SUPREME COURT LARGELY UPHOLDS PPACA

Today, the U.S. Supreme Court upheld the individual mandate and most of the Patient Protection and Affordable Care Act (PPACA).  As expected, it was a close decision -- 5-4 -- with Chief Justice Roberts and Justices Breyer, Ginsburg, Kagan and Sotomayor agreeing that the individual mandate is a permissible tax. Because the individual mandate was found to be acceptable, most of the rest of the law (including the exchanges and the requirement that larger employers provide minimum coverage or pay penalties of their own) automatically stands.  

BACKGROUND ON THE PPACA DECISION

The federal government had argued that Congress has authority under the Constitution to require individuals to purchase health coverage or pay a penalty (the individual mandate) under two separate powers -- the power to regulate commerce and the power to tax. Most of the debate has been over how broad the Commerce Clause is and whether a decision to not buy insurance could be considered economic activity or commerce.

As expected, the four traditionally liberal justices (Breyer, Ginsburg, Kagan and Sotomayor) concluded that Congress has the authority to impose the mandate under both powers. To the surprise of some, Chief Justice Roberts determined that while the Commerce Clause was not broad enough to support requiring individual purchases, the power to tax was broad enough, and that regardless what the penalty was called, it operates like a tax. Basically, the decision was that while Americans can’t be required to purchase health coverage, they can be taxed if they choose not to purchase coverage.

The individual mandate was considered by many to be the most controversial part of the law, and also necessary to create a large enough pool of covered individuals -- some healthy and some not -- to keep the cost of coverage affordable. Once the individual mandate was upheld, the balance of the requirements that apply to individuals and employers was also upheld.

Separately, a number of states challenged the expansion of Medicaid. PPACA provided that if states chose not to participate in the expansion, they would lose all Medicaid funding. The Court held that the expansion of Medicaid was permissible as long as the penalty for choosing not to participate in the expansion of Medicaid was limited to forfeiting the federal funds that would have been available to cover the newly eligible. As PPACA intended for much of the coverage to come through expanded Medicaid, it remains to be seen how this decision will affect implementation of the law, but the Medicaid issue should have no short-term effect on employers.

Because PPACA has been upheld, employers need to move forward with implementing the changes required by the law. The most immediate requirements are:

• All group health plans, regardless of size, must provide "summaries of benefits coverage" (SBC) with the first open enrollment beginning on or after Sept. 23, 2012.  The content and format of these SBCs must meet strict guidelines, and the penalties for not providing them are high (up to $1,000 per failure).  Insurers will be expected to provide the SBCs for fully insured plans, while self-funded plans will be responsible for preparing their own.
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• Employers that issued 250 or more W-2s in 2011 must report the total value of each employee's medical coverage on their 2012 W-2 (which is to be issued in January 2013).
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• High income taxpayers (those with more than $250,000 in wages if married and filing jointly, or more than $200,000 if single) must pay additional Medicare tax, and employers will be responsible for deducting a part of the tax (an additional 0.9 percent on the employee's wages in excess of $200,000) from the employee's pay beginning in 2013.
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• The maximum employee contribution to a health flexible spending account (FSA) will be $2,500 beginning with the 2013 plan year.
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• The Patient Centered Outcomes fee (also called the comparative effectiveness fee) is due July 31, 2013.  The fee is $1 per covered life for the 2012 year.  Insurers will remit the fee on behalf of the plans they cover, while self-funded plans will pay the fee directly.

Politically, while House Republicans have pledged to repeal PPACA, it is unlikely a repeal bill would pass the Senate, and it would be vetoed in any event by President Barack Obama.  The fall elections, of course, could result in a change in control of Congress and/or the White House, and Republican victories would likely re-energize efforts to repeal PPACA or to discontinue funding needed to implement various parts of the law.

The opinion is long (193 pages) and complex, and we will provide additional details -- through both written alerts and a webinar -- once there has been more time to study the opinion.  

 
  

PREPARING FOR THE SUPREME COURT DECISION
ON HEALTH CARE REFORM

The U.S. Supreme Court is expected to publish its decision on the legality of the Patient Protection and Affordable Care Act, or PPACA (also called health care reform, HCR and ACA), by the end of June.  What they will decide is anyone's guess.  Here are the possibilities (in no particular order), and a brief overview of what the decision would mean to employers that sponsor group health plans.  For additional information on the issues the Court is considering,
CLICK HERE.


Entire Law is Constitutional
If the Court decides that all parts of the law are constitutional, employers will need to move forward with implementing the changes that the law requires.  For 2012 and 2013, these include:

• Providing summaries of benefits coverage with the first open enrollment on or after Sept. 23, 2012
• Reporting the value of medical coverage on the 2012 W-2
• Reducing the maximum health flexible spending account (FSA) contribution to $2,500 (beginning with the 2013 plan year)
• Paying the Patient Centered Outcomes fee (due July 31, 2013)

Note: Details on these requirements are included in recent Employer Compliance Alerts.

