Cut Me a (Tax) Break!

Last month, we debunked an email which claims that folks will have to pay taxes on their group health benefits starting next year. That is patently false.

But it is true that new reporting requirements go into effect in 2011, and that's where I "missed the mark:"

"First, the relevant portion of Obamacare© doesn't take effect until 2018.

Second, only so-called "Cadillac plans" are subject to this provision."

Wrong, Henry.

Bob Graboyes, Senior Healthcare Advisor for the National Federation of Independent Business (NFIB), points out to me (in email) that:

1) The W-2 reporting provision does kick in in 2012. (That is, the form filed in 2012 on 2011 wages.) However, we believe the provision really starts earlier. If someone leaves his job in 2011, the employer must provide the W-2 – with the added info – within a few weeks of the employee’s departure.

2) It applies to all health insurance benefits, and not just to Cadillac plans. To my knowledge, there’s no difference in the reporting of Cadillac plan benefits and other insurance benefits.

Further research confirmed Bob's points. The reason that this is so important is that all of these additional requirements increase the actual cost of sponsoring a group health insurance plan (as if rate increases alone aren't onerous enough).

Now, I did get the third point correct: benefits aren't taxable - yet. But two outta three is not acceptable, so I'll dock myself a days blog-pay.

As long as we're on the subject of how ObamaCare© will increase the cost of doing business, it's worth noting another cringe-worthy provision that's been under the radar (but won't be for long), which "mandates that all businesses, tax-exempt organizations, and federal, state and local government entities will be required to issue IRS Form 1099 to vendors from which they purchase goods totaling $600 or more during a calendar year beginning in 2012."

Currently, the threshold is $2000, certainly a more reasonable number. This is particularly problematic for small businesses, which may have a number of vendors with whom they spend just at or above $600 (think business cards and letterhead, a new laser printer or fuel). Rotsa ruck, by the way, prying loose Office Depot's or BP's EIN (Employer Identification Number) in order to comply.

Now, one might think that accountant-types would view this new requirement (and the billable hours that would accrue as a result of it) as a major windfall, but one would be wrong. Noted tax-blogger Joe Kristan sets the record straight:

"Unless you are in the write-up business (basically, bookkeeper-for-hire), it’s an unmitigated nightmare. It generates an enormous compliance burden – for us, as well as for our clients – while generating paper that we will ignore in preparing business returns. The 1099s are cash basis, while most businesses are accrual, so matching the 1099s is pretty much impossible."

Of course, one might be tempted to believe that "hey, government-types are smart, surely they know what they're doing."

And again, one would be wrong. Christina Romer, the outgoing chairperson of the President's Council of Economic Advisers, said on Wednesday (September 1st) that:

"[s]he had no idea how bad the economic collapse would be. She still doesn't understand exactly why it was so bad. The response to the collapse was inadequate. And she doesn't have much of an idea about how to fix things."

And these are the kinds of people now in charge of our health care.

Is there a pill for that?

Health Insurance Designed by Politicians

What does the Capitol Visitors Center and Obamacare have in common?

The CVC was supposed to make it easier for visitors to access Washington landmarks and make their visit more pleasant.

The CVC originally was supposed to take 4 years to build at a budget of $71 million. When completed it took 8 years and cost $621 million.

Obamacrap is supposed to make health insurance more affordable and accessible to everyone, regardless of their age, gender or existing medical conditions.

The initial estimate is the cost of Obamacrap will be less than $1 trillion over 10 years but those figures are already fading in the light of day as the Congressional Budget Office and others are wading through the bill . . . after the fact of course. The final cost will not be known for years.

This makes one wonder, if Washington can't even get a construction project to come in on time and within budget, how can we expect them to do any better with health care?

Your Wyden Waffles Post

Apparently, Sen Ron Wyden (D-IHOP) agrees with us that the so-called Individual Mandate is evil. Previously, of course, he was all for it; in fact, it was a centerpiece of his own "Healthy Americans Act." But that was then, and this is now:

"Last week Mr. Wyden sent a letter to Oregon health authority director Bruce Goldberg, encouraging the state to seek a waiver from certain ObamaCare rules ... One little-known provision of the bill allows states to opt out [of the mandate] ... I believe that the heart of real health reform is affordability and not mandates..."

Last year, for example, we reported that he was not only "on board" with the mandate, but that it was integral to his proposal. This despite the fact that, as we pointed out at the time (and which has since been validated):

"[I]f one is required to buy insurance, it certainly follows that the market will be forced to offer it to them. And that, of course, sets up a whole 'nother set of issues."

