As we get closer to the presidential election, the candidates will share greater details of their national health care proposals. Depending on individual political views, people can argue the merits of both positions.

Briefly, as described by Health Affairs, a policy journal, Sen. Obama’s health care proposal focuses on expanding insurance coverage and provides new subsidies to individuals, small businesses, and businesses experiencing catastrophic expenses. The analysis reports that the plan greatly increases the federal regulation of private insurance and creates questions about fiscal sustainability. (His plan includes a National Health Insurance Exchange, much like the Commonwealth Health Connector like we have in Massachusetts.)

Health Affairs explains that Sen. McCain’s health plan makes employer provided health benefits taxable as income for employees and in return, gives each employee a refundable tax credit– $2500/individual and $5000/family–for those who purchase coverage. The analysis predicts increased costs to employees, reduced benefits and fewer consumer protections.

Both proposals seek to reduce administrative and medical costs in a variety of ways, but they also offer insight into a larger philosophical perspective on the role of government in the marketplace. Independent of the presidential race, however, there are opportunities today for those of us in the health care community to identify cost savings. A common, though no less staggering, statistic estimates that 30 percent of annual health care spending is unnecessary, which adds up to $600 billion annually. Read more…

As Massachusetts braces for yet another double-digit rise in health insurance premiums, many employers are taking actions that go well beyond much-maligned benefit cuts and employee contribution increases. By adopting comprehensive employee health and wellness programs, these employers are beginning to see a positive return both in the form of savings and a healthier workforce.

The new generation of employee programs is a far cry from the unstructured worksite wellness programs of the past. They now rely heavily on data gleaned from confidential surveys from individual employees; indeed, some employers are paying sizable incentives to workers to take the so-called health risk assessments (HRAs). Aggregated data from these surveys enable employers, their health plans and wellness vendors to see what kind of health problems are causing costs and to target healthy eating, fitness and other wellness initiatives to workers at risk for chronic diseases based on their lifestyle and health status.

Here in our own backyard, the EMC Corporation is a pioneer in the development of cutting-edge employee wellness programs. In recent years the Hopkinton-based technology company has waived 12 percent of each employee’s contribution to health insurance premiums in return for HRA participation, an incentive worth over $500 per year. Read more…

One of the major issues that all of the players in the roll out of the Massachusetts health care reform need to address is the rising cost of health care. I thought that the Division of Insurance could further this conversation by providing a base line of what the cost increases had been before reform. To assist in that discussion, the Division engaged a consulting actuarial firm to perform two studies, one to look at the trends in health claims and the other to look at the other to look at how much our HMOs spent on administration per premium dollar when compared to HMOs in other states..

The Division has just issued those two studies (“Trends in Health Claims for Fully-Insured, Health Maintenance Organization in Massachusetts, 2002-2006” and “Analysis of Administrative Expenses for Health Insurance Companies in Massachusetts”). I urge everyone interested in these topics to review the entire reports. On the assumption that not everyone will have time to do that review, I have summarized below the major findings of the claims report.

Major Findings

· Between 2002 and 2006, the total cost for medical services per insured member per month increased by 55%, from $154 to $239.

· Over the study period, total medical claim costs per insured HMO member increased at an average annual rate of 11.6%. Read more…

This report from the Congressional Research Service analyzes several local and state health coverage laws and ERISA. The section on Massachusetts begins on page 11. I read it to say that a lawsuit challenging the employer penalty for failure to provide health insurance in Massachusetts could go either way.

Martha Bebinger

Massachusetts mandates that every employer in the Bay State employing eleven or more full-time employees must make “a fair and reasonable premium contribution” to “a group health plan” for its employees. If a covered employer fails to make this state-mandated contribution, the employer must instead pay a “fair share employer contribution” to the Commonwealth Care Trust Fund.

Federal law, in particular, the Employee Retirement Income Security Act of 1974 (ERISA) preempts this state-imposed employer mandate and others like it. As a matter of policy, federal law should not preempt in this fashion. But, until Congress changes ERISA, it does.

ERISA Section 514(a) provides that that federal statute “supersede(s) any and all State laws insofar as they may now or hereafter relate to any” employee benefit plan. For ERISA purposes, any employer “program” paying for employees’ medical care is such a benefit plan. The language of Section 514(a) is expansive. Moreover, the U.S. Supreme Court has interpreted Section 514(a) capaciously. As a result, Section 514(a) preempts (“supersedes”) state laws like the Massachusetts statute which regulate employers’ expenditures for their employees’ medical care. Read more…

Under proposed regulations, the conditions under which Massachusetts employers can avoid the “fair share contribution” will change effective October 1st. Currently, employers with eleven or more full-time employees must make a fair share contribution of $295 per employee per year, unless (1) 25% of the employer’s employees are enrolled in the employer’s group health plan, OR (2) the employer offers to pay at least 33% of the premium cost of any group health plan offered by the employer to its full time employees that were employed at least 90 days. The proposed regulations would require employers to satisfy both of the above tests in order to avoid the fair share contribution. Employers would need to both have 25% of employees enrolled in a group health plan and pay 33% of the applicable premium. One issue that has been raised is whether this change will cause the fair share contribution to be preempted by federal law. For reasons discussed below, I do not think the new fair share requirements will be preempted.

