Advisor role in exchanges causes clash | LifeHealthPro

Advisor role in exchanges causes clash | LifeHealthPro.

CareFirst to give $8.5 million in grants to safety-net clinics

CareFirst to give $8.5 million in grants to safety-net clinics
By Lena H. Sun, Washington Post, February 28

CareFirst BlueCross Blue­Shield, the largest private insurer in the Washington region, plans to announce Tuesday that it will give $8.5 million to a dozen safety-net clinics to help them use a coordinated primary-care approach to treat their most vulnerable patients, executives said.

Over the next three years, the funded programs are expected to treat as many as 66,000 patients with costly chronic illnesses such as diabetes, heart disease and high blood pressure. The clinics are in Maryland, Virginia and the District.

The initiative expands on an approach known as the patient-centered medical home, which is being tested in dozens of public and private experiments across the country as part of the health-care overhaul. Federal policymakers are watching closely to see whether the strategy can improve care and reduce costs.

Instead of doctors waiting to see patients mostly when they have a specific problem, a team of doctors, nurses and other staff members aims to take care of the whole person on a continuing basis, with an emphasis on prevention and comprehensive care, often targeting the sickest patients. The strategy is expected to translate into better care and fewer emergency visits, hospital stays and trips to specialists, clinic officials said.

Many of the experiments are taking place in privately insured networks. CareFirst, with 3.4 million members, has been conducting one of the largest of its kind in the Washington area since January 2011. About 3,100 doctors, or 81 percent of the region’s actively practicing primary-care physicians, are participating in the program, according to Chet Burrell, CareFirst’s chief executive.

The program uses a team approach and relies on a host of financial incentives to encourage doctors to increase the emphasis on helping their sickest patients. Doctors who join the program receive a 12 percent increase in their insurance reimbursements, $200 for each detailed care plan they set up for a patient, and additional fees for improving quality and reducing overall cost.

In the initiative to be announced Tuesday, CareFirst will provide grants to the safety-net clinics to jump-start their own programs. CareFirst will also give technical support and guidance on electronic health record systems, clinic officials said.

Clinics were asked to submit proposals and were chosen based on how well they could coordinate care for the most needy patients.

“We’re not paying for the care, we’re paying for the coordination,” Burrell said.

One of the recipients is the Arlington Free Clinic, which provides free health care to about 1,600 low-income, uninsured residents. The clinic will receive about $350,000 over three years, roughly a third of the total cost of the program, said Nancy Sanger Palleson, the clinic’s chief executive.

The clinic will use the money to hire additional personnel and upgrade electronic medical records to allow the staff to better track the care of “the sickest of the sick” — about 160 people — she said.

For example, medical assistants could make sure the necessary bloodwork is completed before a patient’s appointment with a specialist, Palleson said. “Otherwise it would be a wasted trip for her and for the physician, who could be seeing someone else.”

With 140 affiliated doctors providing their services free, she said, “the more efficiently we can use them, the more people we will be able to see down the road.”

And the need appears to be growing. The clinic takes new patients through a monthly lottery system. Typically, about 120 show up for the lottery, and the clinic takes 25 of them, Palleson said — but last week, for the first time, 220 people showed up. “We could only take 25,” she said.

The other clinics include Mary’s Center and Unity Health Care in the District, the Spanish Catholic Center in D.C. and Maryland, and Community Clinic Inc. and partner Greater Baden Medical Services in Montgomery County and Prince George’s County.

Experts say the key will be whether the clinics can sustain the programs over time. “The kind of people who have complex medical problems as well as social and economic issues might be the people who would benefit most by this kind of initiative,” said Judy Feder, a health-care expert at the Urban Institute.

Those patients are most likely to “fall prey to the inappropriate use of health care, whether on the back end with preventable high-cost hospital admissions or on the front end with insufficient primary care,” she said.