Hence, ObamaCare©.

Cavalcade of Risk #113: Call for Submissions

David Williams hosts next week's Cavalcade of Risk. Submissions are due this Monday (the 6th). Please remember to include:

■ Your blog's url
■ Your post's url
■ The post's trackback URL (if available)
■ A (brief) summary of the post

And PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).

You can submit your post via Blog Carnival or email.

Health Wonk Review: In the Here and Now

I continue to be impressed with the quality of wonkery displayed by the folks whose submissions you'll see below. Looking back at the first 'Review I ever hosted, I was struck by how many wonk-bloggers [ed: is that even a word?] have left the 'sphere, but quite pleased to see names I recognize as still active: the Health Business Blog's David Williams, my favorite econ-blogger Jason Shafrin, and Workers Comp guru Jon Coppelman (all of whom appear in this edition, as well). I also noticed how short that review really was. I'm all for brevity when appropriate, but there's also no shame in piling on, especially when you read this week's entries.

In keeping with my newfound penchant for minimalism, posts appear in order of submission:

■ Rita Schwab has the sad tale - and important lesson - of little Taylee Blischke, who died at the hands of survived despite the efforts of incompetent, and unrepentant, physicians.

■ Bradley Flansbaum (aka The Hospitalist Leader) shares his comparison of The Great Emancipator and (what we at IB call) ObamaCare©. Guess who wins?

■ Peggy Salvatore uses an old (but timely!) joke to demonstrate the folly of government-supported EHR initiatives.

■ Rich Elmore at Healthcare Technology News reports on the Tiger Team on security and privacy recommendations regarding the handling of personally identifiable health information. Important stuff.

■ Joanne Kenen's post is about how CareOregon, a Medicaid managed-care plan, has created patient-centered medical homes and adapted to its own population a successful care coordination program for patients with multiple and/or complex chronic disease. Interesting.

■ HWR co-founder Joe Paduda weighs in on the cost of voluntarily forgoing necessary health care. While I disagree with his reasoning (high deductibles and/or co-pays are to blame), he makes a valid point:: delaying or forgoing primary care will increase future health care costs

■ Uber-wonk Dr Roy Poses posits that maybe - just maybe - having health care leaders' incentives actually aligned with patients' and the public's needs, and not so large as to elevate the leaders into the "Superclass," might work out better in the long run.

■ My favorite health care economist - Jason Shafrin - examines key provisions of ObamaCare@ from (you guessed it!) an economist's viewpoint.

■ Boston's Tinker Ready talks about "e-patient" Dave, and the contrarian's view of "positive thinking."

■ What does Joe's suddenly accelerating Camry have to do with HWR? Well, you'll have to click through to newcomer Michelle Woods' post on HIT (Health Information Tech).

■ Austin Frakt, The Incidental Economist, believes that Rep. Ryan's plan for Medicare is unlikely to control costs because it is too much like the current [ed: but soon to be "late"] Medicare Advantage program.

■ Maggie Mahar takes a look at former HCA honcho - and current Florida gubernatorial candidate - Rick Scott and finds him wanting.

■ Ken Terry sings the Motown Blues, taking to task the waste of dollars being thrown at Detroit's hospitals. Stop, in the name of...common sense!

■ Workers Comp Insider's Jon Coppelman reports on the case of Americans with Disabilities versus the Occupational Safety and Health Administration. Who wins? Guess you'll have to read the post.

■ Jay Norris, of the Colorado Health Insurance Insider blog, writes about the newly-created Early Retiree Reinsurance Program, which enables federal funding to help pay for retirees’ health insurance.

■ Avik Roy, of The Apothecary (and a featured NRO blogger, as well), takes the contrarian viewpoint in defending the FDA's position in the recent Avastin kerfluffle.

■ Over at the Health Access Blog, Anthony Wright points out that California was the first state in the nation to have its legislature pass a bill to set up a health insurance exchange under health reform.

■ Dr Jaans Sidorov compares and contrasts this Administration's most recent spins with academic writings that "say it ain't so."

■ The eponymous John Goodman's Health Policy Blog reports that the the NCPA [ed: National Center for Policy Analysis] has released an evenhanded consumer’s guide to health care reform, focusing on both new benefits and costs, in a helpful Q&A format.

