Some Small Businesses in Fear after Election

story first appeared in The Wall Street Journal

The results of the presidential election dampened the spirits of many small-business owners who now worry that forthcoming federal policies, including potentially higher taxes and health-care reform, could stunt growth and hiring at their firms.

A November survey from Vistage International Inc. and The Wall Street Journal found a significant drop in optimism compared with the months leading up to the election, as respondents anticipated a worsening economy in 2013.

Julie Sanderson, owner of Vail Condo Rentals, a small business operating with a tight budget, says her main concern is health insurance. She believes that with rates already "sky high," she will be unable to keep her employees if her business costs go up.

The survey's overall confidence index, based on responses of 740 small-business owners, fell to 83.9 from 95.3 in October. That is the lowest in the survey's six-month history.

Specifically, the survey's index of expected economic conditions fell to 77 from 105, a result of 43% of the respondents anticipating worse U.S. conditions in the next 12 months. That is nearly twice as many as October's 23%. The index of business profits also fell to 122 from 135 as only 43% of owners anticipate higher profits in the coming year, down from 50% last month.

Some policies that Mitt Romney had proposed during his campaign were appealing to small-business owners, such as keeping taxes low and repealing President Barack Obama's health-care reform.

Anticipating higher taxes under President Obama, more business owners are preparing cutbacks to their payroll and other overhead expenses. November's employment index fell to 124 from 141 as 16% of owners are planning to reduce staff in the next year, up from 9% in October. And the fixed-investment index fell to 107 from 123, in part because 23% of owners plan to decrease their investment expenditures, up from 14% last month.

Terry Racciato, one business owner, said she was despondent in the days following the election. Ms. Racciato is president of Together We Grow Inc., a pediatric health day-care business for special-needs children in San Diego that she started in 1990.

The top issue for Ms. Racciato is rising health-care costs. She provides benefits to her 52 full-time employees and personally gets coverage through her company's plan. Because she and her husband are now over the age of 60, their deductible and copayment for medical care recently doubled to $37,000 annually. That is money she could have used to bring on another employee, she said.

What's deepening her worry, she said, is that if she opts to drop health benefits to save money, she will, in 2014, have to pay a penalty—a provision that kicks in for companies with 50 or more full-time employees under the federal health-care reform.

She reiterates the fears of Mrs. Sanderson, who fears both her Vail business and her Deer Valley Condo Rentals will be in jeopardy because they operate at low costs. She says keeping vacation rental costs low for her customers is her greatest value, but isn't sure how she'll be able to keep up if her health care costs increase.

Ed Trevis, president and chief executive of Corvalent Corp., an industrial-computer manufacturer in Cedar Park, Texas, says the uncertainty about potential tax hikes is hurting his 50-person firm because he can't plan for the future.

A tax increase on higher-income earners may come as part of an agreement to avoid the so-called fiscal cliff—a series of across-the-board tax hikes and government-spending cuts that will kick in at the beginning of 2013. But Congress has yet to come to a resolution and Mr. Trevis is nervous that any agreement could come down to the last minute and be only temporary.

Global economic conditions are most troubling to William P. Southard, founder and president of DST Controls in Benicia, Calif. Mr. Southard and his 38 employees set up and service computer systems and monitoring panels on five continents.  

More Small Businesses to offer Health Insurance

The Wall Street Journal

The number of small businesses offering health insurance to workers is projected to increase sharply this year, recent data show, a shift that researchers attribute to a tax credit in the health law. Many small businesses, however, remain opposed to the law.

Some small businesses are benefiting from portions of the law, which includes a tax credit beginning this year that covers as much as 35% of a company's insurance premiums.

According to a report by Bernstein Research in New York, the percentage of employers with between three and nine workers and which are offering insurance has increased to 59% this year, up from 46% last year. The report relies on data from a September survey by the nonprofit Kaiser Family Foundation.

A full tax credit is available to employers with 10 or fewer full-time workers and average annual wages of less than $25,000. The credit phases out gradually and has a cap at employers with 25 workers and average annual wages of $50,000. The White House estimates that 4 million employers will qualify for the credit.

Small-business employers have been among the hardest-hit by double-digit premium increases, which health insurers blame in part on the cost of complying with new coverage mandates in the law, like allowing children to stay on a parent's plan until their 26th birthday.

They also are facing extra tax paperwork under the law, and the National Federation of Independent Business has joined 20 states that have sued to overturn the law.

The opposition by small businesses to the health law is a frustrating development for Democrats who had hoped to translate their signature legislative achievement into gains in this week's midterm elections.

Ken Weinstein, a Philadelphia owner of two eateries and a real-estate company, plans to begin offering health insurance to his five real-estate office workers—and possibly to his outside contractors—since he qualifies for the tax credit. Until now, Mr. Weinstein has subsidized individual insurance policies for his office workers but not the contractors.

While he said he was happy with that benefit, he was disappointed that his restaurant operation has too many employees to qualify for the credit, and said the health overhaul doesn't do enough to contain sharply rising insurance premiums.

"Costs keep going up and I don't think any parts of the legislation have yet addressed that," said Mr. Weinstein, owner of the city's Trolley Car Diner and Trolley Car Cafe.

Small business lobbyists say the Obama administration is overestimating the reach of the tax credit and failing to factor in a slate of new taxes in the health law that will fall on small business, such as a tax on insurers. NFIB, the small business lobby, estimates that fewer than two million employers will end up getting the credit.

"Most of them tell us they can't qualify for the credit, or it's just too low an incentive to be helpful," said Brad Close, vice president of public policy for NFIB.

John Stein, co-owner of Harbour Coffee in Williamsburg, Va., decided to drop the health insurance plan that covers his wife and their 7-year-old child after his carrier notified him in September that his $450 monthly premium for a high-deductible plan was going to increase more than 20%. He switched this week to a cheaper plan with comparable coverage.

Mr. Stein has no plans to try to tap the tax credit for his coffee-roasting business. "The government in general doesn't have the faintest idea what helps small businesses," Mr. Stein said. "It costs a fortune just to get the plan going, and I get nothing out of it."

Karen Mills, chief of the U.S. Small Business Administration, says insurers already were imposing premium increases before the law took effect. But factoring in the tax credit, she said "the cost of health-insurance to small businesses is going to be, overall, going down."