Leveling the playing field will be even more important in the run-up to 2014, when primary-care doctors will be in greater demand as insurance coverage expands to millions more Americans, experts said.

Maryland hospitals to share patient data

Maryland hospitals to share patient data

By Lena H. Sun, Washington Post, Published: February 16

Maryland’s 46 acute-care hospitals will soon be able to share basic patient information among themselves and with credentialed doctors, a key step that health officials and clinicians say will improve patient care and cut costs.

The development, announced at a news conference Friday at Holy Cross Hospital in Silver Spring, is being led by the Maryland’s health information exchange, a statewide system that is working to promote the secure electronic sharing of health information among approved doctors’ offices, hospitals and other health organizations.

Maryland officials have been among the most aggressive in pushing for the sharing of health information, an important piece of the federal health-care overhaul. Patients have long been frustrated by the inability of doctors at one facility to access records about a visit to another hospital. But changing the process has been slow for a variety of reasons, including reluctance by hospitals and others to exchange information with competitors.

The goal is to “help ensure that providers have the right information about the right patient at the right time so we can reduce costs and improve care for all Marylanders,” Lt. Gov. Anthony G. Brown (D) said in a statement.

The level of data available for sharing is rolling out in stages.

All of Maryland’s acute-care hospitals are providing basic patient demographic information in real time to the exchange. But it will be 18 to 24 months before the hospitals’ users are fully trained to use the shared data. This includes when any patient in the state is admitted, discharged or transferred, officials said.

Eventually, all hospitals would share much more detailed clinical data, such as lab reports, radiology reports (but not images), and clinical documents such as hospital discharge summaries and specialist reports, said Scott Afzal, who heads the arm of the nonprofit Chesapeake Regional Information System for Our Patients (CRISP) that is in charge of running the state’s health information exchange.

Four of the five hospitals in Montgomery County already provide the most detailed clinical data to the exchange. But only two — Suburban and Holy Cross — have received the extensive training to allow their users to access patient data from other hospitals, he said.

At Suburban, emergency room doctors say the additional information has allowed doctors to improve care.

In an interview posted on the CRISP Web site, Barton Leonard, who heads Suburban’s emergency department, said doctors can even access the operation notes from a surgery that took place two hours earlier.

“No more waiting on faxes or sitting on the phone waiting to talk to someone in medical records,” Leonard said.

In one case in December, Leonard said he was treating a patient with a severe infection and was able to look up his previous blood and urine cultures at another hospital and quickly get him on the right antibiotic.

Efforts in the District and Northern Virginia have lagged farther behind that of Maryland. In the District, an effort to create a health information exchange by the D.C. Primary Care Association, a private group, was suspended because of a lack of funding. The District government is working to create another exchange. In Northern Virginia, a coordinating organization exists, but an exchange has not been set up.

Kevin Wrege, Esq.

Founder & President

Pulse Issues & Advocacy LLC

Office: 202-625-1787

Mobile: 202-253-4929

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

United Medical Center seeks $15 million from the D.C. government

United Medical Center seeks $15 million from the D.C. government

By Tim Craig, Washington Post, Thursday, February 16, 8:47 PM

United Medical Center is requesting an additional $15 million from D.C. taxpayers to help finance a turnaround, likely renewing debate about whether the city should own a cash-starved hospital.

After its previous owners defaulted on its obligations to the city, the District took over the Ward 8 hospital in December 2010 until a new operator could be found. But the city government is divided over whether the city should try to quickly unload the hospital to a private buyer or keep it to try to bolster its quality — and its price tag.

With the latter camp prevailing so far, the hospital’s board of directors wrote Mayor Vincent C. Gray (D), requesting additional funds to help United Medical rebrand its mission by shifting to “ambulatory and physician-centric care.’’ The hospital, formerly known as Greater Southeast Medical Center, specializes in traditional acute care.

The board is asking the District for an additional $9 million in direct funding, as well as to forgive a $6 million loan. The board will also seek $5 million in federal funds.

