Some Employers Could Opt Out of Insurance Market, Raising Others’ Costs
By ROBERT PEAR
WASHINGTON — Federal and state officials and consumer advocates have grown worried that companies with relatively young, healthy employees may opt out of the regularhealth insurance market to avoid the minimum coverage standards in President Obama’s sweeping law, a move that could drive up costs for workers at other companies.
Companies can avoid many standards in the new law by insuring their own employees, rather than signing up with commercial insurers, because Congress did not want to disrupt self-insurance arrangements that were seen as working well for many large employers.
“The new health care law created powerful incentives for smaller employers to self-insure,” said Deborah J. Chollet, a senior fellow at Mathematica Policy Research who has been studying the insurance industry for more than 25 years. “This trend could destabilize small-group insurance markets and erode protections provided by the Affordable Care Act.”
It is not clear how many companies have already self-insured in response to the law or are planning to do so. Federal and state officials do not keep comprehensive statistics on the practice.
Self-insurance was already growing before Mr. Obama signed the law in 2010, making it difficult to know whether the law is responsible for any recent changes. A study by the nonpartisan Employee Benefit Research Institute found that about 59 percent of private sector workers with health coverage were in self-insured plans in 2011, up from 41 percent in 1998.
But experts say the law makes self-insurance more attractive for smaller employers. When companies are self-insured, they assume most of the financial risk of providing health benefits to employees. Instead of paying premiums to insurers, they pay claims filed by employees and health care providers. To avoid huge losses, they often sign up for a special kind of “stop loss” insurance that protects them against very large or unexpected claims, say $50,000 or $100,000 a person.
Such insurance serves as a financial backstop for the employer if, for example, an employee is found to have cancer, needs an organ transplant or has a premature baby requiring intensive care.
Doctors Who Don’t Speak Out
By BARRY MEIER
THE note sent by a doctor to several executives at Johnson & Johnson was blunt: an artificial hip sold by the company was so poorly designed that the company should slow its marketing until it understood why patients were getting hurt.
The doctor, who also worked as a consultant to Johnson & Johnson, wrote the note nearly two years before the company recalled the device in 2010. And it was far from the only early warning those executives got from doctors who were paid consultants. Still, the company’s DePuy orthopedic unit plowed ahead, and those consultants never sounded a public alarm to other doctors, who kept implanting the device.
The memos have recently emerged during the trial of the first of more than 10,000 patient lawsuits brought against Johnson & Johnson over the hip implant device, the Articular Surface Replacement, or A.S.R. The company has insisted that it acted responsibly in determining when to halt its sale. But plaintiffs’ lawyers have offered a portrait of executives who put profits ahead of patients, even scuttling a plan to fix the implant because it cost too much.
It might not be surprising to find that executives acted to protect a company’s bottom line. Still, the Johnson & Johnson episode is also illuminating a broader medical issue: while experts say that doctors have an ethical obligation to warn their peers about bad drugs or medical devices, they often do not do so.
“Questioning the status quo in medicine is not easy,” said Dr. Harlan Krumholz, a professor at Yale School of Medicine.
Physicians may remain silent for a variety of reasons, he and other experts said. They may fear that speaking out could get them sued or believe that a product problem was an anomaly or their fault.
Doctors also have an aversion to reporting. For instance, while the Food and Drug Administration relies on physicians to help monitor product safety by alerting the agency to adverse patient reactions, doctors usually do not make such filings, saying they are too busy for the paperwork.
Uphill Road for Plan to Cut Government’s Drug Costs
By KATIE THOMAS and ROBERT PEAR
In just a handful of words in his State of the Union address, President Obama renewed a proposal to lower the amount that the federal government pays for drugs taken by low-income seniors — a measure that supporters say would save the government more than $150 billion over the next decade. But it faces formidable opposition from Republicans, some Democrats and the powerful pharmaceutical industry, making passage unlikely.
In essence, the plan would require drug companies to provide Medicare with discounts like those they now give to Medicaid. Specifically, the proposal would reduce federal payments for drugs used by low-income Medicare beneficiaries, including nine million people who are eligible for both Medicaid and Medicare.
This group’s drug benefits are now covered by Medicare, not Medicaid, which is significant because the two programs have different rules for how much they pay pharmaceutical companies.
A similar measure was included in the administration’s budget proposal last year, and was introduced during the last Congress. But the drug industry and others who oppose the idea claim it would, in effect, impose government price controls on drugs and reduce the amount of money that pharmaceutical companies have for drug research.
President Obama returned to the idea in Tuesday’s speech, some said, because it is a relatively straightforward proposal that would not directly affect the care that seniors receive.
“I think the attractiveness, politically, is that it’s one of the changes you can make to Medicare that has really pretty significant savings, that doesn’t represent a direct cut in benefits,” said John F. Hoadley, a research professor at the Health Policy Institute at Georgetown University who supports the idea.
Under current law, manufacturers generally must charge Medicaid 23 percent less than the average price they receive for sale of a drug to retail pharmacies. Drug makers must provide additional discounts if a drug’s price rises faster than the rate of inflation. But in Medicare, drug benefits are delivered by private insurers subsidized by the government. The insurers offer coverage in free-standing drug plans and in comprehensive managed care plans, like health maintenance organizations.
The private Medicare plans negotiate prices with drug makers and have secured substantial discounts. But these discounts are smaller — in some cases, much smaller — than what Medicaid gets by law, according to the Department of Health and Human Services.
Previously, people eligible for both Medicaid and Medicare received drug coverage through Medicaid because Medicare generally did not pay for outpatient prescription drugs. But that changed in 2006, when Medicare began covering drugs.
Maine leads most in health reform
But Gov. LePage keeps resisting one of the law's biggest changes: the expansion of Medicaid.
By GLENN ADAMS The Associated Press
AUGUSTA - Though Maine has not embraced all of the components of the federal health care overhaul, the state is still ahead of most others preparing for changes coming next year, an analysis shows.
Maine is one of 11 states, including New Hampshire and Vermont, to approve at least some of the Affordable Care Act's so-called market reforms, according to the Commonwealth Fund, a private group that promotes improved health care.
But Maine has been unwilling to go along with one of the biggest changes under the law: expansion of Medicaid, the federal-state program health care program for low-income families and others. The federal overhaul calls for expanding coverage to people who earn up to 138 percent of the federal poverty line, about $32,000 for a family of four or $15,400 for a single person. The federal government would pay 100 percent of the cost of expansion for the first three years and reduce its share annually after that, eventually down to 90 percent.
Gov. Paul LePage had declared that Maine simply cannot afford the expansion. That has drawn criticism from those who say the state would miss out on the federal subsidies.
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