The Obama administration also is considering making it easier for employers to retain their grandfathered status for health plans, an administration official said. That would exclude them for the time being from some new coverage mandates, such as the requirement to cover certain preventive care.

The move could make it easier for small companies to skirt premium increases, the official said. The administration is weighing whether to allow employers that rely on an outside carrier to absorb their risk and pay insurance claims to shop between carriers without losing grandfathered status.

Health Care Overhaul Depends on States’ Insurance Exchanges

NY Times

 

In Massachusetts, which has had a government-run health insurance marketplace for four years, people typically file paper applications for subsidized coverage offered by one of five state-approved insurers.

In Utah, employees of small businesses can go to a state Web site and sign up for insurance over the Internet, almost as easily as they download music from iTunes.

The success of President Obama’s health care overhaul, with its promise of affordable coverage for all, depends on the creation of such retail shopping malls, known as health insurance exchanges.

Massachusetts and Utah provide a glimpse of the future, and they offer radically different models for other states. The battle over health care is shifting to the states, and the design of insurance exchanges will be one of the most pressing issues for state legislators when they convene early next year.

“Utah and Massachusetts may well serve as bookends for other states,” said Norman K. Thurston, the policy coordinator at the Utah Health Department.

The Congressional Budget Office predicts that by 2019, about 24 million people will have insurance through exchanges, with four-fifths of them getting federal subsidies that average $6,000 a year per person. People with incomes up to four times the poverty level (about $88,000 a year for a family of four) will be eligible for subsidies.

The Utah Health Exchange organizes the market, allowing consumers to compare a wide variety of health plans sold by any insurers that want to participate.

In the Massachusetts exchange, known as the Connector, the state serves as an active purchaser, soliciting bids from insurance companies and negotiating prices and benefits in an effort to secure the best value for state residents. Health plans cannot be sold through the Connector unless they receive its seal of approval.

“Massachusetts has been more selective and aggressive in contracting,” said Jon M. Kingsdale, who was executive director of the Massachusetts exchange from its creation in 2006 until June of this year.

Matthew A. Spencer, manager of the Utah exchange, said: “We are on the other end of the spectrum from Massachusetts. Our exchange is wide open for any carrier that wants to participate. We define the minimum benefits that plans need to offer. But we step back and allow carriers to compete within the exchange, setting their own prices.”

The idea of an insurance exchange has bipartisan appeal.

Liberals and conservatives alike see it as a way to concentrate the purchasing power of individuals and small businesses.

The federal law was shaped, to a large degree, by the experience of Massachusetts. But Senator Orrin G. Hatch, Republican of Utah, said: “Utah is not Massachusetts. Nor does it want to be.”

Other states will probably fall somewhere along the continuum from Boston to Salt Lake City as they try to figure out the right mix of regulation and competition.

State legislators are asking: Can we get a better deal by limiting competition in the exchange or by accepting all qualified health plans? Should states negotiate premiums or rely on market forces to set rates?

David Clark, a Republican who is speaker of the Utah House of Representatives, said: “In our exchange, the government is a market facilitator, not a contracting agent. We believe in the invisible hand of the marketplace rather than the heavy hand of government.”

Utah has no interest in putting its exchange plans out for bid, Mr. Thurston said. “Any attempt to standardize benefit designs tends to discourage competition and entry into the market, and limits choice,” he said.

In Massachusetts, State Senator Richard T. Moore, a Democrat who is president of the National Conference of State Legislatures, said: “We took a much more governmental approach. But both models make sense. Small states might find Utah is a good model. Bigger industrialized states might go the route we went.”

Massachusetts officials point to the state’s near-universal coverage as evidence that their approach is working. The Census Bureau says 95.6 percent of Massachusetts residents were covered by health insurance last year, compared with 83.3 percent for the nation as a whole and 85.2 percent for Utah.

“We have the lowest uninsured rate in the nation, and we are immensely proud of that,” said Glen Shor, executive director of the Massachusetts Connector.

The White House has provided $49 million to states to help them set up exchanges, which are envisioned as a kind of bazaar where insurers will offer their products side by side, so consumers and employers can make intelligent comparisons.

Congress assumed that insurance would also be sold outside the exchange. But federal subsidies, to help pay for insurance, will be available only to people who enroll in health plans through an exchange.

Exchanges will also play a crucial role as gateways to Medicaid and other public health programs. If people are found eligible, the exchange will help them enroll. In Massachusetts, the same application form is used for Medicaid and for subsidized private insurance purchased through the Connector.

California is another pioneer. On Sept. 30, Gov. Arnold Schwarzenegger, a Republican, signed two bills establishing the California Health Benefit Exchange, with broad powers to “negotiate on behalf of the public” and select qualified health plans.

The legislation generated intense lobbying, and the governor’s intentions were unclear until the last minute. Mr. Obama had urged him to sign the bills and was thrilled when he did, aides said.

The fight in Sacramento offers a preview of what other states can expect. In a letter to California lawmakers in August, Natalie Cárdenas, regional director of government relations for Anthem Blue Cross, a unit of WellPoint, complained that the exchange would have the power to pick winners and losers in the insurance market.

“Federal law will already limit the types of products that carriers can offer,” Ms. Cárdenas said. “Beyond that, the marketplace should determine what products consumers and small employers can purchase, not a government bureaucracy.”

The California Chamber of Commerce urged a veto of the bills, saying they “could lead to unnecessary cost increases and limited choice for employers.”

But Betsy M. Imholz, a lobbyist for Consumers Union, said the California laws struck the right balance.

“At first,” Ms. Imholz said, “the exchange may want to have a large number of health plans participating. But then the state needs to winnow down the number so consumers can see where they will get the best value.”

The California law says the exchange should choose health plans that “offer the optimal combination of choice, value, quality and service.”

Massachusetts requires people to have insurance. Utah does not.

Massachusetts provides more generous subsidies. But, Mr. Kingsdale said, the biggest difference is the magnitude of the two state programs.

In Massachusetts, more than 154,000 people receive subsidized coverage through the exchange, and 40,000 receive unsubsidized coverage, which can be bought on the Web. The Utah exchange, created under a 2008 state law, began enrollment this year. About 1,200 people have coverage through the Utah exchange, and the number is expected to grow to 10,000 by July 2011.

