Health Insurance News

East Coast Health Insurance would like you to know that President Obama signed into law on December 21, 2009 an extension and expansion of a COBRA premium subsidy law that was due to expire on December 31. The extension means new compliance obligations for employers, as that the program now runs through February 28, 2010, the subsidy period is expanded by six months and new notice requirements must be met within a tight timeframe.

Earlier this year, in response to the poor economic conditions, the American Recovery and Reinvestment Act of 2009 (ARRA) established a new law under which “assistance-eligible individuals” (AEIs) were initially entitled to receive a 65 percent subsidy for continuation coverage premiums for up to nine months. Under the original law, an AEI is any COBRA qualified beneficiary who elects COBRA coverage and: (1) has a loss of group health coverage as a result of an involuntary termination of employment (other than gross misconduct); and (2) has a qualifying event between September 1, 2008, and December 31, 2009, is otherwise eligible for COBRA coverage during that period and elects that coverage. The law included various new administrative and notice requirements for employers, many of which had to be met within a short period after ARRA was enacted.

Although the ARRA subsidy was supposed to be a short-term fix, as the economy’s rebound became more protracted than expected, in late fall lawmakers begin considering proposals to extend the law and earlier this month, President Obama called for an extension. At least three proposals were introduced – one simply extended the eligibility period by six months, the other two proposals both extended the eligibility period and made further tweaks to the subsidy law provisions.

An amendment to extend and expand the subsidy law was added to the House Department of Defense appropriations bill, Department of Defense Appropriations Act 2010 (H.R. 3326), which the House passed December 16. On December 19, the Senate approved the House version, which then went to the President for his signature.

Following are the key provisions of the COBRA subsidy extension:

1. The amount of time an AEI can receive a subsidy increases from nine to 15 months.
2. The subsidy eligibility period is expanded to include the period that begins with September 1, 2008, and ends with February 28, 2010 (formerly December 31, 2009). Significantly, the new rule does not require that COBRA coverage begin by the end of the period (February 28). Instead, the person is an AEI as long as the COBRA qualifying event (involuntary termination of employment) occurs by February 28, 2010 and is entitled to COBRA coverage as a result of that event.
3. For any AEI for whom the premium subsidy now applies due to the extension, there is a transition period consisting of any period of coverage that begins before the extension’s enactment date. Any period during which the applicable premium had been paid is to be treated as a period of coverage, irrespective of any failure to timely pay the applicable premium for such period.
4. Plan administrators must provide a notice on extension rights to AEIs who did not timely pay the COBRA premium for any period of coverage during their transition period or paid the full (non-subsidized) premium without regard to the subsidy rules. The notice must be provided within the first 60 days of their transition period, and must include information on the ability to make retroactive premium payments as a result of the transition period.
5. In the case of any premium for a period of coverage during an AEI’s transition period, an AEI shall be treated for purposes of any COBRA provision as having timely paid the premium amount if he or she: (a) was covered under the COBRA coverage to which such premium relates for the period of coverage immediately preceding the transition period; and (b) pays, not later than 60 days after the extension enactment date (or, if later, 30 days after the new notices are provided) the amount of the subsidized premium.
6. In the case of an AEI who, during his or her transition period, paid the full premium amount for such coverage without regard to the subsidy amount, ARRA’s rules allowing for that AEI to be reimbursed for the excess premiums will apply.

Plan administrators must provide notices of the new extension rights to individuals who became AEIs on or after October 31, 2009, or experience a qualifying event (consisting of termination of employment) relating to COBRA coverage on or after that date. The notice must be provided within 60 days after the extension’s enactment date or, in the case of a qualifying event occurring after the enactment date, consistent with the timing of COBRA notices.

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With a title like that I wish I was writing about a true Christmas miracle of health reform, but instead we have two bills approved by both legislative houses that are at best described as iffy and at worst corruption.

Before we get into where we stand on this bill, lets finish up what has to happen next. The next step in getting this bill to become a law will be the reconciling of both bills and passage of the final bill when it can finally be signed by Mr. Obama. The House Bill is a real attempt at health care reform with a Public Health Option for the poor to compete with the health insurance companies that are allowing premiums to rise faster then inflation squared. The Senate version appears to be an attempt to prove that they can approve any kind of Bill to save face politically.