“The Board, hospital management, and [the Office of the Chief Financial Officer] leadership met to collaboratively determine the financial support needed to maintain hospital operations and fund the restructuring effort,” wrote Bishop C. Matthews Hudson, chairman of the board. “We came to a consensus that $15 million will be required.”

Gray said in a statement that he would “carefully review” the request “to determine the best response for the benefit of UMC, the District residents it services, and the city as a whole.”

Serving a limited number of clients with private insurance, the hospital has been plagued by financial problems for years. But as the only hospital east of the Anacostia River, D.C. Council member David A. Catania (I-At Large) and other city leaders have repeatedly stepped in to prevent it from closing.

The District invested $79 million in the hospital in 2007 as part of a deal to keep it from closing by selling it to Specialty Hospitals of America, a for-profit company. Specialty struggled to make it payments, citing low Medicare reimbursement rates. In 2010, the District took over the hospital after Specialty defaulted.

Catania, chairman of the health committee, has become a chief advocate for keeping the hospital under public control.

Chief Financial Officer Natwar M. Gandhi has suggested a quick sale. Although Gray agrees broadly with Gandhi’s concerns, he has signaled that he is willing to give the hospital time to stabilize its finances.

In October, a report by the Department of Health Care Finance recommended that the hospital readjust its mission so it can compete better. Citing the report, Gray then requested that the hospital focus more on ambulatory care before it is put up for sale.

Hudson said in his letter that additional money is needed to work toward Gray’s suggestion, including the hiring of a “turnaround consultant.”

“We are not just asking for money,” Hudson said in a brief interview. “There is a purpose to move the hospital forward.”

Hospital officials note that the facility’s finances have improved since the city takeover, including an estimated $2.5 million profit in the fiscal year that ended Sept. 30.

“If you want to make improvements, you have to invest in capital and . . . this proposal appears to do that,” Catania said through a spokesman, Brendan Williams-Kief.

But the hospital’s request could spark a fierce debate on the D.C. Council.

On Tuesday, Catania got into a profanity-laced shouting match with council member Marion Barry (D-Ward 8) when Barry tried to question Gandhi on the hospital’s finances.

Barry, however, endorsed the turnaround plan on Thursday. “We are not going to let the hospital fail,” he said.

Health insurance exchanges in limbo

Health insurance exchanges in limbo

By Sarah Kliff, Tuesday, February 14, 10:18 AM

Pablo Martinez Monsivais AP Of all the agencies to get spending boost in Monday’s budget, the Center for Medicare and Medicaid Services was among the very largest. The White House proposed a $1 billion bump for the agency, that actually had very little to do with Medicare or Medicaid. Instead, it was largely about health exchanges: the online, insurance marketplaces that are supposed to be the backbone to the Affordable Care Act.

More than $860 million of the proposed $1 billion would go to building a federal exchange, which the Obama administration will set up for states that don’t build marketplaces on their own. The agency needs more implementation funds, officials explained at a Monday press briefing, because the $1 billion appropriated within the law is probably going to run out by the end of the year.

Half “has already been obligated or committed for another purpose,” said CMS official Ellen Murray. “The rest will be used this year.”

There’s little expectation that Congress will actually appropriate the funds the White House has requested, especially when the ask is so big and would pretty much go directly toward health reform implementation. What happens to the federal exchange if Congress turns down the request? Center for Consumer Information and Insurance Oversight director Steve Larsen tells Bloomberg that the government “will work with existing, available funding sources.”

There’s a big question, though, about where those funds are – if they do, indeed, exist. Politico’s J. Lester Feder broke the news last year that while the law allows for “essentially unlimited” funding for states to set up exchanges, it did not appropriate funds for the federal government to do the same. All it provided was a general, $1 billion implementation fund – that’s the one that HHS expects to exhaust by the end of the year.

