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Health Care Reform Memo: July 30, 2012

Deloitte Center for Health Solutions publication

The health care reform memos are issued on a weekly basis, highlighting news from the previous week's activities in the administration and implications for the C-suite and various stakeholder groups.

My take: why the U.S. must address unsustainable health costs and declining insurance coverage

From Paul Keckley, Executive Director, Deloitte Center for Health Solutions

Milton Friedman, the University of Chicago Nobel economist once said, “Only a crisis—actual or perceived—produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.”

That crisis is health costs. They’re not sustainable. Per the National Health Expenditures Survey, they increased 7 percent per year in the past decade, and 6 percent annual growth is expected in the next (per the Congressional Budget Office [CBO]). But the costs don’t hit everyone equally: employers and consumers are hit hardest. Here’s how:

When an employer provides health insurance, the company marks up the goods and services they sell to cover their health costs. Individuals and companies that purchase these services pay health costs that are buried in their prices. And in many industries, wage increases are lower than what otherwise might have been paid since health coverage is more expensive and seen as valuable by employees.

And consumers pay as well: Medicaid funding is passed through in state income, property, and estate taxes; Medicare funding is paid for by deductions from paychecks for those employed, matched by employers. Even those without coverage pay part of the tab in the prices for their food and essentials.

But not every employer provides health insurance, and some consumers pay only for costs passed through in the stuff they buy—bypassing payroll deductions, insurance premiums, and co-payments altogether. In fact, from 2000 to 2009, the numbers of employers offering health insurance benefits to their employees dropped from 70 percent to 60 percent as a result of health costs. And our 2012 Deloitte Survey of U.S. Employers estimates 9 percent of employers are likely to drop coverage in the next decade, potentially costing 3 percent of the 160 million covered to lose it—that’s 4.8 million. Our survey says employers want to maintain coverage for their employees, but increasingly smaller companies are especially unable to due to costs.

The Affordable Care Act (ACA) requires employers with more than 50 full- time employees to pay a $2,000/employee penalty if they don’t provide insurance coverage. And it requires states to set up health insurance exchanges (HIXs) to provide affordable coverage for individuals and small employers (up to ten employees) by January 2014, and open the exchange to everyone else after 2016 if it chooses (see Appendix for Exhibit A: Major provisions of the ACA impacting employers and Exhibit B: Employer-sponsored insurance glossary).

In the past decade, insurance premiums for companies and individuals have increased at triple the rate of wages and inflation. Why the difference? Because employer and individual premiums cover health costs for everyone— companies that don’t provide coverage and individuals who do without coverage use the system, and their costs are added to the costs of those with coverage. Complicating matters, Medicare and Medicaid payments to hospitals, doctors, and drug and device manufacturers do not cover costs. Thus, employers and individuals with commercial coverage pick up the difference in their premiums as well.

I don’t like the notion of “free-riders”—sounds like companies and individuals that willfully go without coverage do so because they want to. It’s not that nor is it about the ACA. It’s about costs. And for employers, especially smaller employers, it’s about the ability to compete for talent.

I am firmly convinced we can reduce costs and simultaneously improve safety and outcomes, and that the funds from these efforts can cover the burgeoning costs for the insurables (9 million) and increase coverage for others without insurance. But it means all parties need to start fresh, setting aside partisan brinksmanship and self-protective agendas of industry stakeholders to chart a new course. Everything on the table, and every idea thoughtfully assessed and considered. The group most essential to that conversation: employers.

Per our survey, they see the value to their companies and in the communities of employee health coverage and a vibrant health system. But they don’t have the patience to wait until its costs are under control, and they’re increasingly unwilling to pay for employers that don’t provide coverage and individuals who can afford coverage but go without.

In the Post World War II era, the War Labor Board implemented wage controls to help stabilize the workforce, but allowed fringe benefits like health insurance coverage costs not to count as wages. In the decade that followed, enrollment in employer-sponsored health insurance coverage increased from 20 million to 140 million. It stands at 159 million today. It’s time to address health costs lest the number drop dramatically.

