Sunday, August 14, 2011

Weekend Update

Congress remains in recess. The U.S. Court of Appeals for the Eleventh Circuit created a split in the circuits by deciding that the Affordable Healthcare Act's individual mandate is unconstitutional as discussed at the Scotusblog. That blog points out that the the U.S. Supreme Court already has been asked to review the U.S. Court of Appeals for the Sixth Circuit's opinion unholding that provision's constitutionality (No. 11-117). Consequently, the odds appears good that the Supreme Court will rule on the issue before the 2012 Presidential election.

The Washington Post reports that "Unions reacted furiously Friday to a proposal by the Postal Service to lay off 120,000 workers by breaking labor contracts and to shift workers out of the federal employee health and retirement plans into cheaper alternatives." (The reaction is understandable.) The Post also has provided a link to the white paper discussing the Postal Service's vision for withdrawing from the FEHB Program. The FEHBlog seriously doubts that the Postal Service successfully will create a cheaper alternative to the FEHBP.

Why? It's the demographics. Both the FEHBP and the Postal Service have older work forces and large cadres of annuitants (over 40% of the groups). The annuitants break down into three subgroups-- early retirees (before age 65) who use more health care services than younger employees (those under 50), retirees over 65 with Medicare (Medicare Part A and B moderate the cost of this subgroup), and retirees who retired from the federal government or the Postal Service before 1983 and are not eligible for Medicare (this subgroup is the most expensive by far).

The FEHBP, utilizing group health insurance principles, successfully pools all of the employees and retirees together.  According to the white paper, the Postal Service proposes to break them out into three groups (without mentioning the pre-1983 retirees).

On Friday, the Affordable Care Act regulators issued another set of proposed rules intended to help states establish  the health insurance exchanges that will become operational in 2014. Business Insurance reports that the employer community is encouraged by the Internal Revenue Service's announcement that "it will develop new rules that will make it easier for employers to determine if their health care plans are 'affordable' and exempt from a stiff financial penalty mandated by the health care reform law."

Medcity News included a column by Dr. John Halamka from Harvard discussing why the healthcare industry has been slow to automate its processes. Dr. Halamka alludes to the key obstacle in the FEHBlog's view -- HIPAA. HIPAA was enacted almost 15 years ago and the HHS Department still has not issued all of the electronic transactions standards that Congress contemplated in 1996. Law and technology simply do not mix. Technology is flexible while the law is not. Moreover, Congress required only one side of the transaction -- the health plans -- to implement the standards. The approach of if you build it they will come only worked in a movie. (Congress later modified the approach to require larger providers to submit transactions electronically to Medicare). But the FEHBlog appreciates the fact that this is one horse that is unlikely to be lead back into the barn particularly as Congress doubled down with the HIPAA changes in the HITECH Act and the Affordable Care Act.

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