Mid-week update

Yesterday, the Office of Personnel Management announced a major organization which involves the creation of five new branches to replace seven divisions. Responsibility for the FEHB Program will rest with the Retirement and Benefits branch, led by Deputy Associate Director Kathy McGettigan.

Also yesterday, the Centers for Medicare and Medicaid Services announced that

Nominal health spending in the United States grew 4.4 percent in 2008, to $2.3 trillion or $7,681 per person. This was the slowest rate of growth since the Centers for Medicare & Medicaid Services started officially tracking expenditures in 1960. Despite slower growth, however, health care spending continued to outpace overall nominal economic growth, which grew by 2.6 percent in 2008 as measured by the Gross Domestic Product (GDP). The findings are included in a report by CMS’ Office of the Actuary, released today in the health policy journal Health Affairs.

“This report contains some welcome news and yet another warning sign,” said Jonathan Blum, director of CMS’ Center for Medicare Management. “Health care spending as a percentage of GDP is rising at an unsustainable rate. It is clear that we need health insurance reform now.”

The 4.4 percent growth in 2008 was down from 6.0 percent in 2007, as spending slowed for nearly all health care goods and services, particularly for hospitals.

Speaking of health insurance reform, the House and Senate leadership have begun meeting with the White House to hammer out a modified version of the Senate bill that would be acceptable to a House majority and sixty Senators. Reuters reports that Speaker Pelosi thinks that the negotiators are very close to the finish line. The LA Times is reporting tonight that the President is pushing for the 40% excise tax on so-called Cadillac plans in the Senate bill. The Wall Street Journal is reporting that the President also favors the more generous premium subsidies for lower income Americans in the House bill. In return, the parties may stick with the OPM administered multi state health plans in the health insurance exchanges rather than a public plan option.

Alan Sloan of Fortune Magazine explains what's wrong with the excise tax.

The problem is that they define "Cadillac" not by the benefits a plan delivers but by how much a plan costs. But as any insurance maven will tell you, costs depend more on the people being covered (old, sick, or both?) and location (high-cost New York or low-cost Montana?) than on the level of benefits. "High-cost plans aren't necessarily generous plans," says Beth Umland, director of research for health and benefits for the Mercer consulting firm.

Inside Health Reform reports about ongoing discussions over modifications to the 40% excise tax that would better focus the assessment. Good luck with that.