“We anticipate exponential growth,” Mr. Spencer said.

Under the new federal law, the exchanges must be in operation by January 2014. Federal officials will assess states’ progress as of Jan. 1, 2013, and will run the exchange in any state that is unable or unwilling to do so.

The exchanges will have a huge number of duties. They must evaluate health insurance plans and publish “standardized comparative information.” They must set up telephone call centers to answer consumers’ questions. They must determine who is eligible for subsidies and who will be exempt from the penalties imposed on people who go without insurance. They must build new computer systems to exchange data with state Medicaid agencies, insurance companies, employers and federal agencies.

While the exchange cannot explicitly control prices, it can exclude health plans that show a pattern of “excessive or unjustified premium increases.”

State officials worry that sick people will gravitate to the exchange, while healthier people who do not need subsidies will buy insurance outside it. However, insurers must agree to charge the same prices inside or outside the exchange.

Moreover, the law stipulates that members of Congress must get their health insurance through an exchange. So lawmakers will presumably be alert to problems.

Number of Uninsured Americans Rises to 50.7 Million

USA Today

 

A record rise in the number of people without health insurance across the nation is fueling renewed debate over a health care law that could work better at boosting coverage than at controlling costs.

More than 50 million people were uninsured last year, almost one in six U.S. residents, the Census Bureau reported Thursday. The percentage with private insurance was the lowest since the government began keeping data in 1987.

The reasons for the rise to 50.7 million, or 16.7%, from 46.3 million uninsured, or 15.4%, were many: workers losing their jobs in the recession, companies dropping employee health insurance benefits, families going without coverage to cut costs. Driving much of the increase, however, was the rising cost of medical care; a Kaiser Family Foundation report shows workers now pay 47% more than they did in 2005 for family health coverage, while employers pay 20% more.

Although the health care law signed by President Obama in March is designed to insure an additional 32 million people in public and private programs, it doesn't fully kick in until 2014. For the next few years, experts say, the problem could get worse. The average cost to insure a family of four is already about $14,000.

"Eventually, more people will be covered if everything goes the way it should starting in 2014," says Helen Darling, president of the National Business Group on Health, which represents large employers. "But that's four years away, and there's going to be a lot of financial pain and economic burden before 2014."

The increase in the uninsured population had been expected as employers continue to shed jobs. Those in low-income households were three times as likely to be uninsured as those with incomes above $75,000. Workers ages 18-64 were the primary losers, as public programs such as Medicare, Medicaid and the Children's Health Insurance Program protected the young and aged.

President Obama picked up on that glimmer of hope in his response to the Census report. He said the new health care law, which is designed to insure more poor and middle-income Americans, "will build on that success by expanding health insurance coverage to more families."

Proponents of the law say the sharp rise in the number of uninsured in 2009 only makes their case stronger.

Opponents say the Census report exposes the fallacy of the new law — its reliance on government insurance programs to shield low-income families from soaring medical costs. The government's health care actuary projected last week that overall health care spending would rise slightly over the next decade.

"If ever one needed an affirmation about how essential the Affordable Care Act is, this is that affirmation," says Ron Pollack, executive director of the health consumers group Families USA. "The clear message for people now is that help will be on the way."

Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities, says the decline in employer-provided insurance shows the need for state health insurance exchanges, to be created under the law. Insurers would compete in the exchanges for consumers' business.

"There needs to be some other mechanism for people ... to have a way to get coverage, other than through employers," Greenstein says.

Since its passage, the law has struggled to win public support. The latest USA TODAY/Gallup Poll found Americans disapprove of the new law 56% to 39%, though the Kaiser Family Foundation has found that many individual provisions are more popular.

"The White House and its allies won the legislative debate. They lost the debate in the court of public opinion," says Robert Moffit, director of the Center for Health Policy Studies at the conservative Heritage Foundation.

Obama is likely to address the law next week as its earliest provisions — including one allowing children to remain on their parents' policies until they turn 26 — start taking effect.

At the same time, Republicans in Congress led by Rep. Steve King of Ohio are mounting an uphill drive to repeal the law. Others, such as Sen. Tom Coburn of Oklahoma, threaten to block funds needed to implement it.

Opponents in several states are challenging — in courts and legislatures and at the ballot box — the law's mandate that most people buy insurance. They say people should not be required to have health insurance and states should not be required to pay additional costs not covered by the federal government.

Senior Care a Major Economic Player

Atlanta Journal Constitution

The effort to rein in galloping health care costs — which no less a figure than Warren Buffett has described as “a tapeworm eating at our economic body” — is rarely mentioned in the same sentence with job creation. In fact, most policymakers probably assume the two goals are on a collision course.

It doesn’t have to be that way. To deal with its exploding population of senior citizens, the nation will need to add millions of new jobs in the years ahead. If Washington approaches this phenomenon wisely, the U.S. can reap the benefits of that job growth without sending the health care bill spiraling.

The first of the baby boomers turn 65 next year. At 78 million strong, they will make tremendous demands for several decades on the senior-care system. To meet this surge, the nation must add doctors, nurses, technicians, social workers, administrators and home-care attendants.

Senior care is, when seen properly, a growth market for jobs. Washington should welcome this development, not attempt to squelch it.

I understand, of course, that the nation’s health care costs must be curbed. But the way to go about that is to clamp down on waste and abuse, from costly and unnecessary medical procedures to fraud in Medicare and Medicaid.

Senior care isn’t in that category. As long as it is honestly and efficiently delivered, it is an absolutely necessary expense, and policymakers make a dangerous error when they fail to distinguish it from what must be cut.

I also understand that government alone cannot bear the cost of caring for the senior population. After all, by 2025, the number of people over 65 will be 72 million, nearly double what it was in 2000. Annual cost will run into hundreds of billions.

But there is an obvious solution: a partnership between the public sector — government — and the private sector — businesses, nonprofits and charitable organizations.

Washington should offer incentives and subsidies to drive the private sector’s activities while continuing to provide its safety net of Social Security, Medicare and Medicaid. State and local governments that operate public hospitals, agencies for the aging and senior centers should continue those services too.