Paul Keckely

Paul Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutions

P.S. Here are highlights of two recent surveys. The notable similarities and contrasts between the views of employers and consumers are clear.

2012 Deloitte Survey of U.S. Employers: concern about health costs drives employer coverage decisions

Between February and April, Deloitte surveyed 560 employers with 50 or more employees asking 32 questions to senior executives in each. Highlights:

Employers are concerned about health costs. Most believe the system is expensive, wasteful, and inefficient: 35 percent grade its performance as an “A” or a “B,” while 64 percent give it a “C,” “D,” or “F.” Grades vary by company position with twice as many Owners/CEOs/Presidents (six in ten) judging system performance as an “A” or a “B” than do benefits management executives.

Despite its costs, most companies that provide coverage wish to continue: 9 percent of companies (representing 3 percent of the workforce) anticipate dropping coverage in the next one to three years, versus 81 percent of companies (64 percent of workforce) who plan to continue and 10 percent that are not sure. Larger companies are less likely to drop coverage than smaller. Cost sharing with employees and increased investment in wellness programs are priorities for employers who offer coverage seeking to control their costs and manage their workforce more effectively.

Employers believe they have a “good” understanding of the ACA, but many elements of the ACA are unfamiliar to most. Most have a general sense that the law will not lower costs long-term, and many feel unprepared to implement its provisions. HR professionals more so than the C-Suite. Executives from mid-sized and larger firms are more likely to feel as if they understand the ACA well. Familiarity was highest for the individual mandate (72 percent), employer penalties for not offering benefits (66 percent), essential benefits (53 percent), and HIXs (45 percent). By contrast, most are unfamiliar with bundled payments, accountable care and other features. Employers do not believe ACA will lower costs. Four in ten mid-sized and larger firms feel “well-prepared” to implement the provisions of the ACA whereas only one-fourth of the smallest firms feel this way.

To download the full report, click here.

2012 Survey of U.S. Health Care Consumers: satisfaction with the system low and anxiety about health costs high

Per the 2012 Survey of U.S. Health Care Consumers: adults with employer-sponsored insurance give the health care system lower ratings and are less satisfied with its performance than those covered by Medicare, Medicaid, and individual policy holders. Insecurity about health costs is widespread: one in five with employer- sponsored coverage feels unprepared to handle health costs long-term—below Medicaid and uninsured views but similar to Medicare and individual purchasers:

    Insurance Status Sub-groups of Insured
Total Population Insured Uninsured Direct Purchase Employer Medicare Medicaid Other
Question: Using a typical report card scale with grades of A, B, C, D, and F, how would you grade the U.S. health care system on getting the best value for the money spent on health care?
Favorable grade ("A" or "B") 25% 27% 16% 32% 23% 34% 32% 41%
Average grade ("C") 28% 28% 24% 24% 28% 31% 27% 22%
Unfavorable grade ("D" or "F") 44% 41% 53% 41% 46% 33% 34% 33%
Question: Using a typical report card scale with grades of A, B, C, D, and F, how would you grade the overall performance of the U.S. health care system?
Favorable grade ("A" or "B") 34% 38% 21% 39% 33% 48% 43% 53%
Average grade ("C") 39% 39% 37% 35% 43% 35% 36% 23%
Unfavorable grade ("D" or "F") 24% 21% 37% 24% 23% 16% 19% 19%
Question: How satisfied are you with the performance of the U.S. health care system?
Not satisfied (1, 2, or 3 on a 10-point scale) 26% 22% 41% 22% 24% 17% 19% 17%
Satisfied (8, 9, or 10 on a 10 -point scale) 22% 25% 13% 28% 19% 35% 27% 39%
Question: The U.S. health care system currently spends about $2.7 trillion on health care, almost $9,000 per person per year. In your opinion, what percentage, if any, of total money spent on health care is wasted?
More or less than half
50 – 100% 62% 61% 69% 64% 65% 55% 50% 52%
0 – 49% 38% 39% 31% 36% 35% 45% 50% 48%
67 – 100% 33% 31% 41% 32% 34% 25% 24% 28%
34 – 66% 45% 46% 42% 46% 46% 49% 43% 41%
0 – 33% 22% 23% 18% 22% 20% 26% 33% 31%
Question: Which of the following do you think cause the most money to be wasted?
Total who believe money spent on health care is wasted
Fraud and abuse in the health care payment/ reimbursement system 69% 70% 64% 65% 69% 75% 69% 60%
Individuals not taking enough responsibility for their own health and leading unhealthy lifestyles 49% 51% 39% 47% 53% 53% 41% 39%
Duplication of tests and procedures because physicians don't share patient health information with each other 38% 37% 41% 29% 37% 35% 45% 45%
Doctors providing more services than necessary and/or refusing to treat high-risk patients to avoid possibly being sued 34% 33% 38% 33% 33% 30% 37% 42%
Question: To what extent do you feel your household is financially prepared to handle future health care costs?
Not prepared (1, 2, or 3 on a 10-point scale) 32% 25% 60% 18% 22% 23% 50% 22%
Prepared (8, 9, or 10 on a 10-point scale) 17% 20% 5% 23% 20% 27% 8% 22%