But the real problem lies in the fact that the bill that is likely to be passed is going to be the Senate version which on close inspection appears to reward health insurance companies with increased membership, even if it does force them to accept everyone at one rate regardless of health. The question is which health insurance companies will be able to profit in this type of market and you can bet Blue Cross and Aetna will still be standing in ten years. Most importantly, the Senate bill has no public option to help control medical costs and keep the health insurance companies honest. So why pass it at all? The answer given by the Progressives is that it is a start and this particular start is better then none. Conservatives would argue that this plan just adds more inefficient government at a time when we can’t afford any additional government period.

After reading much analysis of these bills by different journalists from every angle of the political spectrum, I can say for certain that no one is certain of what effect that this legislation will have on the American consumer, the economy, or the health insurance companies. Most seem to agree however that this bill will most likely hurt the Democrats in the short run, while rewarding the health care industry including the pharmaceuticals.

I believe as of today that it is impossible to predict what will happen, as the smartest minds in economics and politics all seem to disagree on what effects this will have on our country, though all agree something had to be done, and thus the question will be this?

Oh, and have a Merry Christmas and remember Jeremy loves you!

Health Reform in the Senate didn't rest for Christmas

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Tomorrow the Senate is expected to vote for the third and final time on the health care legislation.  The final vote is expected to take place at dawn on Thursday.  After that the last step before the bill hits President Obama’s desk is to reconcile the bill that was passed in the House with this Senate bill.

While there are major differences between the two including the Public Option being on the House Bill, the two bill do share much in common, most importantly the health insurance mandate, which makes it a “crime” to be without health insurance.  The penalty?  Only a $800 fine, which is about a month of health insurance for many families, and about 5 months for most people under 35 years old.

The final reconciliation which is likely to be stretched into February is going to certainly be difficult but not impossible, and the smart money is betting on the President signing this bill before Valentine’s Day.

The Senate has met for 24 consecutive days to debate the legislation, the second-longest such stretch in history, and Democrats held a celebratory press conference.

The details of the bill as well as analysis can be found just about everywhere in our health insurance news section and we of course wish everyone a merry Christmas and happy holiday season.

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From Bnet.com here is Jill Schlesinger’s health reform cheat sheet.  Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.

Boiling down legislative babble was an exhausting exercise, but it was a great opportunity to put together my own “cheat sheet” on health care — here goes!

I will use the House plan as the jumping off point and note differences with the Senate’s version.

• Costs $1.04 trillion over 10 years (Congressional Budget Office) [Senate plan would cost more]
• Covers 97% of legal American citizens
• Mandates all individuals to purchase insurance or pay penalty of about 2.5% of gross income
• Establishes insurance exchange where consumers can compare policies and buy coverage
• Includes Public Options to compete with private insurance
• Individual subsidies: The government will offer assistance (credits) on a sliding scale up to four times the poverty level (up to $43K for individual and $88K for a family of 4)
• Requires employers to provide health coverage or pay a fee to the government [Senate plan is $750/employee for employers with > 25 employees]
  • Payroll > $400,000 =  8% of Wages
  • Payroll $250,000-$400,000 = to be determined (smaller penalty)
  • Payroll < $250,000 = NO FEE
• Bars insurance companies from denying coverage due to illness or health status
• Eliminates insurance company lifetime caps

Where’s this money coming from?

Under the House plan, there are three main sources available to fund health care [The Senate plan seemed to pass over this not-so-small detail]:

1) New Taxes on Wealthy Generating $544 Billion

• 5.4% surtax income > $1M
• 1.5%  surtax on income  $500,000 – $1M
• 1% surtax on income $350,000 – $500,000 (starts at $280,000 for individuals)

2) Surcharges on Businesses (see above)

3) Reduction in spending for Medicare and Medicaid

Sticking Points:

• New taxes on rich
• Impact on small businesses
• Change in care–Americans will wonder whether their doctors will participate in public option

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From Peter Schiff

As business owners undergo the yearly ritual of passing through eye-popping health insurance premium increases to their employees, it’s easy to understand why any attempt at health insurance reform would be met with some degree of hope. Unfortunately, President Obama and his Democratic allies in Congress are about to take a very bad system and make it unimaginably worse.

While ramming their new legislation through Congress, the Democrats have taken great pains to point out that they do not intend to “socialize medicine.” But make no mistake, that’s where we’re headed. Even if some naïve centrists believe that their efforts have denied the Left a total victory, the practical implications of the current legislation sow the seeds for complete capitulation.