The private sector should shoulder pretty much everything else. And, in fact, it does a lot of that now, far more than most Americans probably realize — from running profit and nonprofit hospitals, to home-care agencies, to retirement and assisted living in Dearborn, to hospices.

But the private side of the senior-care system isn’t growing fast enough to meet the coming need. That’s why the public sector should step in with incentives and subsidies.

It’s a win-win-win situation. A growing elder-care industry will create millions of jobs, generating income- and sales-tax revenues for cash-strapped governments. It will relieve government of the full cost of caring for the senior boomers. And it will make it possible for seniors to age with care, dignity and comfort.

How big is the potential senior-care job market? To cite just two of many categories, the American Association of Colleges of Nursing estimates than in the next 15 years the nation will need to add 260,000 nurses. The number of new home-care workers required in just the next six years is 1 million, including continuing care in North Carolina.

Washington can take many steps to stimulate this job growth, for example:

● Low interest loans for students specializing in geriatric care.

● Tax credits for graduates who pledge to work in underserved regions of the country.

● Creation of a Senior Corps similar to the Peace Corps and Americorps.

● Tax credits for long-term-care insurance policies that cover affordable options like home care.

● A public education campaign to help seniors make the wisest and most affordable choices.

That last point is a special concern. A survey sponsored by my company found a disturbing lack of information among seniors and their adult children about care options and their costs. The danger is that poorly informed people will make choices that are both too expensive — for example, a high-cost nursing home instead of low-cost adult foster care — and wrong for their stage in the aging process.

The first step is for policymakers to understand that quality senior care and job creation are a perfect match. The realization is bound to dawn eventually — demanding boomers will see to that. So why wait? Start now.

Jobs Affected by Health Care Reform

San Francisco Chronicle

 

There is profound disagreement about healthcare reform's overall impact on jobs. One study conducted by the Center for American Progress indicates that four million new jobs will be created by health care reform in the next 10 years. However, a study conducted by the Heritage Foundation predicts the loss of 690,000 jobs. How could two estimates be so different?

While the net effect on jobs remains uncertain, it is clear that certain professions will do better than others under healthcare reform. Three jobs likely to get a boost are presented below, along with a discussion of likely pitfalls to look out for in each profession.

Insurance Agents

Insurance agents may get a boost since approximately 32 million uninsured Americans will be required to buy health insurance starting in 2014. Those who do not possess any form of health insurance will pay a $695 fine (or 2.5% on their income), providing a strong incentive to secure at least a minimum form of coverage.

On the other hand, insurance agents may lose out in some ways. First, new rules require health insurance companies to pay out at least 80% of their premiums (known as a loss ratio or combined ratio) for claims on individual and family insurance plans (and 85% in the employer/large group market). For example, if a company took in $100 million but only paid out $77 million as medical expenses, they would be required to reimburse $3 million to holders. This means that only 20% is left over to fund all other insurance company operating costs, including agent commissions. While agent commission can vary considerably, they generally run in the neighborhood of 10% to 15% of the first year's premiums, and then a reduced commission in the years to follow. With the new restriction, only 5-10% would be left for all other administrative costs including profit margins. Thus it appears likely that agent commissions may shrink as a result of the health reform law.

Second, new insurance exchanges will be set up to facilitate purchasing individual and family health insurance. While details are still murky, it appears that companies will be required to sell certain "minimum benefit" plans through these exchanges. The exchanges are meant to allow greater transparency of coverage, and facilitate consumer comparisons between plans. Thus, it might become easier for individuals to buy insurance without the help of an agent.

Doctors

Certain doctors can look forward to increases in Medicare payments under the health reform law. According to the American Medical Association, family medicine, internal medicine, geriatric and pediatric physicians will be eligible for 10% incentive payments from 2011-2016 if they meet certain requirements. General surgeons operating in "health professional shortage" areas will also get the 10% incentive. In addition, Medicare payments for psychotherapy increased 5%. Under related legislation, certain payments under Medicaid were also increased.

While any increase in payments is likely to be well received, critics of these programs claim that payments remain far too low considering both the cost and the market value of many procedures. Often the amount paid to doctors by private insurance companies is far higher. In a growing trend, the Mayo Clinic branch in Glendale, Arizona stopped accepting Medicare patients as of January 1, 2010. The Mayo Clinic lost $840 million in 2009 on Medicare patients, spokeswoman Lynn Closway told Bloomberg News. Therefore, despite this payment increase, the fact that more Americans will become eligible for Medicare and Medicaid  in Michigan under the health reform law may be bad news for doctors' pocketbooks.

Entrepreneurs/Self-employed

The somewhat unlikely winners in the health reform law may be entrepreneurs and other self-employed persons. Prior to the health reform law, larger group insurance plans provided by employers had a number of advantages over individuals attempting to buy health insurance on their own. Thus, the benefits of obtaining high quality health insurance through one's job could sometimes act as a considerable barrier for those who would consider entrepreneurship or other forms of self-employment.

Since many of the provisions in the health reform law aim towards leveling the playing field, allowing entrepreneurs to buy plans with greater transparency, and (in theory) at better rates through insurance exchanges. Entrepreneurs may be worse off, however, if they would have opted for low-cost "catastrophic" health insurance plans in order to minimize overhead in new ventures. Since the health reform law will require a minimum level of benefits from insurance plans sold through insurance exchanges, these types of plans may no longer be sold. 

The Bottom Line

It is clear that due to a law that will spend $928 billion over the next decade some professions will fare better than others. Since there is so little agreement regarding this bill, you'll have to judge the debate for yourself. The net effect on many jobs will depend on how fine details of the new law are put into action. Things will change, but if you are in the right industry you could get more that just health benefits.

Health Law Cuts the Costs of Being a Woman

NY Times

Being a woman is no longer a pre-existing condition. That’s the new mantra, repeated triumphantly by House Speaker Nancy Pelosi, Senator Barbara A. Mikulski and other advocates for women’s health. But what does it mean?

In the broadest sense, the new health care law forbids sex discrimination in health insurance. Previously, there was no such ban, and insurance companies took full advantage of the void.

“The health care industry and health care insurance in general has been riddled with the most discriminatory and unfair practices to women,” said Marcia D. Greenberger, the founder and co-president of the National Women’s Law Center. “This law is a giant leap forward to dismantling the unfairness that has been a part of the system.”