Source: 2012 Survey of U.S. Health Care Consumers, Deloitte Center for Health Solutions.

Employers vs. consumers: comparison of survey results

The 2012 Deloitte Surveys of U.S. Employers (July 2012) and of U.S. Consumers (June 2012) provides a comparison between perceptions of the U.S. health system: they are similar except for sensitivity to costs which is high for both but higher among employers:

  Employers Consumers
Health care system performance report card:
Percent grading performance as an “A” or “B”
35% 34%
Favorable views center on:
Percent grading “A” or “B” on various dimensions
Medical innovation (69%)
Access to services (53%)
Ease navigating system (29%)
Medical innovation (61%)
Up-to-date information technology (56%)
Meeting needs of insured (54%)
Unfavorable views center on:
Percentage who believe each cost driver has a major influence on overall health care costs
Hospital costs (80%)
Inefficiencies (68%)
Unhealthy lifestyles (67%)
Hospital costs (59%)
Fraud in the system (55%)
Insurance company administrative costs (52%)
Views on health care reform:
Percent who believe health reform law is…
A good start (30%)
A step in the wrong direction (59%)
Don’t know/no opinion (11%)
A good start (38%)
A step in the wrong direction (29%)
Don’t know/no opinion

Sources: 2012 Deloitte Survey of U.S. Employers, 2012 Survey of U.S. Health Care Consumers, Deloitte Center for Health Solutions

Implementation update

CBO: Supreme Court ruling means 3 million fewer insured, $84 billion saved

The CBO report released Tuesday concluded that:

  • The Supreme Court’s ruling that states have the option to expand their Medicaid program eligibility to 138 percent of the federal poverty level (FPL) means 6 million fewer are likely to be enrolled in Medicaid programs where states elect not to expand. Three million of these will be eligible for federal subsidies to purchase insurance on the health exchanges since they make between 100 percent and 138 percent of the FPL ($11,170 for an individual in 2012).
  • The federal government will save $289 billion/ten years for Medicaid expansion payments to states that delay/opt not to expand their programs, but spend $210 billion/ten years for subsidies.
  • ACA will cost $1,168 billion to implement through 2022—$84 billion lower than prior estimate.
  • Full repeal of ACA would increase the deficit $109 billion since excise taxes (drug manufacturers, medical device, health insurance) and Medicare market basket concessions to providers ($155 billion/ten years) would be reduced/eliminated.

