Mr. President: Campaign on Health Care Reform!

Dear Mr. President:  
You won on health care.  Campaign on it.

You won historic legislation in 2010. Your advisors told you to change the subject and campaign on the economy.  You lost the mid-term elections, big time.

 
You won a victory in the Supreme Court this week. The same advisors who counseled you then are at it again. I don't know what economic accomplishments they think you should run on.  I know a few things about what you've done in health care.

The Affordable Care Act instituted system reforms in how we pay doctors, and how they practice medicine, that are reducing the actual cost of health care. This is tremendous news.  It is not showing up yet in reduced insurance premiums.  But your law makes it possible to do so.

 
Health care spending growth has slowed from double digits to 4% or lower. Further, hospital admissions are down, even among insured people. Writing in Health Affairs in April Kenneth Kaufman states that "independent of the recession, other fundamental and structural changes are likely contributing to the flattening of the cost curve, and further, these changes have the potential to significantly alter the curve’s path into the future."
 
Kaufman quotes Jeff Goldsmith, Ph.D., President of Health Futures, Inc., who "suggests that the makeup and organization of the nation’s physicians is one source of the slowing cost growth. Physicians of the past 30 years typically practiced in solo or small group practices. Under the fee-for-service system, they were incentivized to work long hours, see as many patients as they possibly could, and buy into labs, ambulatory clinics, and specialty hospitals. As a result, they tended to be high users of inpatient and outpatient services. These more entrepreneurial physicians are now reaching retirement age and many tens of thousands are opting to exit the workforce. Replacing them are physicians of a new generation, which has different work and lifestyle expectations. For many younger physicians, owning a practice is not as important as having time to spend with the family and a steady, predictable income.

"One effect is that physicians have sought employment by hospitals...and in larger group practices, many of which now employ hundreds of doctors. They are practicing medicine in ways that remove utilization and cost from the system. Protocols to reduce variation in care delivery, chronic disease management, case management, and other approaches are increasingly being adopted by physicians nationwide. Larger practices owned by hospitals and other entities will have the capital and human resources required to successfully reduce care costs through such approaches, slowing health-spending growth going forward."

 
Other efforts include "moving from an activity-based business model that incentivizes utilization of services to a value-based model that incentivizes population health management across the continuum of care,"
 
Why aren't we seeing lower insurance premiums, then? 
 
First, the insurance industry isn't yet sufficiently regulated.  The Exchanges starting in 2014 will make regulation more likely.  States can use the ACA now to regulate on their own.  A progressive new Congress could create a competing public option, and allow states to create entirely public financing systems like Medicare.  Secondly, the system reforms are not yet universal.  In fact, some physicians are turning to "boutique" practices where they can take only wealthy patients who will continue to pay whatever high fees the docs require to maintain their incomes.

The political good news is that the opposition program will clearly hurl us right back into the days of double-digit health care cost inflation, while cutting seniors and others out of access to care. Surely impressive information for the American people.

The Ryan/Romney proposals would turn Medicare and Medicaid into voucher systems.  Every person would get a coupon worth a certain dollar amount, and go out and look for the best deal from doctors, hospitals, and drug companies.  This means bringing the kind negotiations from the car dealership to the hospital every time we and our families get sick.  For most rational Americans, not an appealing prospect.  It is certainly the end of Medicare.

 
The opposition hounded Dr. Don Berwick out of his position as administrator of the Medicare program, precisely because of his expertise in the kind of system reforms that are now working.
 
Mr. President, you need to stand with the many patients already benefiting from the improved coverage and consumer protections provided by the ACA, and fight for a second term that will propel us forward towards universal, affordable health care.

  

WILL YOU HAVE TO PAY A 3.8% TAX IF YOU SELL YOUR HOUSE? NO!!!

