When Congress returns for a likely lame-duck session after the midterm elections, the biggest battle might be fought over whether to extend the 2001 and 2003 tax cuts to everyone or only to those earning less than $200,000 annually ($250,000 for families). And depending on the makeup of the 112th Congress, which will be seated in January, Republicans might try to make good on a campaign pledge to repeal all or most of the healthcare reform legislation.
The expected flashpoints are being teased endlessly with media sound bites featuring phrases that most of us love to hate: higher taxes, spiraling medical bills, soaring insurance premiums. Insurance companies already are blaming a spike in premiums on the healthcare legislation, claiming that new provisions and mandates are forcing them to further hike their rates.
Closer to home, the high-profile frays could put hospitalists in the awkward position of supporting political positions that sock them in the wallet. After all, doctors are workers and healthcare consumers, too. So what impact could higher taxes and higher insurance premiums really have? Let’s start with health insurance.
Insurance Cost Increases
Signed into law in March, the Affordable Care Act includes tax credits for small businesses to help defray the costs of health insurance coverage. But in 2013, it also raises the threshold for medical expense deductions for most taxpayers, to 10% from 7.5% of adjusted gross income. In other words, families can claim tax deductions only after having spent 10% or more of their adjusted gross income on medical bills. For families with hefty medical bills, that 2.5% difference could translate into a significant shortfall.
CMS was able to negotiate with insurers to achieve a slight drop in Medicare Advantage premiums, but many individual states have had less luck in preventing rate increases from private insurers who blame their higher premiums on new mandates. The Wall Street Journal has documented rate increases of 18% in states like Wisconsin and North Carolina—about 9% of which insurance company officials pinned on the new law.1 Such increases are hardly inevitable, however. The Obama administration’s White House blog, for instance, has cited the example of North Carolina Blue Cross and Blue Shield, which announced Sept. 20 that it will provide $156 million in refunds to more than 215,000 customers after state regulators found an overcharge that should be reversed due to new rules in the reform law.2 WellPoint will similarly refund $20 million to its health insurance customers in Colorado.2
The requested premium increases and identified overcharges have contributed to plenty of finger-pointing among insurers, state regulators, and the Obama administration, which has assailed insurers for using the law as a convenient excuse to raise rates. Highlighting the unease of many consumers, however, is the verdict that the proposed increases—if approved—would hit small businesses and individuals hardest.
According to the State of Hospital Medicine: 2010 Report Based on 2009 Data, released in September by SHM and the Medical Group Management Association, participating hospitalist groups have a median of 10 physician full-time equivalents. Roughly 25% of respondents are in physician-owned groups, while 14% are in a management services organization (MSO) or physician practice management company (PPMC). Smaller HM groups wouldn’t be alone in feeling the pinch, but they might need to consider some serious comparison-shopping to avoid costly premium increases.
Cherilyn Murer, president and CEO of Joliet, Ill.-based Murer Consultants Inc., has worked with healthcare systems and providers in 42 states, but even her company has not been immune to having to contend with rising premiums. “Our managing partner just renegotiated our health benefits [premiums] that were supposed to have gone up 30% by our previous carrier,” Murer says. “Through protracted negotiations and diligence, he was able to find a plan that did not increase our costs, and retained pretty much the same benefits.”