This first round of reform could be labeled as the ‘neutron bomb’ of the insurance industry: it leaves some of the private apparatus standing, but it irradiates whatever remains of the industry’s market viability.

The bill’s centerpiece is a clause prohibiting insurers from denying coverage based on a pre-existing medical condition. However noble and marketable an idea, this proscription removes the very basis upon which any insurance model operates profitably.

A system of insurance requires that premiums be collected from a pool of low-risk people so that funds are available in case a high-risk event befalls a particular person. In that way, premiums can be low and coverage can be widely available, even if the benefits offered are hypothetically unlimited.

For example, homeowners buy fire insurance even though their houses are very unlikely to burn down. Recognizing that a fire could wipe them out financially, most homeowners endure the cost of coverage even if they never expect to collect. The same model applies to health insurance in a free market.

However, the health care bill removes the need for healthy individuals to carry insurance. Knowing that they could always find coverage if it were eventually needed, people would simply forgo paying expensive premiums while they are healthy, and then sign on when they need it. But insurance companies cannot survive if all of their policyholders are filing claims!

Correctly anticipating this incentive, the Senate bill imposes an annual fine which gradually escalates to $750 for those who fail to buy coverage. So what? I would gladly pay $750 in order to avoid the $8,000 per year I pay now for personal health insurance. Currently, I’m relatively healthy for a 46 year old and I don’t anticipate making a big claim. But if I do, under the new rules I can always get ‘insurance’ after the fact. Heck, if I can stay healthy for the next couple of decades, I’ll save a fortune. Think about how much easier the decision would be if I were 20 years younger! Since most people are capable of figuring this out, the entire insurance industry would collapse under such a system.

There can be no question that $750 annual maximum penalty is a mere placeholder. It is the camel’s nose under the tent. When the non-discrimination provision kicks in, the only way these companies could remain solvent would be for Congress to raise the fine to the point where the penalty is greater than the gain of skipping coverage.

For me, that would have to be roughly $8,000 per year. Introducing such a fine right now would have surely killed the bill. So, the wily wonks in Washington have chosen to move slower, knowing that once the first step is taken, the second becomes inevitable.

However, there is another, more devious possibility. Perhaps our elected officials actually intend to bite the hands that feed them. They could double-cross insurance companies by not raising the fine in five years, thereby forcing the industry into bankruptcy as millions of healthy people opt-out. During the ensuing ‘insurance crisis,’ our courageous leaders could ride to the rescue with a nationalized, single-payer system.

The real tragedy is that the current bill does nothing to restrain the forces that are propelling healthcare costs into the stratosphere, namely: regulatory bans of insurance competition, the out-of-control medical malpractice industry, federal programs and subsidies, and a tax code that favors a third-party payment system – which alienates the patient from the cost of his care.

To consider that many in Washington have the nerve to market this multi-trillion dollar monstrosity as a “deficit reduction bill” is to realize that our representatives have lost all touch with reality. For those keeping score, the government made similarly rosy projections in the mid-1960′s when Medicare was first introduced. The inflation-adjusted cost of that program already exceeds the original estimate by a factor of ten. That’s probably where we are headed this time around.

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So everything is hunky dory right?  The health reform legislation somehow secured crazy Senator Ben Nelson in exchange for something about not doing abortions with federal funds.  It looks like America is on its way to fiscal security, without having to fret about the rocketing costs of health care eating all of their money and financial security.

Well, don’t buy that Iphone just yet…  The Democrats themselves are already unsure of what they just agreed to vote again on.  And its not because of health reform, its because the abortion issue is somehow more important to health care then people dying from lack of medical attention.

Obama for his part, is ready to sign anything that says health reform on it, but the problem is that a shallow victory like this one is sure to enrage the masses.

First up reconciling the House Bill (which is actually a reasonable attempt at health reform) with the Senate Bill (which is just pure drivel).  Both pro-lifers and pro choice politicians have made clear their objections to the compromise made on behalf of Senator Nelson and his Nebraska corn huskers.

Not to mention that for a change both the Catholic Church and the Pro Choice Planned Parenthood people finally agree on something and that thing is the rotten egg of a bill floating around the Senate.

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East Coast Health Insurance would like to announce that the House passed a COBRA provision extending the eligibility period for two months and extending the maximum duration of the federal assistance from nine months to 15 months.