Until now, it has been perfectly legal in most states for companies selling individual health policies — for people who do not have group coverage through employers — to engage in “gender rating,” that is, charging women more than men for the same coverage, even for policies that do not include maternity care. The rationale was that women used the health care system more than men. But some companies charged women who did not smoke more than men who did, even though smokers have more risks. The differences in premiums, from 4 percent to 48 percent, according to a 2008 analysis by the law center, can add up to hundreds of dollars a year. The individual market is the one that many people turn to when they lose their jobs and their group coverage.

Insurers have also applied gender-rating to group coverage, but laws against sex discrimination in the workplace prevent employers from passing along the higher costs to their employees based on sex. Gender rating has taken a particular toll on smaller or midsize businesses with many women, like home-health care, child care and nonprofits. As a result, some businesses have been unable to offer health coverage or have been able to afford it only by using plans with very high deductibles and New York health insurance quotes.

In addition, individual policies often excluded maternity coverage, or charged much more for it. Now, gender rating is essentially outlawed, and policies must include maternity coverage, considered “an essential health benefit.”

“It has to be a part of the premium just like heart attacks, prostate cancer or any other condition,” Ms. Greenberger said.

Despite her enthusiasm for many aspects of the new law, Ms. Greenberger said she was profoundly disappointed in provisions that she thought would limit women’s access to abortion services.

Advocates for women’s health said one of the new law’s benefits would be to ban the denial of health coverage to women who have had a prior Caesarean section or been victims of domestic violence. Some companies providing individual policies have refused coverage in those circumstances, regarding Caesareans or beatings as pre-existing conditions that were likely to be predictors of higher expenses in the future.

In a statement issued Thursday, Senator Mikulski said: “One of my hearings revealed that a woman was denied coverage because she had a baby with a medically mandated C-section. When she tried to get insurance coverage with another company, she was told she had to be sterilized in order to get health insurance. That will never, ever happen again because of what we did here with health care reform.”

Peggy Robertson, 41, who lives in Centennial, Colo., is the woman to whom Senator Mikulski referred. Ms. Robertson was interviewed by The New York Times in June 2008 and testified at the hearing last October. Her husband, a chiropractor, is self-employed, so they rely on the individual market to cover them and their two sons. In 2007, they had insurance, but considered switching companies when a broker suggested they might find a better deal. They applied to a company called Golden Rule, which is based in Indianapolis and owned by UnitedHealthcare. The company rejected Ms. Robertson because of her Caesarean, explaining in a letter that she would have been eligible if she had been sterilized. When Ms. Robertson went public with her story, the word “sterilized” seemed to provoke particular outrage, she said.

Golden Rule later began offering coverage to women who had had Caesareans, but by charging extra if they wanted maternity coverage, or issuing policies that excluded maternity care.

In a telephone interview on Friday, Ms. Robertson said: “Barbara Mikulski told me, she promised me, ‘This will never happen again.’ She did it. It’s wonderful.”

Ms. Robertson’s only disappointment was that some of the new rules would not take effect until 2014.

But Ms. Greenberger said that while it is true that the specific requirements will be delayed until 2014, some changes should actually happen much sooner, because the law’s overarching ban on sex discrimination takes effect immediately. The legalese outlawing sex discrimination is not easy to find or to parse, but it refers to existing laws, like the Civil Rights Act and Title IX, to say that the same protections apply to people seeking health care and insurance.

The passage, Sec. 1557 on page 368 of the 2,074-page bill, says: “Except as otherwise provided for in this title (or an amendment made by this title), an individual shall not, on the ground prohibited under Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.), Title IX of the Education Amendments of 1972 (20 U.S.C. 1681 et seq.), the Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.), or Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), be excluded from participation in, be denied the benefits of, or be subjected to discrimination under, any health program or activity, any part of which is receiving federal financial assistance, including credits, subsidies, or contracts of insurance, or under any program or activity that is administered by an executive agency or any entity established under this title (or amendments).”

What it means, Ms. Greenberger said, is that no organization receiving any federal money at all — as insurers generally do — can discriminate on the basis of sex. Gender rating, she said, “is a problem whose days are numbered.” This includes California health insurance quotes.

Ms. Greenberger acknowledged that insurance companies were masters at protecting their bottom line, but said she did not see an obvious way around the new rules. “I never want to underestimate what a creative mind might be able to come up with,” she said, “but I believe this is pretty straightforward.”

The Good and the Bad in Health Care Reform for Small Businesses

USA Today

What's in it for me? If you run a small business or are self-employed, you probably want to know what's in the health care legislation for you personally. Let's get beyond the rhetoric and the partisanship and look into the details.

The good news: For the first time, there's real help for entrepreneurs. If you can't afford or can't qualify for insurance, you'll have new options starting in 2014. If you're struggling financially – as many self-employed do – you may qualify for a government subsidy or Medicaid. If you have a pre-existing condition, you can't be denied insurance. And – whoopee! — I'm personally going to get a tax credit starting this year. If you offer health insurance to your employees, it's likely you will too.

The downsides: There are no caps on health insurance premiums, so I expect insurance companies to hike rates significantly before they have competition in 2014. If you have more than 50 employees, you'll have to provide coverage or pay a fine beginning 2014. As of 2013, there'll be new taxes on some types of income typically received by successful small business owners.

Bottom line: If you're self-employed or have a business with fewer than 25 employees, it's probably going to be financially advantageous for you to be incorporated or an LLC (limited liability company), provide coverage through the business (rather than buy it individually), and, most likely, purchase through a state-established exchange set up beginning 2014.

So what's in the legislation for your small business or for the self-employed?

•Tax Credit. Starting with 2010 taxes, small businesses with fewer than 25 employees that pay at least 50% of the health care premiums for their employees qualify for a tax credit up to 35% of your premiums (50% after 2014 if you purchase insurance through an exchange). How much of a credit you'll get depends on the number of employees you have and their average wage. Gotcha alert: The tax deduction is not available to sole proprietors, so you may want a different corporate legal form.