Part of the Law is Constitutional and Part is Not
The Court could decide that the requirement that individuals obtain health coverage or pay a penalty (the "individual mandate") exceeds Congress' authority but that other parts of the law are permissible.  They could then either specify which parts should stay and which should go, or they could send the case back to a lower court to determine the details.  Either way, employer obligations to comply with the law would continue, and the actions needed for 2012 and 2013 would continue to apply.


Entire Law is Constitutional
If the Court decides that all parts of the law are constitutional, employers will need to move forward with implementing the changes that the law requires.  For 2012 and 2013, these include:

• Providing summaries of benefits coverage with the first open enrollment on or after Sept. 23, 2012
• Reporting the value of medical coverage on the 2012 W-2
• Reducing the maximum health flexible spending account (FSA) contribution to $2,500 (beginning with the 2013 plan year)
• Paying the Patient Centered Outcomes fee (due July 31, 2013)

Note: Details on these requirements are included in recent Employer Compliance Alerts.

Part of the Law is Constitutional and Part is Not
The Court could decide that the requirement that individuals obtain health coverage or pay a penalty (the "individual mandate") exceeds Congress' authority but that other parts of the law are permissible.  They could then either specify which parts should stay and which should go, or they could send the case back to a lower court to determine the details.  Either way, employer obligations to comply with the law would continue, and the actions needed for 2012 and 2013 would continue to apply.

Entire Law is Unconstitutional
The Court could decide that the entire law is flawed, in which case employers will not need to implement the changes that were to take effect for 2012 and later.  There would be some uncertainty (and choices) with respect to the parts of the law that have already been implemented.  Keep in mind that if the plan or policy has been amended or written to include the 2010 and 2011 changes, the plan document or policy will need to be revised to remove the changes -- the mere fact that the law is unconstitutional will not void the changes in the plan or policy.

Several carriers -- Aetna, Humana and UnitedHealthcare -- have stated that they will continue to administer their policies to include many of the changes that have already been implemented, even if that is not legally required.  Employers that have self-funded plans will need to decide -- and those who have fully insured plans may need to decide -- if they want to roll back changes such as:

• Covering dependent children to age 26 (there will be tax issues with this unless the IRS provides a waiver)
• Elimination of lifetime and annual maximums for most benefits
• Elimination of pre-existing condition limitations for dependents under age 19
• First-dollar coverage for preventive care
• Excluding over-the-counter prescription drugs for health FSA and health savings account (HSA) coverage

The Supreme Court decision is unlikely to end the debate over PPACA, particularly with the fall congressional and presidential elections looming.  If the Supreme Court upholds the law, House Republicans have pledged to introduce legislation to repeal it, but they likely do not have the votes in the current Congress to prevail.
This information is general and is provided for educational purposes only, and does not contain legal advice.  You should not act on this information without consulting legal counsel or other knowledgeable advisors.

Challenges of Wellness Programs

Employers Hunt for Ways to Boost Program Payoff

Ask the HR directors of companies without a wellness program why the businesses haven't taken the plunge, and you'll likely get a mix of answers. The challenges of keeping employees engaged and the time needed to run the program are a few common reasons for taking a pass on wellness.

Inevitably, however, a big chunk of the hand-wringing over a full-blown wellness program boils down to costs, experts say -- specifically, the costs of starting and maintaining an initiative and the difficulty of measuring the financial benefits.

Recent research, however, suggests that wellness pays off for employers that are willing to stick with it. A report in the American Journal of Health Promotion finds that for every dollar spent on costs, employers can expect about $3 in overall medical savings within just two or three years.

"The study provides support for continued investment, but reminds employers that health management is a multi-year investment strategy," Seth Serxner, the study's lead author, told Health Behavior News Service.

Yet even those employers that currently support wellness programs have a hard time wrapping their minds around wellness ROI, a separate study suggests. More than three-fourths of employers who have initiatives in place remain in the dark about the ROI of their programs, according to a PLANSPONSOR report on a study by Fidelity Investments and the National Business Group on Health (NBGH).

Fortunately, employers can rely on a number of simple and low-cost ideas that can help them get over the ROI hump and create a program that improves workers' lives, according to Tammie Brailsford, executive vice president and chief operating officer of MemorialCare Health System in California.

"Instead of building a fitness center, offer employees a pedometer, mealtime walking programs and sessions on achieving better health," Brailsford said in SmartBusiness Orange County. "Costs can be minimal -- from $50 to $500 or more per employee annually, plus incentives for health improvement."