If you would like more information on this bill you should visit our main health insurance site, or call us at 888 803 5917.  There is no obligation to buy anything, and it makes us happy to help people in these types of predicaments at no cost.   We also have a more in depth post about the ARRA bill in our health insurance advisor section.

Cobra and ARRA Premium Subsidy Extended as of December 31, 2009 for 6 months

The U.S. House of Representatives has passed a provision that extends the 65 percent COBRA premium subsidy through February 28, 2010, and expands it by six months. House lawmakers also set the stage for another subsidy extension sometime in the future by making it part of the upcoming Jobs bill.

The new subsidy provision, passed December 16, was attached to the Department of Defense Appropriations Act, 2010 — a “must-pass” bill that included funding for the Defense Department. The bill now goes to the Senate. The Senate is expected to pass it before the end of the year.

Under the current law, those involuntarily losing their jobs after the end of 2009 would no longer be eligible for the subsidy.

Under the new subsidy extension provision:

• The end date of eligibility for the ARRA subsidy changes from December 31, 2009, to February 28, 2010.
• The ARRA premium subsidy expands to 15 months, increased from current nine months.
• Those who have lost their subsidy by completing their nine months in November or later would be grandfathered in under the new legislation.
• Involuntary terminations that occur on or before February 28, 2010, would be eligible for the subsidy, regardless of when the individual’s COBRA eligibility period begins. This addresses a Congressional oversight in the original bill pertaining to December 31, 2009, qualifying events.
• Additional notices will be sent with information regarding the amendments to Assistance Eligible Individuals, as well as those experiencing a COBRA qualifying event consisting of termination of employment.

Cobra Health Insurance Extensions

Further Details of the Subsidy Extension

• The COBRA subsidy provision requires additional notices describing the new 15-month premium subsidy. It will be sent to all assistance-eligible individuals who are on COBRA on or after November 1, 2009, or whose qualifying event is a termination of employment occurring on or after that date.
• The provision also allows a period for the retroactive payment of premiums for assistance-eligible individuals whose subsidy period expired on November 16, 2009, and who failed to continue to pay their premiums.

The same refund/credit rules under the original ARRA bill apply to any assistance-eligible individual whose subsidy expired in November and who has since paid the full COBRA premium.

In addition, the provision addresses a Congressional oversight in the original subsidy by making eligibility for the subsidy hinge only on the involuntary termination of employment occurring on or before the new February 28, 2010, sunset date. Subsidy eligibility is no longer tied to the date the COBRA eligibility period begins. Under the original subsidy bill, anyone whose benefits terminate on December 31, 2009, would not be eligible for the COBRA premiums reduction program under ARRA because COBRA eligibility also had to occur on or before December 31, 2009. If a worker is involuntarily terminated on
December 31, 2009, COBRA eligibility would begin on January 1, 2010, making them ineligible for the subsidy.

The House Rules Committee has introduced another subsidy extension in H.R. 2847, Jobs for Main Street Act, 2010. The COBRA provision in this bill would extend the subsidy until June 30, 2010. Although the Senate will not be taking up this bill this year, it presumably will be a starting point for the Jobs bill discussions next year.

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All Republicans can do now to stop the passage of the health care legislation is by playing the delay game.  Happy as can be the Democrats are already declaring victory and the American people are left wondering what happened and what everyone is celebrating.

By getting Senator Nelson, who was the 60th vote to sign on to the bill Democrats seems poised to meet the President’s Christmas Eve passage goal.  That won’t complete the passage either because coming up next on Monday at 1:00 AM the most important vote occurs where the Democrats will have to show those 60 votes.

Republican Senators like Senator McConnell of Kentucky is calling the bill a legislative train wreck and points to the upcoming Medicare cuts as just a taste of the pain this bill will cause for millions of Americans.  More importantly is the historic massive tax increases that will occur at the most vulnerable time of our nation’s economic history.

Still many advisers to the President are already pointing fingers at the Republicans for their blatant delay tactics.

Today the debate is set to continue in Washington.  So where does this maneuvering leave us now?

Well besides the thorny abortion issue which seemed like it was going to derail the bill’s movement, the bill also covers health care surprisingly.  Many American’s had thought the health care bill had been dropped in favor of another abortion debate.

However at the end of the day yesterday, in order to secure the 60th vote, the Democrats agreed to place a separation between taxpayers fund and health insurance premiums to pay for abortions.  Additionally, each state would have the option of restricting abortion coverage.