That federal marketplace will near certainly be needed, as large states like Florida and Louisiana have firmly decided not to set up their own exchanges. Even some states that want to move forward are running into trouble: Just Monday, state legislators in Oregon blocked its marketplace from moving forward.

The uncertainty of where federal exchange funding will come from underscores how much of the health reform law’s fate hangs on the upcoming election. There’s little doubt that the Obama administration will, somewhere, find funds to make sure a federal exchange comes online. The marketplace is, after all, essential to making the Affordable Care Act work. Under a President Romney, it’s pretty easy to see those funds not turning up, and throwing a big wrench into the health reform law’s future.

© The Washington Post Company

DC DISB Press Release on $1 Million Federal Rate Review Grant

DISB Awarded $1 Million Federal Grant

(Washington, DC) — Commissioner Gennet Purcell, Esq., of the DC Department of Insurance, Securities and Banking (DISB) announced that the District of Columbia will receive a $1 million federal grant from the US Department of Health and Human Services (HHS) to enhance DISB’s health insurance premium rate program.

The grant announcement, which was made recently by HHS Secretary Kathleen Sebelius, will be used to improve the oversight of proposed health insurance premium increases, take action against insurers seeking unreasonable rate hikes, and ensure consumers receive value for their premium dollars.

“The District of Columbia is extremely grateful to President Barack Obama and Secretary Sebelius for awarding the city with this grant that safeguards our residents from unreasonable health insurance premiums,” said Commissioner Purcell, adding that DISB had submitted the grant application in July. “With this grant, DISB will continue to create a financial-services market that protects residents from excessive rate increases, but also allows us to move forward in modernizing our approaches in reaching the goal of affordable and accessible care for District consumers.”

The Health Insurance Premium Review Grant is one element of a broad effort under the Patient Protection and Affordable Care Act (PPACA) to increase access to affordable health care. A total of $46 million was awarded to 45 states and the District of Columbia. PPACA includes a variety of provisions to promote a high-quality, high-value, health care system for all Americans, and to make the health insurance market more consumer-friendly and transparent. The grant underscored the federal administration’s commitment to work with state regulators; and it was awarded to DISB to make structural changes to its regulatory authority.

In seeking the grant, DISB proposed to use the funding to significantly enhance the agency’s process for the review and approval of rates of health insurers through the use of advanced technology and the hiring of specialized staff. Additionally, the grant will be used to create a uniformed rate filing procedure for all health providers operating in the District of Columbia. Finally, DISB will use the funding to develop procedures and a system to collect and report health insurance rates and trends in health insurance coverage to the HHS Secretary and the public.

“DISB is looking forward to having these tools to ensure the stability of the marketplace, keep costs low, and provide consumers with increased transparency; as well as offer the choices and quality they need to make the best health care decisions for their businesses and families,” Commissioner Purcell added.

For more details on health reform in the District of Columbia, please visit More information about PPACA may be found at

Kevin S. Wrege, Esq.


PULSE Issues & Advocacy LLC

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

Office: 202-625-1787

Mobile: 202-253-4929

AIS Health Business Daily Piece on Federal Rate Review Grants to States/DC

Featured Story, Sept. 1, 2010

Are Rate Review Grants to States a Strategy to Control Premiums or an HHS PR Maneuver?

Reprinted from HEALTH PLAN WEEK, the industry’s leading source of business, financial and regulatory news of health plans, PPOs and POS plans.

By Steve Davis, Managing Editor

HHS on Aug. 16 awarded $46 million in grants to help state regulators police the insurance industry and crack down on unjustified rate hikes. State regulators tell HPW that the money is needed to upgrade infrastructure, enhance data collection systems, hire consultants and actuaries and post rate filings and other consumer information on their websites. But some industry observers, including two former insurance commissioners, contend the grants equate to little more than a publicity campaign to promote the health reform law. Moreover, they say, rising health coverage costs are the direct result of fees demanded by hospitals and other providers, and increased scrutiny of filings will have limited impact on rates.