Here is one of the most insidious and widespread myths about the application of the Affordable Care Act. In presenting about the law in remote areas, I've found that people who had heard nothing about any of the benefits of the ACA had heard this: if you sell your house you'll have to pay 3.8% in new taxes on the amount of the sale.
Here's what is wrong with this:

Sec. 1411 is below. It does impose a 3.8% tax generally on unearned income, a progressive feature of the law.
And the 3.8% tax does apply to the sale of certain property.
But all of the following must be true for the tax to apply to proceeds from the sale of your home:
1. Your annual income must be $200,000 or greater if you file taxes as a single person, or $250,000 if you file as a couple. This excludes about 98% of Americans right there.
AND
2. The net gain from the sale of your home must be declarable as taxable income.
Now if you've sold a residence in the last 20 years you know that Congress is constantly finding ways to exclude home sale gains from taxable income. Right now you usually pay no tax on the sale for a variety of reasons. These change from time to time but right now include these conditions at least:
a. The first $250,000 in profit on the sale of a primary residence (or $500,000 in the case of a married couple) is excluded from taxable income already.
or
b. If you buy another home, you pay no tax.
Remember, you can make a million in taxable gains on the sale of your home and the new 3.8% tax will not apply unless you're also declaring taxable earnings over $200,000 a year.
You can find all this out in summary at FactCheck.org: http://www.factcheck.org/2010/04/a-38-percent-sales-tax-on-your-home/
But I think you're better armed by knowing where to look in the law so here you are:
‘‘SEC. 1411. IMPOSITION OF TAX.


‘‘(a) IN GENERAL.—Except as provided in subsection (e)—

‘‘(1) APPLICATION TO INDIVIDUALS.—In the case of an individual,

there is hereby imposed (in addition to any other tax

imposed by this subtitle) for each taxable year a tax equal to

3.8 percent of the lesser of—

‘‘(A) net investment income for such taxable year, or

‘‘(B) the excess (if any) of—

‘‘(i) the modified adjusted gross income for such

taxable year, over

‘‘(ii) the threshold amount.

‘‘(2) APPLICATION TO ESTATES AND TRUSTS.—In the case of

an estate or trust, there is hereby imposed (in addition to any

other tax imposed by this subtitle) for each taxable year a tax

of 3.8 percent of the lesser of—

‘‘(A) the undistributed net investment income for such

taxable year, or

‘‘(B) the excess (if any) of—

‘‘(i) the adjusted gross income (as defined in section

67(e)) for such taxable year, over

‘‘(ii) the dollar amount at which the highest tax

bracket in section 1(e) begins for such taxable year.

‘‘(b) THRESHOLD AMOUNT.—For purposes of this chapter, the

term ‘threshold amount’ means—

‘‘(1) in the case of a taxpayer making a joint return under

section 6013 or a surviving spouse (as defined in section 2(a)),

$250,000,

‘‘(2) in the case of a married taxpayer (as defined in section

7703) filing a separate return, 1⁄2 of the dollar amount determined

under paragraph (1), and

‘‘(3) in any other case, $200,000.

‘‘(c) NET INVESTMENT INCOME.—For purposes of this chapter—

‘‘(1) IN GENERAL.—The term ‘net investment income’ means

the excess (if any) of—

‘‘(A) the sum of—
‘‘(i) gross income from interest, dividends, annuities,

royalties, and rents, other than such income

which is derived in the ordinary course of a trade or

business not described in paragraph (2),

‘‘(ii) other gross income derived from a trade or

business described in paragraph (2), and

‘‘(iii) net gain (to the extent taken into account in

computing taxable income) attributable to the disposition

of property other than property held in a trade or

business not described in paragraph (2), over

‘‘(B) the deductions allowed by this subtitle which are

properly allocable to such gross income or net gain.

‘‘(2) TRADES AND BUSINESSES TO WHICH TAX APPLIES.—A

trade or business is described in this paragraph if such trade

or business is—

‘‘(A) a passive activity (within the meaning of section

469) with respect to the taxpayer, or

‘‘(B) a trade or business of trading in financial instruments

or commodities (as defined in section 475(e)(2)).