But as this bill is about more significant items then abortion, the rest of the bill includes a promise to extend coverage to 30 million more Americans and also mandate that every American get health insurance.  Other last minute provisions included a penalty on any health insurance company that tried to increase premiums in advance of the legislation being enacted.

Analysts from the Congressional Budget Office claim that the bill will decrease the deficit somehow by $132 billion over the next ten years, though many consider their math to be suspect.

At its core, the legislation would create a new insurance exchange where consumers could shop for affordable coverage that complied with new federal guidelines. Most Americans would be required to purchase insurance, with federal subsidies available to help defray the cost for lower and middle income individuals and families.

In a concession to Nelson and other moderates, the bill lacks a government-run insurance option of the type that House Democrats inserted into theirs. In a final defeat for liberals, a proposed Medicare expansion was also jettisoned in the past several days as Reid and the White House maneuvered for 60 votes.

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After months of fighting delays and anguish in President’s Obama quest to redo the hungry health care industry he has seemingly won.  On closer inspection of this supposed victory it becomes apparent that with this particular piece of legislation the only winners are the health care industry.

Yesterday however, Obama declared victory.  Still the deal is not a final blow and most of the Senators involved in approving the bill readily admit the shortcomings of the bill and that it was rushed in favor of expediency.  Insiders like Senator Harry Reid of Nevada the Democratic majority leader reported that Obama was pretty happy with the status of the health care reform bill.

Obama himself declard, “a major step forward” and the climate change agreement an “important breakthrough.”  Though he also admitted that the bill is far from enough and not as close to passage as many in the media suspect.

Of course political analysts are saying that the deal itself is not going to help Obama or the Democrats with their polling nor will it energize Democrats.  Most importantly everyone agrees that the bill is simply not good in its present form and unlikely to either fix the ailing economy or save our country from the growing health care costs. degrees by midcentury.

On the other hand there are still at least some changes that the Democrats have demanded though it has lost many other changes, but at least it stands a decent chance of being passed.  The New York Times sums it up very well:

Mr. Obama has put a high value on process and keeping things moving, recognizing that history generally does not remember the to and fro, only the big sweep of presidential accomplishments. He may not get the health care plan he envisioned but, if the legislation passes, he will insure 30 million more people, stop insurers from denying coverage for pre-existing conditions and at least try to rein in costs. He will not end climate change in his presidency, and may not get the market-based emission caps he wants, but he may move the country, and the world, toward meaningful action.

Of course, to many on both sides of the aisle, there is a less sympathetic narrative. To the left, Mr. Obama seems increasingly to lack the fire to fight on matters of principle. To the right, he appears to be overreaching, saddling the country with debt and the weight of a bloated and overly intrusive government.

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Guess who hates the Health Reform Bill now?  Liberal group NOW (National Organization for Women) who though are are a left wing organization whom everyone should support based on the fact that they seek to protect the rights of 50% of the population and moreover have an agenda that consists of protecting the rights of women and that includes making sure all women have adequate access to health care.

NOW Likes Health Reform, but Hates the Health Reform Bill

So why do they disapprove?  Its because of the language relating to the ridiculous abortion amendments and legislation.   The leader of the National Organization for Women (NOW) dislikes the language used to halt spending on any insurance plans that cover abortions.  Why then would a Democrat put the language in the bill at all?  To garner the 60th vote from Senator Ben Nelson.  In other words politics.

“The so-called health care reform bill now before the Senate, with the addition of Majority Leader Harry Reid’s Manager’s Amendment, amounts to a health insurance bill for half the population and a sweeping anti-abortion law for the rest of us,” NOW President Terry O’Neill said in a statement.

“We call on all senators who consider themselves friends of women’s rights to reject the Manager’s Amendment, and if it remains, to defeat this cruelly over-compromised legislation,” O’Neill added.

NOW which has been on the national radar since its inception in 1966 has always obviously been in favor of women’s rights to abortion, which for some reason is relevant to health reform.  No one really understand the relationship of health reform and abortion, but both parties have made this seemingly unrelated issue a focal point of the silliest debate on record, and perhaps a symbol of the apocalypse!

The compromise to win Nelson’s vote was included in the manager’s amendment to the Senate bill, which was released by Majority Leader Harry Reid (D-Nev.) this morning. The compromise measure seeks to segregate federal funds from going to subsidize plans covering abortion.

By contrast, groups and lawmakers opposing abortion rights have blasted the Senate bill as falling well short of protecting against federal funding for abortion.

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