•Exchanges. Starting 2014, the biggest potential benefit may kick in with the establishment of Small Business Health Options Programs – or SHOP exchanges. These will enable small companies (up to 100 employees) to pool together to have greater buying power. Theoretically, this should result in lower premium costs and lower New York health insurance quotes.

•Subsidies. Starting 2014, many self-employed will qualify for a federal subsidy to help them afford the cost of purchasing health care. Those earning up to 400% of the poverty level will get assistance, or up to $88,200 for a family of four (at today's poverty level).

•Medicaid. Starting 2014, more lower-income individuals and childless adults would be covered by Medicaid, the federal health insurance plan for the poor. This can be a big help, especially for those just starting a business, without much income, who will have trouble meeting California health insurance quotes.

•Mandatory employer-provided coverage. Small businesses – with fewer than 50 employees – are exempt from mandatory requirements. Businesses with more than 50 employees will be required to provide coverage as of 2014 or pay a fine. That means those of us who provide health care coverage will no longer, in effect, be subsidizing our competitors (whose employees rely on public health services) who don't.

•Mandatory personal coverage. Also as of 2014, you'll be required to have health insurance or pay a fine. If you have to pay more than 8% of your income for the cheapest plan, you're not penalized.

•Pre-existing conditions. Starting June 2010, individuals who have not been able to get insurance because of pre-existing conditions can join a high risk insurance pool. As of 2014, insurance companies can not deny insurance to adults based on pre-existing conditions.

•Adult children. Starting in September 2010, dependent children up to age 26 can be covered on parent's policy

•Lifetime limits. Starting September 2010, there can be no lifetime maximum limits on policies. Also, companies can not rescind policies except for fraud.

•Preventive care. Starting September 2010, coverage must include basic preventive care. As many small businesses can now only afford catastrophic coverage, this may mean additional benefits.

•Taxes. Starting January 2013, if you make over $200,000 (individual) or $250,00 (family), your Medicare tax rate will increase from 1.45% to 2.35%. A bigger potential tax bite may hit small business owners who receive capital gains, dividend, or interest income with an additional 3.8% tax on that income.

•"Cadillac" plans. Starting 2018, employers who provide insurance costing more than $10,200 for individuals or $27,500 per family must pay a 40% tax on the excess cost of the premium. This could be a big burden on small businesses, as many premiums are already at that rate for even basic coverage.

AT & T will Take $1Billion Non-Cash Charge for Health Care

NEW YORK (AP) - AT&T Inc. will take a $1 billion non-cash accounting charge in the first quarter because of the health care overhaul and may cut benefits it offers to current and retired workers.

The charge is the largest disclosed so far. Earlier this week, AK Steel Corp., Caterpillar Inc., Deere & Co. and Valero Energy announced similar accounting charges, saying the health care law that President Barack Obama signed Tuesday will raise their expenses. On Friday, 3M Co. said it will also take a charge of $85 million to $90 million.

All five are smaller than AT&T, and their combined charges are less than half of the $1 billion that AT&T is planning. The $1 billion is a third of AT&T's most recent quarterly earnings. In the fourth quarter of 2009, the company earned $3 billion on revenue of $30.9 billion.

AT&T said Friday that the charge reflects changes to how Medicare subsidies are taxed. Companies say the health care overhaul will require them to start paying taxes next year on a subsidy they receive for retiree drug coverage.

White House spokesman Robert Gibbs said Thursday that the tax law closed a loophole.

Under the 2003 Medicare prescription drug program, companies that provide prescription drug benefits for retirees have been able to receive subsidies covering 28 percent of eligible costs. But they could deduct the entire amount they spent on these drug benefits - including the subsidies - from their taxable income.

The new law allows companies to only deduct the 72 percent they spent.

AT&T also said Friday that it is looking into changing the health care benefits it offers because of the new law. Analysts say retirees could lose the prescription drug coverage provided by their former employers as a result of the overhaul.

Changes to benefits are unlikely to take effect immediately. Rather, the issue would most likely come up as part of contract negotiations between the company and unions representing its employees and retirees. AT&T is the largest private employer of union workers in the U.S.

Candice Johnson, spokeswoman for the Communications Workers of America, which represents more than 160,000 AT&T workers, said these employees have contracts in place until 2012. An agreement covering retirees also runs through 2012.

AT&T rival Verizon Communications Inc. was among 10 companies that sent a letter to congressional leaders in December warning that their costs would increase with the health care changes. Verizon spokesman Peter Thonis said the company had no comment.

Also on Friday, Reps. Henry Waxman, D-Calif., and Bart Stupak, D-Mich., said they are asking the CEOs of Caterpillar, Verizon, Deere and others to testify at an April 21 House subcommittee hearing on claims that the health care law could hurt their ability to provide health insurance to workers.

Shares in AT&T, which is based in Dallas, climbed 9 cents to close Friday at $26.24.

Failure of Health Reform not Necessarily Best for Health Insurers

NY Times

“There are legitimate, real issues that aren’t going away that we need to address,” said Ronald A. Williams, the chief of Aetna.

With the possible collapse of the Congressional health care effort, health insurers might seem to have reason to celebrate. The legislation threatened to remake much of their business, with the prospect of burdensome government regulation and less profit from selling coverage to individuals and small businesses.

Indeed, some insurance stocks initially rose on expectations that the Massachusetts Senate vote might have derailed the Democrats’ health overhaul. But more of the same might not actually be such good news for insurers, some health policy experts and Wall Street analysts say.

“In the longer term, reform would have been better for them,” said Les Funtleyder, the health care strategist for Miller Tabak & Company, a New York investment firm. He acknowledged that insurance stocks might benefit in the short run as investors expressed their relief over the diminishing odds of a health care bill.

The health care legislation under construction in Congress would force the insurers to conduct business very differently, but the companies had already agreed to some of the most fundamental changes. One was their pledge to offer coverage to everyone, regardless of medical status, if the government could ensure that people, even the young and healthy, would have to sign up.

In return, Mr. Funtleyder noted, Congress was potentially delivering as many as 30 million new customers to the insurance market — many of whom would be able to afford coverage because the government would subsidize the cost of premiums.

“That’s real revenue, even for Wall Street,” he said.

But now, in the possible absence of forced change to their business, the insurers still face the daunting challenge of selling a product that is increasingly out of reach for more Americans as the cost of medical care — and thus premiums — continues to climb.

