"The Next Stage of Health Care Reform: Controlling Costs by Paying Health Plans Based on Health Outcomes" 

DALE B. THOMPSON, University of St. Thomas - Department of Ethics & Business Law
Email: thompsondaleb@yahoo.com

The predominant form of paying for health care in the United States (Fee-for-Service) creates inefficient incentives and leads to rising costs. A number of changes were incorporated into the health care reform legislative package of 2010, but these changes will not stop rising costs. Instead, this article proposes that the reimbursement structure for the Medicare Advantage program be revised so that medical plans receive their payments based on delivery of health outcomes, not delivery of health services. This approach utilizes centralized enforcement at the level of the plan, to provide incentives for the plan to encourage its providers to improve health outcomes.

"The Early Retiree Reinsurance Program: $5 Billion Will Last About Two Years" 

EBRI Notes, Vol. 31, No. 7, July 2010

PAUL FRONSTIN, Employee Benefit Research Institute (EBRI)
Email: FRONSTIN@EBRI.ORG

The Patient Protection and Affordable Care Act (PPACA) of 2010 created a temporary reinsurance program for sponsors of employment-based health plans that provide retiree health benefits to retirees who are over age 55 and not yet eligible for the Medicare program. The program provides an 80 percent subsidy for retiree claims of between $15,000 and $90,000. Congress appropriated $5 billion for the program, which is effective June 1, 2010, and the subsidy will be available through the earlier of Jan. 1, 2014, or the date when the funds are exhausted. One goal of the program is to provide an incentive for employers to maintain retiree health benefits and assist retirees with their costs for health coverage. Under the early retiree reinsurance program, plan sponsors must be able to show that the subsidies were not used to reduce their level of support for the plan. Subsidies can be used to reduce retiree costs, and sponsors must also show that the subsidies were used to generate savings or had the potential to generate savings. An important question is whether the $5 billion will be exhausted before 2014. This paper finds that if the subsidy were drawn down for all early retirees and their dependents, $2.5 billion of the $5 billion available would be exhausted in the first year of the program. The $5 billion would last no more than two years and would not be available in 2012 or 2013.

The PDF for the above title, published in the July 2010 issue of EBRI Notes, also contains the fulltext of another July 2010 EBRI Notes article abstracted on SSRN: “Target-Date Fund Use Over Time.”

"Restoring Health to Health Reform" 

Journal of the American Medical Association, Vol. 303, pp. 1419-1420, 2010
Georgetown Public Law Research Paper No. 10-43

LAWRENCE O. GOSTIN, Georgetown University Law Center - O'Neill Institute for National and Global Health Law
Email: gostin@law.georgetown.edu
PETER D. JACOBSON, University of Michigan School of Public Health
Email: pdj@umich.edu

In this article, we discuss the public health provisions of the Patient Protection and Affordable Care Act (PPACA). We first set forth a framework to identify the key reforms that are needed for a robust public health system. These include workforce and infrastructure investments. We then assess the PPACA against these criteria. We conclude that although the act would make significant investment in public health (especially in wellness and prevention programs), it does little to improve the existing structural deficiencies that the public health system must overcome if it is to be effective in improving the population’s health.

"Will Employers Undermine Health Care Reform by Dumping Sick Employees?" 

Minnesota Legal Studies Research Paper No. 10-37

AMY MONAHAN, University of Minnesota - Twin Cities - School of Law
Email: monahana@missouri.edu
DANIEL SCHWARCZ, University of Minnesota Law School
Email: Schwarcz@umn.edu

This Essay argues that federal health care reform may induce employers to redesign their health plans to encourage employees who are likely to consume a greater-than-average amount of medical services to opt out of employer-provided coverage and instead acquire coverage on the individual market. Although largely overlooked in public policy debates, this prospect of employer dumping of high-risk employees raises serious concerns about the sustainability of health care reform more generally. In particular, it threatens the viability of individual markets and insurance exchanges by raising the prospect of adverse selection in these markets caused by the entrance of a disproportionately high-risk segment of the population. This risk, in turn, simultaneously threatens to increase the cost to the federal government of subsidizing coverage for qualified individuals and to exempt more individuals from complying with the so-called “individual mandate.” The Essay offers several legislative solutions to the prospect of high-risk employee dumping that can substantially mitigate these risks.

"How Do Employers React to a Pay-or-Play Mandate? Early Evidence from San Francisco" 

NBER Working Paper No. w16179

CARRIE COLLA, affiliation not provided to SSRN
WILLIAM DOW, University of California, Berkeley - School of Public Health
Email: wdow@berkeley.edu
ARINDRAJIT DUBE, University of California, Berkeley - Institute for Research on Labor and Employment
Email: adube@berkeley.edu

In 2006 San Francisco adopted major health reform, becoming the first city to implement a pay-or-play employer health spending mandate. It also created Healthy San Francisco, a public option to promote affordable universal access to care. Using the 2008 Bay Area Employer Health Benefits Survey, we find that most employers (75%) had to increase health spending to comply with the law, yet most (64%) are supportive of the law. There is substantial employer demand for the public option, with 21% of firms using Healthy San Francisco for at least some employees, yet there is little evidence of firms dropping existing insurance offerings in the first year after implementation.

"Medicare Part D and the Financial Protection of the Elderly" 

NBER Working Paper No. w16155

GARY V. ENGELHARDT, Syracuse University - Center for Policy Research, Dartmouth College - Department of Economics, National Bureau of Economic Research (NBER)
Email: gvengelh@maxwell.syr.edu
JONATHAN GRUBER, Massachusetts Institute of Technology (MIT) - Department of Economics, National Bureau of Economic Research (NBER)
Email: gruberj@mit.edu

We examine the impact of the expansion of public prescription drug insurance coverage from Medicare Part D on the elderly and find evidence of substantial crowd-out. Using detailed data from the 2002-7 waves of the Medical Expenditure Panel Survey (MEPS), we estimate that the extension of Part D benefits resulted in 80% crowd-out of both prescription drug insurance coverage and prescription drug expenditures of those 65 and older. Part D is associated with only modest reductions in out-of-pocket spending. This suggests that the welfare gain from protecting the elderly from out-of-pocket spending risk through Part D has been small.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

"Initial Thoughts on Essential Health Benefits" 

New York University Review of Employee Benefits & Executive Compensation, Forthcoming
Minnesota Legal Studies Research Paper No. 10-36

AMY MONAHAN, University of Minnesota - Twin Cities - School of Law
Email: monahana@missouri.edu

This symposium essay takes an initial look at the concept of “essential health benefits,” a critical yet often-overlooked part of the Patient Protection and Affordable Care Act (“PPACA”). For the first time, through the requirement that all individual and small group health insurance policies cover “essential health benefits,” the federal government will take an active role in regulating the substance of health insurance. PPACA does not define “essential health benefits” by statute, but instead grants authority to the Secretary of Health & Human Services to determine which benefits must be provided. Unfortunately, the statutory language provides very little guidance regarding how to meaningfully distinguish between services that ought to be considered essential and those that ought not. Most troubling is the fact that the statute gives the Secretary no concrete basis on which to exclude benefits from the definition of essential. To further complicate matters, the Secretary’s decisions will come with significant fiscal implications for the federal government given the relationship between premiums and the cost of the newly-created premium tax credits. And while PPACA claims to retain a role for the states in regulating the substance of health insurance, this essay suggests that this power is largely illusory.