Hospital requirements for tax exemption focus on transparency, efforts to collect from uninsured

Per ACA and recent guidance from the U.S. Department of Health and Human Services (HHS), tax exempt hospitals must satisfy four rules to be deemed tax exempt: they must publicize financial aid policies, charges for services for persons in need, and policies about collecting medical bills; they must also conduct a Community needs assessment every three years. Of special concern to regulators are “extraordinary” efforts to collect from those without coverage.

Colorado District Court throws out contraception requirement for private, non-religious employer

Friday, Colorado District Judge John L. Kane granted an injunction preventing HHS from enforcing the ACA contraception mandate on a local company that is not a religious organization. The rule, effective August 1, would require that most employers provide birth control coverage as essential health benefit with no co-pay in their employee health plan. The district court opinion stated a clear and present need to prevent “irreparable harm” on the plaintiff; the ruling does not block “enforcement of the preventive care coverage mandate against any other party.”

Reactions: HHS Secretary Kathleen Sebelius: “This lawsuit was not brought by a religious organization. Rather, it was brought by a for-profit commercial enterprise whose purpose is to sell HVAC equipment. We are confident that as this case moves through the courts, the policy that most health insurance plans cover contraception will be upheld.”

Mitt Romney: “Today’s injunction preventing the federal government from forcing one family business from having to choose between keeping its doors open and violating its faith is a step in the right direction. But it is only a step, not the end of the struggle. We must ensure that the same freedom to live according to one’s faith is available to all Americans.”

Related: Wednesday, the Thomas More Law Center filed an emergency motion for a temporary restraining order requesting Federal District Judge Robert Cleland of the Eastern District of Michigan stop the new contraceptive coverage requirement. The Christian public interest law firm challenges the constitutionality of the HHS Mandate under the First Amendment rights to the Free Exercise of Religion and Free Speech and the Establishment Clause.

Note: the Thomas More Law Center previously filed a lawsuit against the administration challenging the constitutionality of the individual mandate provision of the ACA—subsequently dismissed in District court and the 6th circuit court of appeals.

AIDS activists concerned about Medicaid expansion option granted states by Supreme Court

Last week, more than 23,000 delegates from more than 195 countries convened for the International AIDS Conference in Washington, DC. Assistant HHS Secretary Howard Koh outlined the goals of the National HIV/AIDS strategy that include: reducing new infections by 25 percent and increasing access to professional care within three months of a new diagnosis from 65 percent to 85 percent.

A major focus was the Supreme Court decision making Medicaid expansion optional for states. Julie Scofield, executive director of the National Alliance of State and Territorial AIDS Directors (NASTAD) stated: “The extension of Medicaid coverage to all people up to 133 percent of poverty without discrimination is perhaps the single biggest thing that can be done to push the National HIV/AIDS Strategy forward.” A majority of existing state Medicaid programs do not cover single adults, many of which have the highest prevalence of HIV cases.

CCIIO: exchange guidance to be released this summer

Friday, speaking at the Alliance for Health Reform forum on HIXs, interim director of the Center for Consumer Information & Insurance Oversight (CCIIO) Mike Hash advised that additional guidance would be available later this summer. The guidance will include further detail on the level of minimum health benefits that qualified health plans must offer and operational responsibilities for state and federally operated exchanges.

House introduces new menu labeling legislation, changes ACA requirement

Section 4205 of the ACA amended U.S Food and Drug Administration (FDA) Section 403 of the Federal Food, Drug, and Cosmetic Act to require any chain with 20 or more locations and whose primary business is selling food to display calorie counts on menus and menu boards for all food items for sale. Last week, Representative John Carter (R-TX) introduced the Common Sense Nutrition Disclosure Act of 2012 to amend FDA regulations regarding calorie labeling in restaurants, retail food establishments, and vending machines. The new legislation would exclude pre-packaged foods, and would provide alternative approaches to calorie reporting.