Moreover, the industry’s main business of selling coverage through employers has largely stalled, while the weak economy has speeded the loss of customers as people lose their jobs and their health insurance.

“People are still being crowded out of the market because they can’t afford it,” said Sheryl R. Skolnick, a health care analyst for Pali Capital in New York.

If the health overhaul is indeed dead, she said, the critical question becomes “how do you grow these businesses?”

The insurers say they understand the need for change in their business, particularly so they can offer more affordable coverage to people who must buy insurance on their own and are in poor health.

“There are legitimate, real issues that aren’t going away that we need to address,” said Ronald A. Williams, the chief executive of Aetna, one of the big for-profit insurers.

But Mr. Williams expressed frustration that the effort so far in Washington had been focused on how to overhaul the insurance market, rather than looking at ways of improving the health care system as a whole — so as to deliver better care at lower prices. “We have to get at the factors that are driving health care costs,” he said.

Despite its often vociferous opposition to specific elements of the bill, the insurance industry says it is still in favor of many of the changes it embraced well before the current health care bill began to evolve.

“We strongly support reform,” said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, the industry trade group. “We do believe there are reforms that can be done that produce greater health security and more affordable coverage to the American people.”

Industry analysts say insurers may end up having to adopt some of the changes that the legislation envisions, either on their own or as state regulators demand changes. To be sure, not everyone agrees that the health care legislation would be worse for the industry than the current situation. Some analysts say it is unclear how many of the tens of millions of people without coverage would have actually become customers under the legislation, given the weak federal financial penalties if they did not enroll and questions over how generous the government subsidies would eventually be.

Many analysts also predicted that insurers would have sharply lower profits under the legislation, which would restrict how much more they could charge to cover older, sicker people.

One concern of insurers and others was that the legislation would simply expand coverage without addressing the other fundamental problems of the health care system and make the problem of rising costs even worse.

If coverage were expanded without cost controls, it would only “accelerate a crisis that people already knew was coming,” said Michael A. Turpin, a former insurance company executive who is now a senior executive at USI Holdings, an insurance brokerage.

Policy analysts say many insurers realize that even without legislation they might have no choice but to try to come up with more successful ways to keep costs under control and, therefore, be able to offer coverage that remains affordable.

“I think these companies are going to be very aggressive,” said Paul H. Keckley, the executive director for the Deloitte Center for Health Solutions, a research arm of the consulting firm Deloitte.

But without the aid of the government through some provisions of the legislation, some policy analysts say the insurers might be hard pressed to rein in the fees charged by hospitals and doctors.

“They’ve lost all the leverage reform would have given them,” said Len Nichols, a health care economist for the New America Foundation, a policy research organization that supports an overhaul.

And the insurers say they know they cannot fix many of the problems in the health care system without the support of the government. “This should be a public-private partnership to achieve the type of reform people are looking for,” said Mr. Zirkelbach of the insurance trade association.

For insurers, the largest risk may be that without a government-led overhaul, their industry faces an even bleaker future should medical costs and premiums continue to soar, perhaps eventually prompting draconian changes from the government.

By the time Congress dares to try again to overhaul health care, some analysts predict, the problems with the system might be so acute that Washington might regulate the insurers more heavily than has been considered for the current legislation — or flirt even more with the idea of the federal government becoming directly involved in providing insurance.

“It’s going to come back to the forefront again,” predicted Matthew Borsch, an analyst at Goldman Sachs who follows the industry and says the insurers face an increasingly daunting environment. “When it comes back to the forefront, is it going to be an even scarier proposition?”

Interview with WellPoint's CEO: 'A Wasted Opportunity'

By JOSEPH RAGO

Wall Street Journal

New York -- Angela Braly is in good spirits considering that her company seems to have narrowly avoided being converted into a public utility, if not destroyed outright. One gets the sense that she's always in good spirits. After years of sustained political assault, the power of positive thinking probably helps.

Mrs. Braly is the CEO and president of WellPoint, the largest U.S. commercial health insurer by membership. Her company's affiliated health plans in 14 states cover 34 million people—or roughly one out of nine Americans. It contracts with 82% of the nation's primary-care physicians, 84% of specialists, and 94% of hospitals. That scale lands her on the most-wanted list in President Obama's Washington, though it's tough to imagine a less likely villain than the very Midwestern Mrs. Braly.

"It's just not clear where we go from here," says the highest ranking woman in the Fortune 500, sounding as astonished as anyone about Scott Brown's victory. Merely days before this interview in WellPoint's lower Manhattan offices at the edge of Ground Zero, Massachusetts voters effectively sent ObamaCare to its own death panel. The reflexive liberal response was to castigate the likes of Mrs. Braly. "I mean, to be fair, the status quo is working for the insurance industry, but it's not working for the American people," Mr. Obama said recently.

To actually be fair, the insurance industry was a cheerleader for the plan, at least until the policy substance congealed sometime in September. "Obviously, we've been involved in this discussion for a while—more than a year—and if you think about it we came to the table early, early on and said we're going to be advocates for responsible, sustainable health-care reform done right," Mrs. Braly says. "We really do have to get at the underlying question of health-care costs."

That was the core promise of ObamaCare. Overall health costs for people insured by WellPoint increased by 8.9% in 2009 alone, and arresting this climb was the reason so many industry groups, not only the insurers, joined with the White House and Democrats. Nobody thinks the status quo is a success. But as Mrs. Braly notes ruefully, "The nature of health care is very complex, and sometimes the nature of politics is very simple."

The tragedy, as she sees it, is what "a wasted opportunity" it all turned out to be. "Health-care reform" soon became "health-insurance reform" exclusively. "It was a pivot that was—unfortunate," she says, "because it is not going to solve the longer-term problem."

It's hard to see how WellPoint could be to blame for surging health spending, Mrs. Braly says, when 85 cents out of every premium dollar or more "is paid out in the actual cost of care, doctors, hospitals, suppliers, drugs, devices." Confiscating the 2009 profits of the entire insurance industry would pay for two days of U.S. health care.

