Insurers and providers react to health care bill

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At 11:54 a.m. March 23, 2010, President Barack Obama signed into law the Senate overhaul of the health insurance industry, which the House of Representatives approved two days earlier.

On March 30, the president signed the final, reconciled version.

Initial reaction from health advocates and community leaders was largely positive.

Wilfred Payne, executive director of the Alma Illery Medical Center in Homewood, said the new law is positive for the Black community because it would prompt more uninsured Black men to get insurance.

 

Beth Heeb, executive director of the Consumer Health Coalition, said she expects the new health care law to “benefit millions of Americans.”

“In Pennsylvania, we expect it will help 143, 600 who are currently denied benefits from pre-existing conditions,” she said. “There are tax credits for families up to 400 percent of the poverty level, $88,200 for a family of four, or $43,320 for an individual. And Medicare eligibility increases to 133 percent of the poverty level.”

Another benefit to consumers, Heeb said, is the requirement that states develop Internet sites posting “fair consumer and uniform policy” documents that would allow people to compare coverages.

“Other benefits include a $250 payment to seniors to cover the prescription drug ‘donut hole’ out-of-pocket expenses. No lifetime benefit limit and no denials for children,” she said.

However, it has since come to light that the health care bill has a glitch that allows children to be denied for pre-existing conditions. As written, the bill states if an insurance company accepts a child with, say, asthma, the insurer cannot exclude inhalers and respiratory care from coverage, as sometimes happens now—but that meant the company could still turn down the child altogether.

Insurers, though, have agreed to honor the obvious intent of the law, until is it amended, which Kathleen Sebelius, U.S. Department of Health and Human Services secretary, said would be done by September.

Reaction from the business community, particularly the health insurance industry, has been less positive. Within two hours of President Obama’s March 23 signing of the new law, Health America announced a rate hike of 38 percent. When called for comment for this story, spokesperson Kendall Marcocci said the company would have no comment on the legislation at this time.

Highmark spokesman Michael Weinstein said the company has always supported broader coverage, but they are still analyzing the bill.

“By and large, we cover pre-existing conditions, but we have concerns on the cost impact, particularly with the individual mandate,” he said. “Our position is that an individual mandate has to be strong and enforceable. Right now, the requirement is too weak. People won’t buy insurance until they’re sick and that will obviously force premiums up.”

The law requires individuals to buy insurance or face a $695 fine, too low said Weinstein to force people to buy a policy.

One local small business said the rates they were given by the three local health insurers were:  Health America’s current rate of $477 per month with no deductible. Highmark’s rate of $519 per month, and UPMC was charging $312.

UPMC, which is both an insurer and a provider of medical services—and the largest employer in Pittsburgh, released only a statement following the law’s initial signing:

“UPMC is encouraged that Congress has taken action to expand access to affordable, high-quality health care.  Much work, however, remains to be done legislatively and in the regulatory arena to achieve the nation’s health care reform goals.  As an integrated system that’s both a payor and provider, UPMC is uniquely positioned and committed to translating health care reform goals into the delivery of high-quality, cost-effective results for the residents of western Pennsylvania.”

Several large employers including Verizon, Caterpillar, John Deere and AT&T released projections that said compliance with the new health care law would cost hundreds of millions. Deere said its cost would be $150 million this year, Caterpillar expects a charge of $100 million in the first quarter alone, and AT&T said it would record a $1 billion cost.

In addition to those costs, manufacturers of medical equipment also face a new 2.3 percent tax on revenue.  The law’s supporters said the higher number of covered individuals would mean more sales and would offset the new charge. Mark Leahey, president and CEO of the Medical Device Manufacturers Association, said that was not the case in Massachusetts, which enacted universal care four years ago.

He said small companies would be hardest hit.

“The tax is structured based on total revenue of companies,” he said. “The current structure would have a devastating impact on jobs for these companies, R&D budgets and the ability to bring new therapies to the table. If the issue isn’t resolved, companies will move overseas or dry up.”

Bill Hawkins, chairman and CEO of Medtronic, which makes insulin pumps among other such devices, and which has a local office, said last week the new law could force 1,000 layoffs. The company has since modified its position, releasing a statement March 29 that said:

“The impact of the tax, we estimate, will be roughly $150 to $200 million on Medtronic annually beginning in 2013. We have no immediate plans to eliminate jobs at Medtronic as a result of the device tax or health care reform.”

(Send comments to cmorrow @newpittsburghcourier.com.)

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