Legislative update

Transparency, controls on HHS salaries proposed

Last week, Representatives Joe Barton (R-TX) and Cliff Stearns (R-FL) introduced the HHS Employee Compensation Reform Act of 2012 to amend Title 42, legislation that allows the Environmental Protection Agency (EPA) and HHS to pay certain scientists and engineers salaries higher than allowed under federal pay rates. EPA has 17 and HHS 1,461 employees earning between $155,000 and $200,000/year per the Government Accountability Office (GAO). The bill would limit the use of Title 42 hiring to HHS only, and require that no more than 5 percent of its employees be eligible. In addition, employees would have a salary cap equal to 150 percent of the annual rate of pay for Level I of the executive, and HHS would be required to annually report to Congress the number of Title 42 employees.

Industry update

Government, health plans collaborate to accelerate fraud detection efforts

Thursday, the White House, HHS Secretary Sebelius, and Attorney General Eric Holder announced a partnership involving the Medicare, Medicaid, and private health insurance plans, who will share de-identified claims data to improve detection and prevent payment of fraudulent health care billings. Data will be used to identify “hot-spots” and over time change government’s approach from “pay to chase” to early detection and prevention. Among anticipated outcomes of the effort:

  • Harsher sentences on those who commit health care fraud—including 20-50 percent longer sentences for crimes that involve more than $1 million in losses
  • Better screenings of providers and suppliers of Medicare and Medicaid
  • Suspension of payments those suspected of fraudulent activity

Note: over the last three years, the administration has recovered $10.7 billion in health care fraud—$4.1 billion in 2011.

NFIB, AHIP express concern over excise tax, provisions of ACA

Last week, leaders from America’s Health Insurance Plans (AHIP) and the National Federation of Independent Businesses (NFIB) convened to discuss concerns surrounding several provisions of ACA, notably the excise tax on insurance premiums expected to generate $87 billion over the first decade after implementation. NFIB argued the tax applies unequally to independent businesses, as they are more likely to provide fully-insured plans than the larger firms that self-insure and are exempt from the tax. Additional areas of concern to the two organizations are:

  • Definition for “full-time employee” for independent businesses
  • Tort reform
  • Scope of practice: allowing professionals to work to the top of their licenses and allowing physicians to work on more complex cases
  • Care coordination
  • Anti-fraud efforts
  • Transparent prices
  • Increased access to health savings accounts (HSA) and provisions for concierge medicine

GAO: $2.3B in “meaningful use” Medicare payments in 2011; 16 percent of hospitals received funding as of 2011

Last week, the GAO released updated data about adoption of certified electronic health records (EHRs) per the Health Information Technology for Economic and Clinical Health (HITECH) Act at year end, 2011:

  • 16 percent of eligible hospitals and 9 percent of eligible professionals received Medicare EHR payments in 2011
  • 761 hospitals and 56,585 professionals were awarded $2.3 billion in Medicare EHR payments ranging from $22,300 to $4.4 million (median: $1.7 million)
  • Hospital breakdown: 67 percent urban, 86 percent acute care, 44 percent in the South vs. 12 percent in the Northeast


“If you put the federal government in charge of the Sahara desert, in five years there’d be a shortage of sand."

— Milton Friedman

“The health reform law will raise employers’ insurance costs by up to 2 percent per year as a variety of fees and taxes are collected starting in 2013 and 2014. A special tax to fund research on the effectiveness of treatments will double next year, to $2 times the average number of people covered, and will remain in place till 2018. And, starting in 2014: new fees for the pharmaceutical and medical device industries…likely to be passed along to companies that offer health coverage. Also, 2014, insurers will pay a tax based on market share to help underwrite the law’s provisions. Those costs too will be passed down the line to employers as well as to individuals…Diverse and powerful interests will win out in the end…consumer groups, managed care firms and provider groups. Hospitals, receiving fewer federal dollars for uncompensated care, are especially eager for help from Medicaid to offset costs.”