■ At the Health Affairs Blog, Michael O’Grady and Jennifer Baxendell Young propose an automatic adjustment mechanism in which federal Medicaid financing would increase for states suffering economic hardship, without the need for special Congressional legislation. Left unanswered: why only Michael's picture is on the post.

■ The Health Business Blog's David Williams interviews one of my favorite med-bloggers: Dr Evan Falchuk. What makes him a fave? Here's a sample: "We connect with people because we’re talking about real stuff." Trust me, this guy is important.

■ And finally, our own Bob Vineyard puts the smackdown on all the "wonderful" changes promised by ObamaCare©, including the fact that we now have fewer choices at higher costs.

That wraps up this week's episode of Health Wonkery. Please be sure to tune in again on the 16th when Jay's better half, Louise Norris, hosts the next edition.

Mid-Week ObamaCare© Implementation Update

First up (and as previously noted but now confirmed), Aetna will no longer write so-called "child-only" plans. These have been useful in, for example, divorce situations and some group-based scenarios, and are now off the table insofar as Aetna's individual medical plans are concerned. While this may not seem to be a big deal, it's a further erosion in the choices available in the (previously) open market.

This change is effective October 1st for Kentucky and Indiana, and November 1st for Ohio.

If you're tuning in late, these changes are a direct result of ObamaCare©'s careless and destructive assaults on basic risk management principles. For example, the new regs prohibit underwriting on "children" 19 years and under, which, according to the folks at Aetna, "have the potential to significantly increase the cost of premiums and make coverage unaffordable." Quite so.

On the other hand, Medical Mutual is poised to pick up at least a few of Aetna's minors:

"Medical Mutual will continue to accept applications and provide quotes for plans with effective dates of September 23, 2010, through October 31, 2010, for children under the age of 19 (either as a stand-alone product or as part of a family)."

Of course, no one really knows what's going to happen going forward from October. As the folks at MMO told us in email, "the Company reserves the right to withhold final approval based on clarification of state and federal regulations on individual plans or not issue a policy at all."

How's that for Hope and Change?

UPDATE: And this just in from United Healthcare's Golden Rule:

"In previous communications, we had informed you of an impending change to the coverage effective date that would take place on September 1, 2010. Due to broker feedback, this date has been moved to September 6, 2010."

Interesting that they received, and acceded to, what must have been fairly intense pressure from agents.

So beginning with new applications received on or after next Monday:

"Coverage effective dates for Golden Rule renewable health plans will be the later of 30 days after an application is received or the date requested by the customer (but no greater than 60 days)."

Glad they cleared that up.

Health Insurance Bridge to Nowhere

The folks in Washington that gave us the "bridge to nowhere" have done it again, this time with health insurance. ERRP (Early Retirement Reinsurance Program) as announced by HHS is supposed to make it easier for employers to provide health insurance to early retirees. Congress authorized $5 billion of money they did not have to fund this program until 2014.

Most expect that will not be enough to support the program, but then, what else is new? According to Sunshine News:

Sixty-nine Florida businesses and government entities have been accepted into a new federal program designed to help employers and unions maintain health coverage for early retirees not yet eligible for Medicare.

The Early Retiree Reinsurance Program is designed to be a $5 billion bridge to the new federally mandated health insurance exchanges that begin in 2014.

But U.S. Rep. Bill Posey said the program looks more like a shell game, and it could come up short financially.

Rep. Posey is not the only one with this concern.

"The timing of this announcement by the administration is interesting because earlier this month Medicare trustees issued a report noting on page 183 that the new health-care law will result in nearly 6 million retirees losing their prescription drug coverage from their former employers -- a fact that went largely unreported," said Posey, R-Cocoa.

Posey added, "Nowhere in today’s HHS release is there a reference to HHS’ own warning to retirees that this program is largely unfunded -- by perhaps tens of billions of dollars.

Probably just an oversight . . .

The White House said immediate action was needed to bridge the health-care gap for early retirees, noting that the percentage of large firms providing retiree coverage dropped from 66 percent in 1988 to 29 percent in 2009.

Does the White House actually believe they can magically reverse a trend of the last 20 years when they can't reverse the unemployment and foreclosure trend of the last 2 years? Or do they only care if the voters believe this garbage?

The folks at EBRI, who have a pretty good handle on health insurance costs, have estimated the money for ERRP will run out in 2 years.

Just another stupid government trick from the folks who brought you Obamacrap.