Kansas Insurance Commissioner Sandy Praeger says her office will use some of the funding to hire a consultant to evaluate its current rate-review process. Her office now has 30 days to review and approve requested rates, but she typically only denies requests if she can demonstrate that they are excessive or discriminatory, she tells HPW. Praeger adds that the funding could provide her office with more resources with which to make such determinations.

“Those grants are going to be very helpful to states during difficult budget times and will give us the capacity to do what we need to do, whether that is providing consumer information and improving transparency, or going through the physical review process,” says Oklahoma Insurance Commissioner Kim Holland. She tells HPW that her office will use some of the funding to hire actuarial consultants to help it comply with the new rate review process and an anticipated increase in rate filing volume.

The District of Columbia and all but five states — Alaska, Georgia, Iowa, Minnesota and Wyoming — applied for and were awarded $1 million each. The grants are the first round of $250 million in funding called for by the health reform law to improve the way states review and approve insurance rate increases. Future grants will be awarded over the next five years. Each state that receives a grant is expected to require insurance companies to report more extensive information through a new, standardized process, which HHS says will help state regulators better evaluate proposed premium increases.

But the grants, which were touted during an HHS press conference, are politically motivated and will do little to protect consumers against rate hikes, says Paul Ginsburg, president of the Washington, D.C.-based Center for Studying Health System Change. The funding, he adds, is an attempt to convince the public that changes to the existing insurance system, as a result of the reform law, are already underway even though key provisions won’t take effect until 2014. He tells HPW that the funding will have little impact on health insurers or the rates they charge.

“The potential to lower rates significantly through rate review is not there, but it polls well to ‘put a cop on the beat.’ Part of it is pressure from those who preferred a single payer approach, who are highly suspicious that private insurers can bring value to health care,” he tells HPW.

Just 26 states have the authority to reject proposed rate increases, and many of them lack the resources to exercise that authority, which has contributed to “unjustified” premium increases in some states, according to HHS.

J. Robert Hunter, former Texas insurance commissioner, agrees that many states don’t have the authority to reject rate hikes, but says some of them simply lack the will to do so. Hunter, who now works with the Consumer Federation of America, warns that state regulators could lose some of their authority to HHS if they don’t get tough on rate hikes. “The only way for the federal folks to get [state regulators] to act is to threaten to take over” if they don’t conduct tougher reviews and keep coverage costs reasonable. “This $1 million carrot is vastly inadequate to do the job,” he adds.

Former Maryland Insurance Commissioner Al Redmer calls the grants a waste of money. “I don’t know of any state insurance administration that does not have some statutory authority to review rates already,” he tells HPW. “Typically state regulators can get what they need from the state legislature. [The grants are] just another attempt to spread federal dollars throughout state bureaucracies throughout the country. It is a [public relations] move.” Redmer is now president of Landmark Insurance and Financial Group and is running as a Republican for a state senate seat.

But Holland says turning to the state lawmakers for help might not be that easy. State legislatures are their “own unique animal” that deal with myriad issues. Moreover, rate review is a complex issue that some state legislatures might not want to tackle. Holland says she doesn’t now have rate approval authority, but says her office has asked health insurers in the state to begin filing rates “and they have been cooperating.” Ultimately the state legislature has to grant the insurance department the authority to conduct rate reviews.

States will be allowed to contribute $18,000 of their grant to the National Association of Insurance Commissioners, and nearly all of the grantees intend to do so, says Praeger. The funding will help NAIC add more capacity to its electronic rate and form filing system and standardize some of its data collection, she says.

Most states intend to use part of the funding to post details about the rate requests on their websites, according to their applications. While such information won’t impact rates, state regulators say it will give the public a better understanding of insurance costs.

