Early Retiree Reinsurance Program (ERRP) Applications Now Being Accepted

Today the US Department of Health and Human Services' Office of Consumer Information and Insurance Oversight (OCIIO) announced that they will immediately begin accepting applications for participation in the early retiree reinsurance program (ERRP).  A draft application was released earlier this month, but employers hoping to be part of this new, temporary program now can complete and submit an official application. 

The ERRP was created as part of the recently enacted federal health reform package and became effective June 1, 2010. Participating employers will be reimbursed 80 percent of certain claims between $15,000 and $90,000.  One condition of participation in ERRP is that the employer must have in place procedures and programs that have or will generate cost savings for plan participants with chronic and high cost conditions.

The application can be accessed by visiting http://www.hhs.gov/ociio/regulations/index.html.
Also available on the OCIIO site is an ERRP Fact Sheet and Application Submission Do's and Don'ts.

Connecticut First State to Expand Medicaid

Connecticut is the first state in the Union to permanently expand its Medicaid program to low-income, single adults as a result of the recently enacted federal health reform. State officials predict that over 45,000 adults will be eligible for the program under this new expansion. Childless adults, prior to health reform's passage, could enroll in Medicaid only if their state was granted a waiver. These waivers were temporary and strict criteria had to be met in order to qualify for approval and renewal. The Patient Protection & Affordable Care Act changed this and now requires state Medicaid programs to cover all low-income individuals beginning in 2014. States that take early action are able to access federal funding to enroll individuals immediately.

Click here to read the press release from the US Department of Health & Human Services.

Health Reform expected to lower the federal deficit but not health care costs to employers in the short term

In a New England Journal of Medicine perspective piece, Peter Orzag, Director of the Office of Management and Budget, and Ezekiel Emanuel, a special advisor on health policy to the OMB and chair of the Department of Bioethics at the National Institutes of Health, outline their perspectives on “Health Care Reform and Cost Control.”

They state that current projections show total health care expenditures as a percentage of GDP being 0.5% lower in 2030 than they would have been without the passage of health care reform. However, the majority of the cost savings come from Medicare and Medicaid and not from a reform to the health care delivery system, which would result in lower costs for employers to offer health care to employees. Additionally, employers will be contributing to the government’s cost savings beginning in 2018 with the onset of the tax on “Cadillac” insurance plans.

Orzag and Emanuel go on to emphasize the need for health care delivery reform, and highlight three areas they believe will have the potential to cut costs across the board. Two of these three areas have the potential to directly affect the cost of health care to employers: The Patient-Centered Outcome Research Institute, which will research the effectiveness of various medical technologies and interventions, and the Innovations Center, which will develop, test and evaluate new policies and programs that enhance the quality of care for Medicare beneficiaries, reduce their cost of care, or both.

To read the full NEJM article click here

Businesses Respond to “Grandfathered Plan” Regulations

Yesterday the Departments of Health and Human Services, Labor, and Treasury jointly released the highly anticipated regulations for status as a “grandfathered health plan.” The regulations outline the routine changes that plans existing prior to March 23, 2010 can make without losing their grandfathered health plan status. Mid range projections in the regulation estimate that about half of employers will lose their grandfathered status by 2013. By losing grandfathered status, plans will have to comply with new federal health reform regulations that include many additional provisions such as: coverage of recommended prevention services with no cost sharing and guaranteed access to OB-GYN and pediatrician services.


Kaiser Health News’ Phil Galewitz and Mary Agnes Carey published an article yesterday outlining the business community’s mixed reception to this newly released regulation. Both small and large businesses have established opinions for and against the regulations, and all seem to agree its greatest benefits lie with consumers. To access the full Kaiser article click here

How Far Does $5 Billion Go? Not Very If It's ERRP

A recent report from the Employee Benefit Research Institute (EBRI) asserts that the $5 billion appropriated for the newly created early retiree reinsurance program (ERRP) will run dry within the first two years of its initiation.

The recently passed health reform package, The Patient Protection and Affordable Care Act (PPACA), created ERRP with the aim of providing temporary reinsurance for sponsors of employer-sponsored health plans that provide retiree health benefits to retirees 55-64 years old. ERRP becomes effective June 1, 2010 and the subsidy will be available until Jan. 1, 2014 when state-based health insurance exchanges are expected to be established or whenever the funds are exhausted.

Click here to read the entire brief from EBRI.

Large Employers' Perspective on Health Reform

In the latest edition of Health Affairs, National Business Group on Health President Helen Darling describes the large employer perspective on health reform.  While the new law may indeed provide health insurance coverage to scores of Americans who were not previously covered, large employers are faced with new administrative and financing burdens.  Large employers, in addition, may have to deal with low-wage workers opting-out of employer-sponsored coverage and receiving coverage through new health insurance exchanges.  Ms. Darling, moreover, asserts that the public sector must work with the private sector to drive delivery system reform and ensure the success of cost containment efforts.

To access the complete article (Health Affairs subscription required), visit: http://content.healthaffairs.org/cgi/reprint/29/6/1220.

Prior Approval of Health Insurance Premium Adjustments Reinstated

Yesterday both chambers of the New York State Legislature approved a package of massive statewide health care spending cuts as part of Governor Paterson's emergency budget bill.  New York City nursing homes, hospitals, and other health care programs will be hit hard by the cuts, with many set to lose out on millions of dollars.  Many New York hospitals will also lose out on federal matching subsidies as a result of the state cuts, meaning greater losses than stated in the state's budget package.

A separate bill was also passed that, effective October 1, 2010, requires health insurers to receive prior approval of premium rate adjustments from the State Department of Insurance.  Health insurance plans sold in the individual and small group markets will also be required to experience medical loss ratios of 82 percent.

Click here to read more about this development from the New York Times.

Cost is Key Reason Workers Are Uninsured

A recent study published by the Employee Benefit Research Institute (EBRI), a non-profit, non-partisan research organization, demonstrates that the majority (85 percent) of uninsured workers cite cost as the number one barrier to coverage. Lack of availability of coverage was reported by 29 percent of respondents as another barrier to coverage. These individuals reported that they did not have access through their own employer, their spouse's employer, or a parent's employer. A provision in the new health reform law will allow adult dependent children up to age 26 to access coverage through a parent's employer-sponsored health plan. This new benefit becomes effective with new plan years that begin on or after September 23, 2010. The US Department of Health & Human Services (HHS) predicts that potentially over 1.20 million individuals will become newly enrolled in coverage as a result.

Click here to access the EBRI brief explaining the findings of the below referenced study.
Click here to view the complete EBRI study.