court that struck down an Internal Revenue Service regulation allowing subsidies in all states, regardless of whether they create their own insurance exchanges or rely on the federal marketplace.

Plaintiffs in the case pressed by the libertarian Cato Institute, Halbig v. Burwell, argued that the text of the health care law (PL 111-148, PL 111-152) only permits subsidies in the 16 states plus the District of Columbia that have established their own exchanges, not in the 34 that use healthcare.gov.

The recent order approved by the majority of the 11 judges on the D.C. Circuit scheduled oral arguments for the full "en banc" review for Dec. 17, which sets the stage for a ruling upholding the subsidies nationwide next winter or spring.

The majority of the 11 judges on the full panel were appointed by Democratic presidents. That has led analysts to predict the full court will overturn the three-judge panel's earlier ruling and erase a split with another circuit court on the legality of the law's insurance subsidies. The differing rulings raised the possibility that the U.S. Supreme Court would take up the issue.

Supreme Court review remains a possibility, however. Michael A. Carvin of the law firm, Jones Day, also the lead plaintiffs' attorney in the Halbig case, petitioned the Supreme Court July 31 to overturn a ruling by a panel of the 4th Circuit Court of Appeals in Richmond, Va., that upheld subsidies nationally.

That petition in King v. Burwell says it "is the only vehicle that would allow [the Supreme Court] to resolve this matter within the October 2014 term."  If the Supreme Court does grant certiorari in that case, a final ruling resolving the fate of the subsidies could come as soon as early next summer.

Both the Halbig and King challenges are funded by the Competitive Enterprise Institute.

Cato Institute analyst Michael Cannon said that last week's order for en banc review "is unwise and unfortunate. It has the appearance of a political decision, and will likely only delay Supreme Court review."

Cannon said that administration's strategy is to delay "this litigation as long as possible, which would tend to prejudice the courts because delay further entrenches the subsidies that the Halbig ruling declared illegal, and increases the disruption that will be caused by eliminating those subsidies."

"The D.C. Circuit rarely grants en banc review," said Washington and Lee Law School professor Timothy Jost, a health law supporter. "The fact they did here is testimony to the devastating effect this misguided decision would have had on millions of Americans and the fact that the decision is wrong on the law."

Jost added that "this also means the Supreme Court is very unlikely to grant certiorari in the companion 4th Circuit King decision, since there is no longer a split of decisions among the circuits."

The case is Halbig v. Burwell (No. 14-5018).

By Melissa Attias, CQ Roll Call

September 10, 2014 -- Lawmakers from both parties have reiterated concern about how the health care law could complicate the upcoming tax filing season, even as the head of the Internal Revenue Service (IRS) emphasized that the vast majority of taxpayers next year will be narrowly affected.

IRS Commissioner John Koskinen told the House Ways and Means Health Subcommittee that 120 to 125 million of the 150 million anticipated filers of individual tax returns will check a box affirming they have health coverage. "That's all they'll have to do," he said.

The remainder, including individuals who received subsidies to buy insurance under the law (PL 111-148, PL 111-152), sought an exemption or are paying penalties for not having coverage, will have additional filing responsibilities, Koskinen noted.

California Democrat Mike Thompson expressed concern about the process for subsidy recipients and questioned whether it could be simplified with an extra checkbox. But Koskinen said the process is needed to reconcile subsidies paid in advance based on estimated income with what recipients are actually entitled to based on their actual earnings. 

Thompson also asked what the IRS is doing to educate people to update their income through the health insurance exchanges if they experience a change during the year. Koskinen said his agency has highlighted the issue in public releases, on its website, in YouTube videos and on social networks and has talked to tax preparers. He noted that updating income with the exchange during the year is not required, and the result is that any discrepancy will be smaller when the subsidy is reconciled during tax season.

More Funding

Koskinen also repeated calls for additional IRS funding in his opening remarks. He said the agency is expecting more calls next filing season from people looking for help sorting out health law requirements.