Here’s a look at a few states and how they intend to use their funding:

  • Arizona: State regulators check filings in the individual market only for completeness. The additional funding will help the department of insurance improve its review process by hiring an actuarial consultant to review 95% of submissions for compliance, and to make recommendations regarding whether filings are unjustified or excessive.
  • Arkansas: The funding will help create and staff a “consumer-driven advisory council,” improve transparency and communications through an expanded website, and create a Rate Review Center for consumers and issuers.
  • Colorado: In its application, the state said it would use some of the funding to hold web-based town hall meetings and public rate hearings.
  • Illinois: Along with posting filings on its website and conducting public hearings on proposed rate requests, the state will translate web and print health insurance information into Spanish, Polish and Korean.
  • Massachusetts: The state insurance department says it will develop “new analytic tools” to evaluate rates. It also intends to require health insurers to separate claims and administrative data into “standardized buckets,” and develop new models to analyze rate data.
  • Oregon: The state, which now reviews only individual and small-group rate proposals, says it will use some of the federal funding to develop and implement a large-group market rate review process. Much of the grant will be used to examine rates requests and provide information to the public.
  • Wisconsin: Sean Dilweg, Wisconsin’s commissioner of insurance, says his office will use the grant money to improve transparency and consumer education around rate increases, and pay for additional “actuarial resources” that will help review proposed rate hikes and identify trends among health insurers. Some of the funding also might be used in the future to help the department make recommendations on whether a health plan can participate, or continue to participate, in the state’s insurance exchange, which must be operational by 2014 under the reform law.

Kevin S. Wrege, Esq.


PULSE Issues & Advocacy LLC

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

Office: 202-625-1787

Mobile: 202-253-4929

Forbes Piece on the Future of Agents by Merrill Matthews

Let’s hope this one is premature…

Health Insurance Agents, RIP
Merrill Matthews, 08.30.10, 12:00 PM ET

The first casualties of ObamaCare–not counting truth and the trust the public had placed in President Obama to keep his promises–will be health insurance agents. That proud army of tens of thousands of Americans whose calling was to help individuals and employers work through the maze of available health insurance policies to find one that met their clients’ needs.

Democrats pushing ObamaCare, just as Democrats pushing ClintonCare 17 years ago, always saw the demise of health insurance agents as an acceptable, even a desirable, loss.

In November 1993, when then-First Lady Hillary Clinton headed up her own scheme for a government takeover of health care, an agent asked her what would happen to health insurance agents under her plan. The Wall Street Journal quoted Clinton as saying, “I’m assuming anyone as obviously brilliant as you could find something else to market.”

And now that the Clinton vision has finally come to pass in ObamaCare, many of those agents will indeed find something else to market–because they’ll have to.

It’s not like you couldn’t see this train wreck coming. Once the health care reform debate got underway, I began to warn health insurance agents in speeches and on conference calls that when Obama referred to administrative waste, he was talking about them.

Some of them told me they, in conjunction with their primary trade association, the National Association of Health Underwriters, were visiting members of Congress trying to convince the powers that be that agents provided value. That still appears to be NAHU’s basic strategy.

I think those efforts have been pointless. That’s because of what former President George H.W. Bush called “the vision thing.” The vision guiding those who are really driving the reform effort is a country in which people go online and choose from three or four comprehensive health insurance plans. There will be some choices, like the size of deductible. There may even be a few benefit choices. But ObamaCare is about dramatically reducing choices, not expanding them.

Fifty years ago when people’s telephone options were limited to a black landline, they didn’t need an AT&T store filled with trained professionals to help sort through their needs, finances and available plans.

Health insurance options, like phone options, have exploded in the last decade, with all kinds of innovative new plans entering the market–until now. ObamaCare, as Deputy Sheriff Barney Fife might say, is going to nip that in the bud.

With a handful of health insurance options available online, consumers won’t need an agent. Besides, the law’s provision mandating what health insurers must spend on claims, known as a minimum loss ratio–80% of the premiums for small employers and 85% for large employers–will leave little money to pay agent commissions.