‘‘(3) INCOME ON INVESTMENT OF WORKING CAPITAL SUBJECT

TO TAX.—A rule similar to the rule of section 469(e)(1)(B) shall

apply for purposes of this subsection.

‘‘(4) EXCEPTION FOR CERTAIN ACTIVE INTERESTS IN PARTNERSHIPS

AND S CORPORATIONS.—In the case of a disposition of

an interest in a partnership or S corporation—

‘‘(A) gain from such disposition shall be taken into account

under clause (iii) of paragraph (1)(A) only to the extent

of the net gain which would be so taken into account

by the transferor if all property of the partnership or S

corporation were sold for fair market value immediately

before the disposition of such interest, and

‘‘(B) a rule similar to the rule of subparagraph (A)

shall apply to a loss from such disposition.

‘‘(5) EXCEPTION FOR DISTRIBUTIONS FROM QUALIFIED

PLANS.—The term ‘net investment income’ shall not include

any distribution from a plan or arrangement described in section

401(a), 403(a), 403(b), 408, 408A, or 457(b).

‘‘(6) SPECIAL RULE.—Net investment income shall not include

any item taken into account in determining self-employment

income for such taxable year on which a tax is imposed

by section 1401(b).

‘‘(d) MODIFIED ADJUSTED GROSS INCOME.—For purposes of this

chapter, the term ‘modified adjusted gross income’ means adjusted

gross income increased by the excess of—

‘‘(1) the amount excluded from gross income under section

911(a)(1), over

‘‘(2) the amount of any deductions (taken into account in

computing adjusted gross income) or exclusions disallowed

under section 911(d)(6) with respect to the amounts described

in paragraph (1).

‘‘(e) NONAPPLICATION OF SECTION.—This section shall not apply

to—

‘‘(1) a nonresident alien, or
‘‘(2) a trust all of the unexpired interests in which are devoted

to one or more of the purposes described in section

170(c)(2)(B).’’.

(2) ESTIMATED TAXES.—Section 6654 of the Internal Revenue

Code of 1986 is amended—

(A) in subsection (a), by striking ‘‘and the tax under

chapter 2’’ and inserting ‘‘the tax under chapter 2, and the

tax under chapter 2A’’; and

(B) in subsection (f)—

(i) by striking ‘‘minus’’ at the end of paragraph (2)

and inserting ‘‘plus’’; and

(ii) by redesignating paragraph (3) as paragraph

(4) and inserting after paragraph (2) the following new

paragraph:

‘‘(3) the taxes imposed by chapter 2A, minus’’.

(3) CLERICAL AMENDMENT.—The table of chapters for subtitle

A of chapter 1 of the Internal Revenue Code of 1986 is

amended by inserting after the item relating to chapter 2 the

following new item:

‘‘CHAPTER 2A—UNEARNED INCOME MEDICARE CONTRIBUTION’’.

(4) EFFECTIVE DATES.—The amendments made by this subsection

shall apply to taxable years beginning after December

31, 2012.

(b) EARNED INCOME.—

(1) THRESHOLD.—

(A) FICA.—øAmended section 3101(b)(2) of the IRC, as

added by section 9015 (and amended by section 10906) of

PPACA, including inserting a new subparagraph (B)¿

(B) SECA.—øAmended section 1401(b)(2) of the IRC,

as added by section 9015 (and amended by section 10906)

of PPACA, including inserting a new clause (ii) in subparagraph

(A)¿

(2) ESTIMATED TAXES.—Section 6654 of the Internal Revenue

Code of 1986 is amended by redesignating subsection (m)

as subsection (n) and by inserting after subsection (l) the following

new subsection:

‘‘(m) SPECIAL RULE FOR MEDICARE TAX.—For purposes of this

section, the tax imposed under section 3101(b)(2) (to the extent not

withheld) shall be treated as a tax imposed under chapter 2.’’.

(3) EFFECTIVE DATE.—The amendments made by this subsection

shall apply with respect to remuneration received, and

taxable years beginning after, December 31, 2012.