Those incentives can increase overall costs, but most employers remain committed to them, the Fidelity/NBGH study found. Seventy-three percent of companies with wellness programs used incentives in 2011, with an average value of $460. That compares with an average incentive value of $430 in 2010 and $260 in 2009.

But the real value of incentives shouldn't be tied solely to cost, warns Renay Gontis of JRG Advisors. The incentive needs to be not only desirable but also in sync with the goals of the wellness program, she said.

"The last thing an employer wants to do is to offer counterproductive incentives such as membership in a bacon-of-the-month club or a gift certificate to an all-you-can-eat dinner," Gontis told SmartBusiness Pittsburgh. "A few positive incentive examples include fitness club memberships, new walking/running shoes, massages and paid time off."

Prescription Drugs: Experts Say Savings Spring from Smart Choices

Generic vs. Brand Name Drugs

When individuals or employers for group health plans sit down and craft options to cut health care costs, they often include prescription drugs in the mix. This is likely due the significant roll that drugs play within the health insurance plan.

Among all types of medical costs, drug prices are rising the fastest, according to new research by the Government Accountability Office detailed in a recent Reuters report.

The study found that the price index for the top 100 commonly used drugs rose by an annual average of 6.6 percent from 2006 through the first three months of 2010. That compares with a 3.8 percent annual average increase in the consumer price index for all medical products and services.

Billions of Dollars could be saved 

A new study by Express Scripts notes that if all patients consistently used generic or low-cost brands, home delivery and followed doctor's orders, the nation could trim as much as $403 billion a year in health care spending.

Keeping this in mind, savings in monthly premiums for an insurance plan can be realized by choosing a plan that limits the drug choices to generic only. However, if someone prefers or needs the brand name medication later on, then any savings from a less expensive "Generic Only" plan will be cancelled out by the need to pay for the higher priced brand name medications.

Deciding on what plan to choose is not always easy. Going with an option of "Generic Only" medications may save you in monthly premiums, but there could be trouble lurking around the corner when Brand Name medications are needed.

Jaws vs. Pharmeceutical Companies

Baldwin Georgenton Insurance Agency is creating our first blog during Shark week so we thought it would be appropriate to post about Sharks... Hope you find the information as interesting as we do.

HAPPY SHARK WEEK

 

Many breakthroughs have been made resulting in shark cartilage being known to cure everything ranging from a common cold to battling cancer or heart disease and malaria.

"Scientists have believed for over 35 years that since sharks do not appear to develop as much cancer as humans, there may be something in their systems that protects them from getting cancer," stated by Gabriel Feldman, MD, director of prostate and colorectal cancer for the American Cancer Society.

It is extremely difficult for cancer to grow in cartilage due to the fact that it does not consist of blood vessels.  A popular theory is that Cartilage stops the main source that fuels the tumor which is Angiogenesis (the growth of new blood vessels from pre-existing vessels).

The identification of an angiogenic diffusible factor derived from tumors was made initially by Greenblatt and Shubik in 1968.

Danger lurks in murky waters...

...as the debate continues between strategic marketing campaigns and some biologists disagreeing about shark cartilage being a beneficial cancer treatment.. 

Professionals like Gary K. Ostrander, who’s a research professor in the departments of Biology and Comparative Medicine at The Johns Hopkins University; has the opposition that the use of shark cartilage can be a misleading and disappointing outcome for humans as well as sharks.

"Since shark cartilage has been promoted as a cancer cure, not only has there been a measurable decline in shark populations, but cancer patients also have been diverted from proven, effective treatments," Ostrander says. "People read on the Internet or hear on television that taking crude shark cartilage extract can cure them of cancer, and they believe it without demanding to see the science behind the claims."

 "The fact is that it is possible that highly purified components of cartilage, including from sharks, may hold some benefit for treatment of human cancers," Ostrander says "The key will be to isolate these compounds and design a way to deliver them to the site of the tumor."

The Cancer Treatment Research Foundation conducted a 1998 study with 60 cancer patients in the advanced stage, stating "shark cartilage powder has no effect on slowing the cancer, improving the quality of the participants' lives, or shrinking the tumors" 

Based off of the 1998 study, Barrie Cassileth, PhD, author of The Alternative Medicine Handbook, stated "Everybody in [the field of oncology] knew way before this article was published that shark cartilage cannot possibly be beneficial.  There are possibly chemical components in shark cartilage that may have a tumor-reducing effect."

 

Environmentalists are also concerned about the decline of sharks with in the last decade and the cost of using shark cartilage could be very costly as a result.  Although there are extreme mixed reviews about shark cartilage being the magical wonder cures for cancer the relentless optimists are working with pharmaceutical companies who may one day make synthetic shark cartilage.