Indeed, agents have told me that health insurers in the individual market–where people buy their own policies–have notified agents selling their products that commissions are being cut. Worse yet, some insurers have even warned they may be forced to cut commissions retroactively, depending on the decisions to be made about those minimum loss ratios. Thus, an agent could sell a policy and get a commission for it only to be told later that he has to give some of that money back.

In addition ObamaCare envisions getting most individuals and small employers in the newly created “exchanges,” similar to what Massachusetts implemented in 2006. Those exchanges will make agents’ problems even worse. A colleague of mine recently received an e-mail from an agent who wrote, “Once my employer clients hear how [ObamaCare] all fits together, 100% of them have said that they will cancel their group plans, and have their employees utilize subsidized care via the government exchange.”

Of course, health insurance agents may continue selling other health insurance products, such as long-term care insurance to cover nursing homes and assisted living facilities. Though even there ObamaCare includes the Community Living Assistance Services and Support Act, or CLASS Act (bureaucrats can devote a lot of effort thinking up catchy bill titles; often more consideration, frankly, than they give on the impact of their bills). It’s a poorly designed and woefully underfunded effort to create a new entitlement for long-term care needs.

Agents can also turn to Medicare supplemental coverage, though probably not Medicare Advantage plans, since ObamaCare tries to defund that program. And there are other types of policies that pay cash if a specific disease appears, such as cancer.

And there’s always life insurance, at least until Obama decides that he needs to reform that market also.

Health insurance and health insurance agents are in for a big change. But no need to worry, even in this awful economy. They’ll be able to “find something else to market.” Just ask Hillary Clinton.

Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas.

Kevin S. Wrege, Esq.


PULSE Issues & Advocacy LLC

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

Office: 202-625-1787

Mobile: 202-253-4929

Bloomberg News — Small Biz HC Tax Credit Limited

Focus On Entrepreneurs, August 2010 August 26, 2010, 3:33PM EST text size: TT

Small Businesses Skip the Health-Care Tax Credit

Insurance brokers say response is low because the value of the benefit declines quickly for companies that pay average annual wages of more than $25,000 or employ more than 25 workers

By David Lerman and Liz Smith

Sales are off by 20 percent this year at Image Computer, which repairs printers in suburban Detroit. So President Steve Olis is worried about whether he can continue paying the $71,000 a year it costs him to provide health insurance for his employees.

The Obama Administration’s answer for Olis and other small-business owners: a tax credit of as much as 35 percent of the insurance premiums they pay for employee medical coverage, a signature part of the health-care reform bill signed into law in March. Image Computer, however, doesn’t qualify for the credit because Olis pays his 15 employees an average of $55,600 annually, and companies with average salaries above $50,000 aren’t eligible. “At some point I can’t do this any longer,” Olis says of his rising health-care premiums.

Eager to promote the new small-business tax credit, the government this spring mailed 4 million eligible companies postcards with highlights of the program. The response has been tepid, according to insurance brokers who sell small-group policies. The reason, they argue, is that the credit starts to phase out for companies that pay average annual wages of more than $25,000 or employ more than 25 workers. The value of the benefit declines quickly, so many business owners in high-cost states get no tax break, and those elsewhere often say the credit is too small to make much of a difference. Sales of health plans have gotten “very little traction so far,” says James Stenger, director of business development for BenefitMall, which sells small-group plans in New Jersey.

Stenger says most of his clients pay their workers more than $25,000 a year, so the average tax credit he’s seeing for the few who qualify is about 10 percent of the cost of the policy. That’s less than $200 per worker—not enough to spur many business owners to start providing coverage. Brokers across the country report a similar response. JLBG Health in Warrenville, Ill., contacted 460 small businesses about the tax credit. Roughly 40 percent were eligible, though only seven of those companies qualified for the full benefit. Not one of the 400 New England employers served by Hampstead (N.H.)-based Landmark Benefits is eligible, the broker says. The legislation “is just not doing what we had hoped,” says Steven Selinsky, the incoming president of the National Association of Health Underwriters.