—The Kiplinger Letter, July 6, 2012

Fact file

  • HSA enrollment: enrollment increased from 11.4 million (2011) to 13.5 million (2012); 13.1 percent of the commercial health insurance market have high-deductible plans; 32 percent of employers with 500 or more employees offered a high-deductible plan in 2011—up 9 percent from 2010. (Source: AHIP, “Health Savings Accounts and Account- Based Health Plans: Research Highlights,” July 2012)
  • Long-term care insurance premiums: for $150/day benefit, $1,524 annual premium (2007) to $2,269 (2012)—increase of 49 percent. (Source: American Association for Long-Term Care Insurance)
  • Percentage of Medicare intense markets: (Source: Bloomberg Analytics)
     Highest Medicare Intensity
    (% of population)
    Lowest Medicare Intensity
    (% of population)
    1. Lauderhill, FL (48.55%)
    2. Channelview, TX (47%)
    3. Miami Gardens, FL (45.94%)
    4. North Miami, FL (43.51%)
    5. Paterson, NJ (43.12%)
    1. Mililani Township, HI (2.37%)
    2. Ashburn, VA (3.80%)
    3. Copperas, Cove, TX (3.82%)
    4. Fort Washington, MD (6.34%)
    5. Watertown, NY (6.37%)
  • Supreme Court decision: 46 percent of U.S. adults believe the Supreme Court’s decision to keep the ACA intact was a good thing, and 41 percent a bad thing. (Source: The New York Times/CBS News Poll, published July 19, 2012)
  • Medical home operating costs: analysis of 669 community health centers designated patient-centered medical homes (PCMHs) by the Health Resources and Services Administration (HRSA)—PCMHs have a 4.6 percent higher operating cost per patient per month, $27,300 per full-time physician equivalent. (Source: Nocon et al, “Association Between Patient-Centered Medical Home Rating and Operating Cost at Federally Funded Health Centers,” The Journal of the American Medical Association [JAMA], July 4, 2012)
  • Cancer treatment cost savings: “Please tell us how much excess cost you could eliminate from cancer treatment without negatively impacting health outcomes?” Practice managers 15.9 percent, oncologists 18 percent, payers 22.7 percent. (Source: Managed Care Oncology Index: Winter 2011, The Zitter Group)
  • Health care employment: health care added 13,000 jobs in June—16 percent of total. For last 12 months, health care added 325,000 jobs: hospitals added 95,400 to 4.8 million, physician offices added 76,700 to 2.4 million. (Source: Bureau of Labor Statistics)
  • Mortality rates for Medicaid expansion: death rates (severity adjusted, income and employment status adjusted) for adults 20-64 decreased 6.1 percent in states which expanded Medicaid programs. (Source: Harvard School of Public Health study, “Mortality and Access to Care among Adults after State Medicaid Expansion,” The New England Journal of Medicine [NEJM], July 25, 2012)
  • Estimated payment cuts in ACA: $77 billion/ten years home health care (Source: National Association for Home Care and Hospice); $29 billion/ten years medical device (Source: AdvaMed).
  • Medicaid funding: federal payments $443.5 billion 2014-2019 for 100 percent of costs (2014-2016), 95 percent of costs (2017-2019), and 90 percent after for expansion for 16 million. (Source: Kaiser, “Medicaid Coverage and Spending in Health Reform: National and State-by-State Results for Adults at or Below 133 percent FPL,” May 2010)


Exhibit A: Major provisions of the ACA impacting employers

Year Provision

Small Business Tax Credits: provided tax credits to small employers with no more than 25 employees and average annual wages of less than $50,000 that provide health insurance for employees. Phase I (2010- 2013): tax credit up to 35% (25% for non-profits) of employer cost

Reinsurance Program for Retiree Coverage: created a temporary reinsurance program for employers providing health insurance coverage to retirees over age 55 who are not eligible for Medicare.

Adult Dependent Coverage to Age 26: extended dependent coverage for adult children up to age 26 for all individual and group policies.