The Employee Retirement Income Security Act of 1974 (“ERISA”) is a federal law governing nearly all employee benefit plans, including employer-provided group health plans. One of Congress’ purposes in passing ERISA was to allow for nationally-uniform administration of employee benefit plans. As a result, ERISA broadly preempts state laws that “relate to” an employee benefit plan. Defining the boundaries of ERISA preemption has been a difficult task for the courts, and even after many Supreme Court opinions there are not clear answers on when a state law relates to an employee benefit plan.

In the cases dealing with so-called pay or play mandates (where employers are given a choice between complying with a health care law or paying a monetary fee to the state), the outcome seems to turn on whether the penalty associated with non-compliance is so significant as to effectively force compliance. Read more…

A number of employers have suggested recently that the Massachusetts Health Care Reform Act is headed to federal court. They say tougher requirements for employees (that take effect October 1st) make the conflict between state law and ERISA (the federal Employee Retirement Income Security Act) worse. ERISA applies to and preempts state regulation of most employee benefit plans. States can still regulate insurance companies and the products they sell. But most large companies are self-insured and the state can not regulate self-insured health plans.

The issue is whether several parts of the Massachusetts law violate ERISA by establishing requirements that employers must follow. Massachusetts says employers with 11 or more workers set up payroll plans so that employees can pay for coverage on a pre-tax basis. It also fines employers that do not pay 33% of the cost of a health plan or cover 25% of full time employees. The Patrick administration plans to change OR to AND on October 1st. Business groups say the change will hurt more employers and will make an ERISA suit more likely.

In January, Massachusetts will establish a minimum standard for health plan benefits. Read more…

Transparency. Measures. Outcomes. Information for informed choices. Laying it all out on the table.

Call it what you want but the trend in health care, and certainly a main focus of the reform law and of “Reform II”, the cost-containment bill, is to generate more information, submit it to an ever-increasing number of sources, and ensure that it’s all posted online where it’s …. well, oftentimes it’s ignored.

Right now, the state is putting the finishing touches on a Cost & Quality website. The Massachusetts Hospital Association has had its Patients First website up and running since 2005, posting nurse staffing data and, now, data relating to “nursing-sensitive” measures, such as how often patients fall in a hospital or develop bed sores.

The national Hospital Compare website (operated by the U.S. Department of Health and Human Services on behalf of the public/private coalition known as the Hospital Quality Alliance) reports voluntarily-reported hospital-specific data on about two dozen best practices/processes of care – for example, does a hospital administer antibiotics one-hour prior to surgery? Or give a pneumonia patient a thorough assessment and influenza vaccination? More such measures will be added this year and next. Read more…

Many of us know someone who went into the hospital, picked up an infection and got sicker, rather than better. The Centers for Disease Control estimate this happens to 1.7 million Americans every year. In Massachusetts, the cost of treating these infections is as much as 473 million dollars annually. Better prevention has become a top priority for hospitals and government regulators. More on that after we hear the story of one man Red Sox fans know well.

BEBINGER: In October, 2002, Terry Francona had just finished a season as bench coach for the Texas Rangers. His knees were bothering him and his doctor recommended routine arthroscopies.

TERRY FRANCONA: I’d probably had six on each knee, it was no big deal, like an oil change. I walked out of surgery and was on my way home, thinking it was just another routine knee fixer upper. Little did I know that I was in for basically the fight of my life.

BEBINGER: A fight that began with staph infections in both knees. Staph is the common name for a group of bacteria that many people carry in their nose or on their skin. As Francona discovered, many strains don’t respond to commonly used antibiotics and are difficult to treat.

FRANCONA: I was in for four more surgeries, it was about a 7 week period when I was in and out of intensive care and I had some bleeding, almost lost a limb and at times my life was probably threatened. It was spiraling out of control and nobody has answers to get me back under control.

BEBINGER: Francona reminds himself now…he’s fortunate he survived.

FRANCONA: I laid in a hospital bed a lot of nights thinking, please let me be able to handle this, cause there were some nights when I didn’t think I could, the pain was pretty intense. Read more…

Due to overly aggressive rate increases, many Massachusetts residents are being priced out of a product they purchased with a great degree of foresight not even 10 years ago. Long term care insurance (LTCI), which covers home care, assisted living care, adult day care, hospice care, and nursing home care, has become a critical coverage in many residents’ financial and estate plans. Traditional health insurance and Medicare provide very limited benefits when it comes to long term care scenarios. Unfortunately, as policyholders look to the future, the benefits of owning a LTCI policy will either no longer be available to them, or the coverage will have been reduced to a meaningless amount.

Rates on existing LTCI policies have risen as much as 60% in some cases and are currently being reviewed by the Commissioner of the Massachusetts Division of Insurance. Considering skyrocketing health care costs, it is understandable that insurance companies would seek increased rates. Under current economic realities, a 20% increase in LTCI premiums could be considered reasonable, but 60% seems opportunistic. Read more…