Plus, if you've gotten this far, you can look up portions of the Internal Revenue Code (IRC) referred to above.

Insurance co.s want to make you healthy! They also have a bridge for sale

The still-fragile Affordable Care Act (ACA) gives the public a fighting chance at reining in health insurance premiums. But we’re going to have to wrestle with the insurance industry every step of the way. As the National Association of Insurance Commissioners (NAIC) convenes in Seattle today, the public has the imperative to stick up for ourselves. Here’s what’s at stake in this round.

Starting in September, health insurance plans are required to spend at least 80-85% of the premium we pay them on actual health care. Executive bonuses, administration, marketing and profits are limited to the other 15% (in large plans) to 20% (in small plans). This is supposed to incentivize the insurance industry to operate efficiently and to negotiate assertively with health care providers. rather than simply passing on cost increases to consumers.

The $2.5 trillion dollar question is this: how do you define actual health care? The Secretary of Health and Human Services defines this figure, known as the Medical Loss Ratio (MLR), after consulting with the NAIC. And the insurance industry has not been shy.

The insurance industry is asking the NAIC to define the MLR to its advantage, by counting marketing programs, including those with public health themes, as medical expenses, rather than the administrative expenses they clearly are.

The aims of the relevant section of the law (Sec. 2718) - low cost care that offers value to consumers – conflict with the financial imperatives of the health insurance industry, to maximize profits and returns to shareholders, as well as administration, including executive compensation. Proposals by the insurance industry call for calculating the MLR in a way that will frustrate the aims of the law. The MLR is a ratio, with all medical claims (in the numerator), divided by total premiums (in the denominator). A high MLR means that the insurance company is spending a relatively higher share of premium income on its members' medical care and less for administration and profit. A low MLR means that the insurance company is returning less in medical care benefits to its members while retaining more for executives and shareholders; this can also signal a solid opportunity for investors.

To fairly achieve an 85% MLR, a company would have to show that the amount spent on medical claims (in the numerator) is high relative to premiums. But companies can frustrate the intent of the law by defining medical claims to include other expenses, including expenses typically considered part of administration.

The Senate Commerce Committee has documented that, "At least one company, WellPoint, has already ‘reclassified’ more than half a billion dollars of administrative expenses as medical expenses, and a leading industry analyst recently released a report explaining how the new law gives for-profit insurers a powerful new incentive to ‘MLR shift’ their previously identified administrative expenses."

The ACA standard for including expenditures for non-clinical care as a medical expense (that is, in the numerator) is that it must "improve health care quality." It’s hard to imagine this test will be met by the few occasions of insurance companies’ co-sponsoring visible public health events, nor do they justify skewing the MLR in ways that would raise premiums, or requiring the additional administrative effort to determine whether or not it is in itself an administrative or medical expense.

In our letter to the HHS and NAIC, the EQUAL Health Network urged, "The NAIC and HHS should discourage efforts by insurance companies to create and benefit from insubstantial programs that masquerade as clinical treatments. These programs should be properly counted as the administrative expenses that they are. Otherwise, a proliferation of such programs, if regarded as clinical care, would have the exact opposite of the intended effect of the measure: it would cause health care expenditures to balloon, and dilute value for consumers."

What About Their Investments?

The ACA standard applies only to insurers' premium revenues. Yet patients and payors should be equally concerned about how an insurer uses income from its investment of the sums it extracted from previous years’ patient premiums. A more appropriate standard would measure the share of insurers' total revenues devoted to care, as some analysts have urged.

NAIC committees have been working largely outside of the public’s view to draft standards. In our letter, the EQUAL Health Network urged, "It is vital that rate review and other pressures be strong enough to prevent insurers from simply raising premiums in order to offset the limit on their administration/profit share. It will also be important to create an ongoing public process to set and review the initial regulations which are required to begin in September, 2010. Public comment on this system's achievements and limitations will provide assessments of the system's success, and offer the groundwork for constructive and equitable adjustments to the rules."