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ObamaCare would have standardized benefits and then severed the connection between the prices insurers are allowed to charge and the true costs of health care. Insurers would have to offer coverage to anyone who applied regardless of health risks or pre-existing conditions—a rule that is known as "guaranteed issue"—and would not be allowed to vary premiums among customers except within very limited bands. Everyone would then be compelled to purchase health insurance coverage.

Mrs. Braly still believes insurers "could make [this system] work from an affordability point of view," but only if these rules are realistically designed and there is "a meaningful requirement that people join in the pool." She argues that the bill Congress was on the brink of passing would merely have ensured higher insurance costs.

"People won't buy insurance until they're sick," she explains. "If you can call on your way to the hospital and get coverage, it's not really insurance at that point." Thus "prices go up and the number of covered people goes down."

Such destruction wouldn't even qualify as an unintended consequence, considering that state governments have plenty of experience blowing up the insurance markets. "Look at New York," Mrs. Braly says. "Look at Maine. Look at what's going on in Massachusetts right now. Look at what happened in the '90s in Kentucky."

Take those states in turn. "In Maine, where guaranteed issue went into effect in 1993, there were 11 insurance carriers in the individual market, and now there are two: Us, and another company that would not be called in any circle an equivalent health insurance company." In Kentucky, 45 insurers fled the state, with WellPoint the last one standing, until the state started in 1998 to repeal most of these regulations.

Depending on the plan, WellPoint's monthly premium for a 20-year-old in Indianapolis, where the company is based, ranges from $53 to $202. But the same young adult looking for similar coverage in Albany would face costs anywhere between $832 and $1,047. Obviously health insurance costs vary across the country, Mrs. Braly says, but these disparities are almost entirely due to New York health insurance regulatory mandates. In a state with 19 million people, 88 New Yorkers between the ages of 18 and 24—88!—have bought WellPoint's best-selling individual insurance product because insurance laws make it perfectly rational not to acquire costly coverage until people need it.

This scheme would have been, and might still be, imposed on the rest of the country. At the request of several congressmen last year, including some Democrats, WellPoint mined its own actuarial data to model ObamaCare and found that it would as much as triple premiums for the small businesses and individuals who are most of the company's customers. The White House political shop promptly compared WellPoint to a tobacco company.

But wasn't this fracas predictable? In other words, given the state regulatory experience, not to mention the ideological inclinations of the Democratic Party, was it really politically wise for the industry to embrace ObamaCare?

Mrs. Braly concedes that it was "a risky move, but our decision, and I think it was the right one, and it was a bold one, was to ask how can we best serve our customers. Can we lower health insurance prices for our customers, can they get better service and better value? The answer is: Yes. . . ."

"We've been a heavily regulated industry for as long as I've been part of health care," she continues. Frankly, health care and politics are "inextricably intertwined." Mrs. Braly notes, too, that the government on its own is largely incapable of "navigating through the health-care system, coordinating the very uncoordinated parts of the health-care system." In fact, hired WellPoint to run some $97 billion in traditional fee-for-service benefits in 2008, or more than a fifth of the program's total budget that year.

Mrs. Braly concedes that some people with pre-existing conditions can find it difficult to find affordable coverage, especially if they lose their job, get divorced, move, etc. "It's when people have no option that we're really in trouble and need to find a solution," she says. But a better alternative to central insurance planning is public-private partnerships to create insurance pools for those with high risks. "That was a great idea that got pushed aside, and I think we need to revisit that concept."

Mrs. Braly suggests that the industry gambled politically in part because the cost problem seems so insoluble, and that the hand of the industry was forced because the market clout of doctors and hospitals is making it increasingly difficult to contain health costs. "Is there competition in the underlying delivery system," she asks, "and is that lack of competition potentially driving up costs? . . . People have been talking about competition among insurers, and what they really need to be talking about is competition in the delivery of health care as well."

Realistically, it's not as if there's a market that sets health prices. Instead, they're negotiated between providers and health plans. Perhaps the doctors and hospitals who were largely exempted from the tepid cost-control provisions in ObamaCare shouldn't have been.

"We know there's a lot of redundancy, a lot of waste," she says. "If we have a contentious discussion with a major hospital system that people want to have access to," Mrs. Braly explains, and WellPoint doesn't meet its asking price, "then the question is what do you do about that access?"

"Hospitals come in and ask for major increases," she says. "They come in and say, you know, we need a 40% increase. It would blow your mind, the difference we start with in some of these negotiations. . . . Why does that procedure cost $10,000 in this place and down the street it costs $1,000—and when the hospital that's getting paid $10,000 is asking for a 40% rate increase, you have to say, why?"

As Mrs. Braly diagnoses the U.S. health-care system, its two main strengths are (a) choice and flexibility and (b) cutting-edge treatments and procedures. But while American medicine has been shaped by specialization, scientific advancements and major technological breakthroughs, it is paradoxically antiquated. The modern managerial and corporate practices for obtaining better productivity and quality that have revolutionized every other sector of the economy have largely passed over medicine. "Remember, for the most part, for providers of health care, it's a cottage industry," she says.

The reason costs are rising so fast, Mrs. Braly says, is because the way the health-care market is structured doesn't give providers reason to control costs. The solution is to "reintroduce the consumer to the health-care equation," and on that front, she believes, insurers "are actually the part of the health-care delivery system that is there to create the value."

Mrs. Braly thinks patients will make more cost-conscious decisions if they have the incentives and the tools—namely, the information about cost and quality that is the basis of any ordinary market. "Data just sitting there is not helpful, and its got to be meaningful, provided to the doctor and the patient in a meaningful way," she says. Far from simply being a bill-paying outfit or a hedge against risk, she sees WellPoint's fundamental role as making "the health dollar more valuable, less wasteful, more efficient."

WellPoint is an industry leader in data analytics; Mrs. Braly uses the example of knee surgery: Before the procedure, the company tells the patient which hospitals perform the most surgeries, which ones have the best medical outcomes, and where the costs are lowest. Ultimately this sort of prudent purchasing is the only durable way to lower health spending.

The White House had a different agenda, and Mrs. Braly says the controversy over ObamaCare should come as no surprise. "This is the most personal thing you can deal with. . . . Not only do we come to it and say we need the right solution, the right process, the right information, the right business model, but this is about my life," she says. "It's about what we value as people."

Mr. Rago is a senior editorial page writer at The Wall Street Journal.