44% of the "Newly Covered Under Obamacare" Don't Need Obamacare. They'd Already Qualified Under Other Federal Welfare Provisions

This is a fascinating read from Megan McArdle over at Bloomberg:

[T]he largest effect [on the reduction in the uninsured] comes, not from the subsidies, nor from the mandate, nor even from the Medicaid expansion. The largest effect was due to that 'woodwork effect' -- about 44 percent....  [I]n which people who were previously eligible for Medicaid 'came out of the woodwork' and signed up for the program in 2014. ... 

We’ve always known that there was some 'woodwork effect,' in which people who were already eligible signed up because of some combination of easier signup procedures and the heightened publicity that surrounded Obamacare’s passage and implementation. But these are huge numbers; the woodwork effect is more than twice as large as the number of people who became eligible for Medicaid thanks to Obamacare’s more generous criteria. This suggests the possibility that the plurality of people who gained insurance thanks to the law technically didn’t need a new program to become insured; all they needed to do was to sign up for public insurance they already qualified for. 

The underscoring is mine.

Certainly undercuts the "you can't repeal it" cries ... by about 44%.
 

Judge Blocks Obama Administration's Overtime Rule

So much for a slow Thanksgiving week in benefits news:  

Judge blocks Obama rule extending overtime pay to 4.2 million U.S. workers
November 23, 2016 – Reuters
Excerpt: “A federal judge on Tuesday blocked an Obama administration rule to extend mandatory overtime pay to more than 4 million salaried workers from taking effect, imperiling one of the outgoing president's signature achievements for boosting wages. U.S. District Judge Amos Mazzant, in Sherman, Texas, agreed with 21 states and a coalition of business groups, including the U.S. Chamber of Commerce, that the rule is unlawful and granted their motion for a nationwide injunction. The rule, issued by the Labor Department, was to take effect Dec. 1 and would have doubled to $47,500 the maximum salary a worker can earn and still be eligible for mandatory overtime pay. The new threshold would have been the first significant change in four decades.”

Judge blocks Obama overtime rule, putting it in jeopardy
November 22, 2016 – The Hill
Excerpt: “The Labor Department’s contentious overtime rule was blocked Tuesday by a federal judge in Texas, putting one of President Obama’s top regulatory initiatives in jeopardy. In a 20-page order, Texas U.S. District Judge Amos Mazzant issued a temporary injunction halting the rule nationwide.”

FLSA overtime rule effective December 1 blocked by court
November 22, 2016 – Wolters Kluwer
Excerpt: “Late on November 22, a federal district court in Texas enjoined nationwide implementation of the Labor Department’s final overtime rule. The rule was to go into effect on December 1. Judge Amos Mazzant, ruling on a consolidated lawsuit brought by 21 states and a business coalition, concluded that the executive, administrative, or professional employee exemption contained in FLSA Sec. 13(a)(1) does not grant the Department the authority to utilize a salary-level test or an automatic salary updating mechanism under the rule. “With the Final Rule, the Department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test. Consequently, the Final Rule does not meet [step one of the] Chevron [deference test] and is unlawful,” the court ruled (State of Nevada, et al v. Dept. of Labor, et al, Dkt. No. 4:16-CV-00731, Nov. 22, 2016).”

  

Friday Benefit Clips: Obamacare on the Ropes; Election Impact on Employment Law Issues; FMLA and Overtime Updates

Health Care Reform News:

Election Results Likely to Result in the End of the ACA as We Know It, But Employers and Plan Sponsors Should Stay the Course for Now
November 10, 2016 – Proskauer Rose LLP
Excerpt: “This is not a novel approach to effect healthcare legislation – the ACA itself was a product of budget reconciliation legislation passed after Democrats lost their Senate supermajority in 2010. Budget reconciliation legislation cannot be held-up by filibuster, but the subject of the legislation must be related to revenue. Non-revenue related provisions can be struck from this type of legislation.”