Coverage of Preventive Benefits: required new health plans to provide at a minimum coverage without cost-sharing for preventive services rated A or B by the U.S. Preventive Services Task Force, recommended immunizations, preventive care for infants, children, and adolescents, and additional preventive care and screenings for women.

Automatic enrollment for employees of large employers: required employers with more than 200 employees to automatically enroll new full-time employees in coverage (subject to any waiting period authorized by law) with adequate notice and the opportunity for an employee to opt out of any coverage the individual or employee was automatically enrolled in.


Changes to Tax-Free Savings Accounts: excluded the costs for over-the-counter drugs not prescribed by a doctor from being reimbursed through a Health Reimbursement Account or health Flexible Spending Account (FSA) and from being reimbursed on a tax-free basis through a HSA or Archer Medical Savings Account (MSA). Increased the tax on distributions from a HSA or an Archer MSA that are not used for qualified medical expenses to 20% of the amount used.

Employers disclose value of health benefits on Form W-2: required employers to disclose the value of the benefit provided by the employer for each employee’s health insurance coverage on the employee’s annual Form W- 2.

Employers establish appeals process for coverage and claims determinations: enrollees given notice of available appeals processes and the opportunity to review their file and present evidence as part of the appeals process. Enrollees offered an external appeals process

2012 Employers distribute a uniform summary of benefits and coverage explanation prior to enrollment or re-enrollment
2013 Employers notify employees of existence of the health insurance exchanges and available coverage options
Employer Retiree Coverage Subsidy: eliminates the tax-deduction for employers who receive Medicare Part D retiree drug subsidy payments.
Flexible Spending Account Limits
: limits the amount of contributions to a FSA for medical expenses to $2,500 per year, increased annually by the cost of living adjustment.

Individual Requirement to Have Insurance: requires U.S. citizens and legal residents to have qualifying health coverage

Employer Requirements: assesses a fee of $2,000 per full-time employee, excluding the first 30 employees, on employers with more than 50 employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit. Employers with more than 50 employees that offer coverage but have at least one full-time employee receiving a premium tax credit, will pay the lesser of $3,000 for each employee receiving a premium credit or $2,000 for each full-time employee, excluding the first 30 employees.

Health Insurance Exchanges: creates state-based American Health Benefit Exchanges and Small Business Health Options Program (SHOP) Exchanges, administered by a governmental agency or non-profit organization, through which individuals and small businesses with up to 100 employees can purchase qualified coverage.

Exhibit B: Employer-sponsored insurance glossary

Term Definition
High-deductible A plan that features higher deductibles than traditional insurance plans, can be combined with a HSA or a health reimbursement arrangement to allow you to pay for qualified out-of-pocket medical expenses on a pre-tax basis.
Deductible The amount you must pay for covered care before your health insurance begins to pay.
Health Savings Account (HSA) A MSA available to taxpayers who are enrolled in a High-deductible Health Plan. The funds contributed to the account aren't subject to federal income tax at the time of deposit.
Co-pay A flat dollar amount you must pay for a covered program. For example, you may have to pay a copayment for each covered visit to a primary care doctor.
Premium A monthly payment you make to your insurer to get and keep insurance coverage. Premiums can be paid by employers, unions, employees, or individuals or shared among different payers.
Coinsurance Coinsurance is the percentage of the allowance that you must pay for your care. You may also be responsible for additional amounts.
Cost-sharing The share of costs covered by your insurance that you pay out of your own pocket. This term generally includes deductibles, coinsurance and copayments, or similar charges, but it doesn't include premiums.
Employer Responsibility Under the ACA starting in 2014, if an employer with at least 50 full-time equivalent employees doesn't provide affordable health insurance and an employee uses a tax credit to help pay for insurance through an Exchange, the employer must pay a fee to help cover the cost of the tax credits.
Out-of-Pocket Limit The maximum amount you will have to pay for covered services in a year. Generally, this includes the deductible, coinsurance, and copayments. This definition may vary from plan to plan.


National health reform: What now?

National health reform: What now?

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