"We're concerned about our ability to meet this demand because of ongoing budget constraints," Koskinen said. The IRS could see even more calls if Congress passes tax extender legislation at the end of the year, he added, expressing hope that lawmakers would act quickly and make few changes.

The Obama administration requested money for the IRS to implement the tax-related provisions of the health law, but it was not funded, Koskinen said. The agency is moving funding away from other priorities to deliver on its responsibilities, he added, but the level of service could drop without the money requested for fiscal 2015 so that almost half of people who call the IRS are unable to reach a live assistant.

Oregon Democrat Earl Blumenauer urged Koskinen to continue to emphasize his agency's resource challenges. "We can't continue to cut the IRS budget, reduce staffing, make the code more complex, and then beat up on the IRS and still expect that we're going to keep the highest compliance rate in the world," he said.

Exchange Success Questioned

Beyond the tax process, Andy Slavitt, principal deputy administrator of the Centers for Medicare and Medicaid Services, faced questions about the health coverage numbers as a result of the 2010 law. Georgia Republican Tom Price asked how many of the 8 million enrolled through the federal and state insurance exchanges at the end of the first open enrollment period already had coverage, but Slavitt said he did not know.

Addressing reports that a hacker broke into the federal exchange website in July, Slavitt told Price his agency learned about the incident on Aug. 25 and that he thinks it notified federal authorities within approximately 10 days. Slavitt said insurers were informed at the same time and were unaffected, but Price maintained that insurers found out through the press.

Tennessee Republican Diane Black also asked about testing of the new auto-enrollment feature in the exchange, which Slavitt said he thinks is scheduled for October. He said open enrollment begins Nov. 15 and that people who are already enrolled but do not come back to the exchange will be automatically enrolled in their existing plan Dec. 15.

Speaking to reporters after the hearing, Slavitt said his agency rolled out a streamlined application process to navigators and the call center this week, and that the backend system for the exchange is still being worked on. He also said the agency is where he expected for testing the federal exchange website, noting that it has a lot more time than what was provided last year.

"We've left what I think is sufficient amount of time in the schedule," Slavitt said.

By Kerry Young, CQ HealthBeat Associate Editor

September 11, 2014 -- Despite the objections of drugmakers, the idea of having Medicare set payments for some drugs based on the cheapest price of a similar group of medicines is still on the table.

For the second time this year, Congress's advisers on Medicare have delved into whether and how the so-called least costly alternative approach could be applied to medicines administered in doctors' offices. The option would exist in cases where medical evidence suggests two or more drugs for the same condition produce roughly the same results.

The Medicare Payment Advisory Commission (MedPAC) made no formal recommendations last week. Medicare took the approach between 1995 and 2010 for so-called Part B drugs administered in a physician office setting. The policy was dropped due to a federal court ruling.

Medicare's spending on Part B drugs rose by 3 percent, to $13.2 billion in 2012.

Government reports have estimated major savings from the approach: an inspector general's audit cited by MedPAC staff projected $1.1 billion in savings over two years if the least costly alternative approach was used for treatment of the eye condition wet age-related macular degeneration. The Congressional Budget Office has estimated $500 million could have been saved in connection with Part B payments for a drug for arthritis of the knee.

Cancer medicines also often fall into the category.

New law would be needed to authorize the policy, MedPAC staff said. Commission members noted that there would be some challenges going that route.

One hurdle would be deciding when drugs were similar enough to merit being considered as a class, said Katherine Baicker, a MedPAC member and professor of Health Economics at the Harvard School of Public Health.

"The easy case is when things are truly equivalent and it makes no sense to pay more for the same likely effectiveness," she said. 'The much harder case is when there is an incremental improvement."

Medicare would need to maintain some incentive for companies to proceed with smaller advances in medicine, she said.

Rita Redberg, a cardiologist from the University of California San Francisco, said it would be crucial for Medicare to set strict standards for determining that newer drugs truly have some advantages to existing products. She said that companies often tout their new releases this way without having much to show for it.

"I hear innovation a lot more than see it," she said.

The Pharmaceutical Research and Manufacturers of America (PhRMA) objects to the concept.