2016 Election – Impact on Compliance Issues
November 9, 2016 – BB&T Insurance Services
Excerpt: “Regardless of any future changes that may be made, employers that provide group health coverage for their employees must prepare for upcoming ACA deadlines. These may include…”

2016 End of Year Plan Sponsor “To Do” List Health & Welfare
November 9, 2016 – Snell & Wilmer
Excerpt: “The Health Care Reform Act created the transitional reinsurance program, which requires most self-insured health plans to make contributions to HHS for the 2014, 2015, and 2016 calendar years. The contribution amount is determined by the number of covered lives under each plan. The number of covered lives must be calculated and submitted to HHS by November 15 of each year. The third and final filing is due November 15, 2016 for the 2016 calendar year.”

2016 Reinsurance Contributions Review and Discussion Session
November 7, 2016 – The Centers for Medicare and Medicaid Services
Excerpt: “Notable Changes for the 2016 Benefit Year…File no later than November 15, 2016 (to) submit the Form and schedule payment.”

Donald Trump Wins Presidential Election, Total Rewards & Business Changes Expected in New Administration
November 9, 2016 – World at Work
Excerpt: “Trump's positions on total rewards issues include a mix of traditional pro-business positions and some novel approaches to policy changes…”

ColoradoCare measure Amendment 69 defeated soundly
November 9, 2016 – The Denver Post
Excerpt: “Amendment 69, the ballot measure known as ColoradoCare that would have created a universal health care system in Colorado, was soundly defeated Tuesday night…Amendment 69 would have eliminated most private health insurance in the state and replace it with a taxpayer-funded cooperative known as ColoradoCare, which would have provided coverage to every single Colorado resident. It would have been paid for, largely, through a 10 percent payroll tax — workers at businesses would have been responsible for a third of the tax, while their employers would have picked up the rest; the self-employed would have paid the full 10 percent.”

ACA Compliance Alert: "Opt-Out Payments" to Employees Who Decline Employer Health Coverage
November 9, 2016 – Frost Brown Todd LLC
Excerpt: “The employee's "tax family" consists of the employee and all individuals the employee is reasonably expected to claim as a personal exemption on his or her individual tax return. One thing to note - this term can include individuals that are not eligible under the employer plan (e.g., dependents who are age 26 or older). When the requirements of an eligible opt-out arrangement are met, the opt-out payment is not considered for affordability purposes for the entire period of coverage to which the payment applies, even if the other coverage subsequently terminates for the employee or a member of the employee’s expected tax family.”

Hospital and Health System Health Benefit Plan Obligations Under New Nondiscrimination Rules: ACA Section 1557 and Requirements for Federal Contractors
November 7, 2016 – Alston & Bird LLP
Excerpt: “This impacts any entity (or health benefit plan) that receives federal financial assistance, including Medicare or Medicaid reimbursements. Two new regulations require some employers to make health plan design and administrative changes. While not all employers are subject to these requirements, those who are will need to review their plans and be aware of other obligations these rules impose…The Section 1557 regulations will impact employer-sponsored plans in several ways. Employers looking to assess application of Section 1557 to themselves or their health plan should determine whether they fit into any of these categories…”

NOT-130248-16: Sections 4375 & 4376 – Insured and Self-Insured Health Plans, Adjusted Applicable Dollar Amount for Fee Imposed by §§ 4375 and 4376
November 4, 2016 – The Internal Revenue Service
Excerpt: “The fee imposed by §§ 4375 and 4376 helps to fund the Patient-Centered Outcomes Research Institute (PCORI) and is calculated using the average number of lives covered under the policy or plan and the applicable dollar amount for that policy year or plan year…The applicable dollar amount that must be used to calculate the fee imposed by §§ 4375 and 4376 for policy years and plan years that end on or after October 1, 2016, and before October 1, 2017, is $2.26.”

In Other News:

Can an Employer Require That an Employee Submit FMLA Certification from a Specialist to Support the Need for FMLA Leave?
November 4, 2016 – Franczek Radelet
Excerpt: “Therefore, a generic note even from the psychiatrist stating that the employee can return to work is not good enough. As the court also affirmed here, the employer has the right to insist that the health care provider review the job description for the position and confirm that the employee can perform those job duties. And, according to this court, the employer can require that this information be provided by the psychiatrist, as opposed to a primary care doctor.”