U.S. Small Business Administration chief Karen Mills says complaints about the tax credit are premature. “This is all still in anecdote land,” Mills said in an interview. She maintains that the income cap was needed to keep a lid on the cost of the tax credit and that the people with the greatest need—low-paid workers at the smallest companies—will be able to get coverage. Companies “want to provide health insurance [because] they’re losing good employees when they don’t,” Mills says. “The math says [the program] is likely to be positive.”

One company that has had success selling policies under the program is Blue Cross and Blue Shield of Kansas City, which launched a marketing push to promote the tax credit when the law was enacted. Although less than a quarter of small businesses in the Kansas City area qualify for the credit, the ad campaign paid off. Blue Cross has sold 227 plans to small businesses in the past three months—80 percent more than in a typical three-month period, says Tom Bowser, chief executive officer. Now, Blue Cross affiliates in other states are hoping to replicate the Kansas City marketing strategy—a combination of print ads, radio spots, and direct mail explaining the program’s advantages. The success “is tangible evidence that this legislation is having some effect,” Bowser says, “and we’re cashing in on it.”

The bottom line: Many small businesses can’t take advantage of a tax credit designed to reduce the cost of providing health insurance.

Lerman is a reporter for Bloomberg News. <a href=”mailto:esmith583 is a reporter for Bloomberg News.

Kevin S. Wrege, Esq.


PULSE Issues & Advocacy LLC

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

Office: 202-625-1787

Mobile: 202-253-4929

WSJ Piece on University Health Plans & Nat’l Reform

Big Foot on Campus

Why colleges want a waiver from ObamaCare.

In the movie “Animal House,” the hilariously loathsome Dean Wormer announces a pointless campus crackdown with the classic line, “The time has come for someone to put his foot down. And that foot is me.” Democrats seem to have had a similar inspiration and targeted student health insurance in ObamaCare. Along comes word that the bill “could make it impossible for colleges and universities to continue to offer student health plans.” That’s how the American Council on Education and a dozen other higher-ed lobbies put it in a recent letter to the Obama Administration, warning that the insurance coverage they offer may get junked by ObamaCare’s decrees.

Between 4.5 million to 5.5 million students annually are insured by short-term plans sponsored by their schools, which are tailored to upperclassman who have aged out of their parents’ coverage or to international and graduate students. These plans are very low cost because the benefits are designed for generally healthy young people and often organized around campus health services and academic medical centers.

All of which means these plans aren’t likely to qualify under ObamaCare’s “minimal essential coverage” rules that mandate rich benefit packages, even if colleges have the flexibility to make exceptions for special needs. And given that insurance must now be sold anytime to everyone, colleges may be required to continue to cover students after they’ve graduated—leaving this type of coverage unaffordable.

It doesn’t help that the regulations governing student health plans are as carelessly written as the rest of the bill, and the uncertainty is holding up insurance contracts and plan design for the coming academic year. Not surprisingly, the colleges are asking federal regulators for a blanket ObamaCare waiver. (Can everyone else apply too?)

All of this is no accident. The liberals who wrote the bill despise these campus health plans because they think every plan in the country should be designed in Washington and have been calling for a regulatory crackdown for years. Other Democrats probably had no clue about these rules, even as they voted for a bill that was so large and convoluted that no one could truly understand it. Either way, count this as another of ObamaCare’s really futile and stupid gestures, with many more to come.

Printed in The Wall Street Journal, page A14

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit

Kevin S. Wrege, Esq.


PULSE Issues & Advocacy LLC

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

Office: 202-625-1787

Mobile: 202-253-4929


Get every new post delivered to your Inbox.