Randy Burkholder, PhRMA's vice president for policy and research called the least-costly alternative approach "unworkable."

The least-costly alternative approach "would create significant access barriers to important new treatment options," Burkholder said. "We need better approaches to supporting efficient delivery of high-quality, patient-centered care that help get patients the care that is best for them and support continued medical progress."

September 9, 2014 -- Federal officials announced last week that they'll give Wisconsinites who lost health coverage because of changes in the state's Medicaid program until Nov. 2 to obtain insurance on the federal exchange.

Healthcare.gov's regular open enrollment period isn't scheduled to reopen until Nov 15.

"Coverage options are now available to the limited number of people who are no longer eligible for BadgerCare, after the state made changes to its Medicaid program earlier this year," Centers for Medicare and Medicaid Services (CMS) Administrator Marilyn Tavenner said in a statement.

Special enrollment periods are available in the case of certain "life events," such as the loss of a job or a divorce. The CMS statement cited "unique circumstances" to justify special enrollment for the Wisconsin residents who were affected.

Sen. Tammy Baldwin, D-Wis., had written to CMS last week to request the special sign-up opportunity.

Last year, Republican Gov. Scott Walker and GOP legislators opted for partial expansion of BadgerCare rather than full expansion under the health law (PL 111-148, PL 111-152), according to reports. Walker said the federal government couldn't be counted on to stick with federal funding levels in the health law for a full expansion.

The partial expansion plan led some people to lose coverage.

According to Baldwin, Walker contended that 90 percent of former BadgerCare recipients would be able to line up coverage on the federal exchange.

"However, this promise was not kept for 60 percent, almost 38,000 individuals, of those terminated from BadgerCare coverage by Walker," Baldwin said in a recent press release.

Baldwin, who said Walker saw no need for the special enrollment period, said she hoped Walker would work to help those affected get coverage on the federal exchange.

September 11, 2014 -- Another Republican effort to undo a pillar of the 2010 health care law took center stage in the House last week as lawmakers passed a measure that would allow companies and workers to keep employer-sponsored group health plans not in compliance with the law's coverage requirements.

Lawmakers backed, 247-167, a bill (HR 3522) that would permit insurers to continue providing any group plans offered in 2013, regardless whether they meet criteria in the law (PL 111-148, PL 111-152). Insurers could offer those plans to existing or new enrollees through December 31, 2018, but could not offer the coverage through health insurance exchanges.

Republican Bill Cassidy of Louisiana drafted the legislation in response to plan cancellations after President Barack Obama promised people could keep their health insurance plans if they liked them. The administration did, however, delay some of the health care law's requirements and plan cancellations.

The Congressional Budget Office estimates that the bill would increase federal revenues by $1.25 billion from fiscal 2015 to fiscal 2024, $400 million of which would be off-budget.

The White House, in a Statement of Administration Policy, said it would veto the measure over its threat to the "health care security of hard working, middle class families" and "the progress made because of the Affordable Care Act."

The underlying measure would consider the plans grandfathered so that policy holders could not be penalized for failure to comply with the law's individual mandate, which requires most people to have health insurance or pay a penalty.

Similar legislation (HR 3350) to grandfather individual insurance plans was passed by the House in November but also was met by a veto threat and ignored by the Senate.

Republicans maintained that the health care law creates higher costs and fewer choices for the consumer and said that the bill would help millions of individuals who are slated to lose their non-compliant plans and face higher premiums.

But Frank Pallone Jr., D-N.J., argued "that is not losing your coverage, that is your coverage getting better."

Democrats said that rolling back vital components of the health care law would lead to higher premiums and less protections for women and people with pre-existing conditions. Pallone called the measure "nothing but another attack on the Affordable Care Act," which Democrats pointed out has been targeted by Republican legislation over 50 times.

Bill sponsor Cassidy, however, countered that "this is about keeping a promise to the American people. President Obama made unequivocal promises dozens of times that Americans could keep their plans if they wished." He said the bill would ultimately help keep that promise.

Cassidy, a physician, is running for the Senate seat held by Democrat Mary L. Landrieu.