Overtime Changes Take Effect December 1, 2016
November 3, 2016 – BB&T Insurance Services
Excerpt: “A Department of Labor (DOL) final rule is set to increase the salary threshold for the “white collar overtime exemptions” to $47,476 per year. Recent challenges to the rule have left some questioning whether it will take effect on Dec. 1, 2016 as scheduled.”

FMLA Fraud Finding Leads To Employer Court Victory
November 3, 2016 – Fisher Phillips
Excerpt: “Further, the court noted that United showed no signs of bias against employees who took FMLA leave. In fact, in the two years prior to the investigation, the employer approved 56 days’ worth of intermittent leave requested by Sharif, never once rejecting his requests. “This is not the record of a company that is historically hostile to FMLA leave in any discernable way,” the court said.”

  

Election Results Likely to Result in the End of PPACA

A great early read from Robert Projansky, Steven Weinstein and Damian A. Myers over at Proskauer:  

... To the extent that the ACA is limited or eliminated by these actions, there is then the question of what stands in its place. Throughout his campaign, President-elect Trump has made clear that he intends not just to repeal the ACA, but also replace it with something new. Concrete details are lacking at the moment, but the following are possible components of his replacement plan:

• A cap on the employer deduction for health coverage provided to employees.

• Individuals without employer-provided health coverage would receive a tax credit against the cost of coverage purchased on the individual market. The tax credit would not be an advanced premium credit, but would instead be taken in full when filing income tax returns.

• Expansion of health savings accounts, including increased contribution limits, and improved price transparency from healthcare providers.

• Insurance companies would be able to sell policies across state lines.

• Provide block grants to states for Medicaid.

• Allow consumer access to imported drugs meeting safety standards.

Ultimately, it is far too early to know exactly what President-elect Trump and the Republican-controlled Congress will do with respect to the repeal of the ACA and the enactment of new health care reform or what the impact of any of those changes will be....

 

On Armstrong and Getty with a Diagnosis and Prognosis on Obamacare

You can also listen here. 

1) Costs and Obamacare Premiums

• Total Obamacare price tag is still around $1.75 T - will be larger if the law is to survive.
• When we last spoke in mid-August I told you employer plans were up 7% while Obamacare plans were up 18% to 23%. Well the final results are in and it is the higher end of my projection. 23 to 25% for most Exchange plans in 2017.

     Why?

• Obamacare enrollees are 22% more costly than people covered through employer plans.
• Medicaid expansion enrollees are 50% more expensive than originally projected.

2) How Many Are Covered?

We really don’t know. The CBO, Gallup, CDC and Census Bureau all ask different questions and come up with different answers. Even Covered CA simply takes the number of policies sold and multiplies by 1.7 for their “estimate.”

1. Are you uninsured right now?
2. Have you been uninsured for all of the last year?
3. Have you been uninsured at any point in the last year?

We are likely somewhere north of 10 million now but probably well less than 20 million total – and that includes the folks who have gained coverage due to the Medicaid expansion. CBO projects that 9 million were covered under Exchanges in 2016 (up from 8M in 2015).

3) Why it’s Failing

4) What needs to be done for a Governmental System like this to work? There are only two options to make Obamacare work at this point:

• Turn on a firehose of money by increasing the individual and Employer Mandates by about three times and doubling subsidies to all entrants thereby running up another Trillion and an half dollars in costs. Or
• Push to a centralized single-payer, Medicare for all type of system and force all of our healthcare workers to be paid substantially less – like European healthcare workers.

        Both of these are politically impossible, especially in our current climate.

5) Faith in Bureaucrats to Guard Your Tax Dollars?

• In 2015 the Gov. Accountability Office conducted an audit of Obamacare Exchange safeguards by creating 18 fictitious applicants and applying for Obamacare with fake Social Securities (some starting with 000) or wholly fictitious people, created from thin air. 17 of 18 of them skated through with coverage.
• Of course, HHS and the Exchanges said they’d do better in 2016. They didn’t. This year 16 of 16 made it through. This year GAO was able to befuddle Obamacare with expired IDs, partial documentation and fake people.