Summaries of recent articles about health savings accounts appear below.

* Employers: An increasing number of businesses looking to help their workers with health insurance costs “are turning to the HSA model as a way to protect themselves from escalating premiums and to offer their employees a creative way to shelter their wages,” Richard Bernstein, CEO of the insurance advising firm Richard S. Bernstein & Associates, writes in a Miami Herald business column. Bernstein writes that HSAs are “growing in popularity among employers” because the accounts are not affected by the “‘use it or lose it’ provisions” if the “accumulated funds are not … used for medical expenses”; they “provide an attractive way to save money” that “grows tax-free”; and the accumulated funds can be “used tax-free to pay Medicare deductibles and long-term care insurance” (Bernstein, Miami Herald, 1/7).

* Investors: The Wall Street Journal on Saturday examined how “some of the [HSAs'] biggest beneficiaries are proving to be well-to-do investors looking for another way to fund their retirement savings.” The Journal states, “Unlike the more widely used and better-known flexible spending accounts,” HSAs provide beneficiaries “more control over — and a bigger stake in — their health spending,” and “savings not needed to pay for out-of-pocket medical expenses can accumulate … for years.” According to the Journal, making the maximum allowable annual payments to an HSA “can be an astute financial strategy for the well-heeled” and “can provide a valuable source of retirement income alongside” 401(k) and individual retirement accounts. However, HSAs are “less favorable for lower-income unhealthy people because out-of-pocket expenses increase” with the amount of health services used, and the “tax advantages aren’t as great for people in lower brackets” (Knight, Wall Street Journal, 1/5).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation© 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

A recent decision by the Equal Employment Opportunity Commission that employers can legally eliminate or reduce health benefits for retirees when they reach age 65 and become eligible for Medicare and retain benefits for retirees younger than age 65 “is a welcome step that could help slow the deterioration of employment-based health insurance” and “help far more people than it hurts,” according to a New York Times editorial (New York Times, 1/5). The decision allows employers to establish two classes of retirees — those younger than age 65 and those ages 65 and older — and offer different benefits to each group. In addition, the decision allows employers to eliminate or reduce health benefits for the spouses or dependents of retirees ages 65 and older (Kaiser Daily Health Policy Report, 1/2).

According to the editorial, the decision is “based on a plausible premise: If employers struggling with the rising costs of health care have to provide equal benefits, they will be more likely to eliminate all of their retiree coverage or reduce benefits to the younger retires than to increase benefits to their Medicare-eligible retirees.”

The editorial states that, although the “regulation is clearly unfair to people who were willing to accept lower wages while working in return for lifetime health benefits,” no “pain-free answer” exists for the “burden of rising health care costs.” The editorial concludes, “The least painful solution is to let Medicare carry the burden for those 65 and older while freeing employers to focus on younger retirees, who need help the most” (New York Times, 1/5).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation© 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

Summaries of several efforts by employers to reduce health insurance costs appear below.

* Employee health: “Enterprising employers are investing in the health of their employees and realizing less acute care, disability and lower general health care costs,” with such investments also likely to promote “better employee morale and retention rates,” the Miami Herald reports. “Senior level executives are role models for their programs, because without a corporate culture that values good health and actively promotes it, few employees are likely to take ownership of their health issues,” according to the Herald (Cole, Miami Herald, 12/31/07).

* Health plans: This year is “likely to see an expansion in health plans that cater to individuals who can’t afford their employer-sponsored insurance; an employer-driven focus on fitness and healthy lifestyles in the workplace; and consolidations among health care companies” as part of an effort to reduce costs, according to experts, the Denver Post reports. In addition, U.S. residents this year “can expect to see the emergence of philosophies for reforming health care in this country” from presidential candidates, “particularly for the millions who have no insurance” (Rouse, Denver Post, 12/29/07).

* Smoking: An increased number of employers have begun to ban smoking on their properties and promote smoking cessation programs as part of an effort to reduce health insurance costs, the Orlando Sentinel reports. In addition, some employers have considered an increase in health insurance premiums for employees who smoke (Wessel, Orlando Sentinel, 12/24/07).

* Wellness programs: An increased number of employers have begun “looking to control health costs by implementing creative wellness programs that reward employees for improving their health,” the Wichita Eagle reports. According to experts, health insurance costs for employers doubled from 1990 to 2001 and likely will double a second time by 2012. Experts maintain that popular wellness programs can significantly reduce health insurance costs for employers. The Eagle profiles a wellness program offered by Stinson Morrison Hecker — a regional law firm with 780 employees and headquarters in Kansas City, Mo. — in which workers who participate can receive between $75 and $250 annually (Atwater, Wichita Eagle, 1/3).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation© 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

The penalty for Massachusetts residents who can afford but do not purchase health insurance in 2008 could quadruple compared with the penalty in 2007 under draft regulations released by the state Department of Revenue on Monday, the Boston Globe reports. If the regulations are approved, the maximum penalty this year for residents who do not obtain health coverage would increase to $912 per year from $219 last year. The proposed penalties, which are based on half the cost of the least expensive state-sponsored health plan, are capped to avoid excessive fees, according to the Globe.

Under the draft regulations, fines would vary based on income and the length of time a resident has been uninsured. Residents younger than age 26 who do not qualify for subsidized coverage and are uninsured for all of 2008 would be fined $672, while residents older than 27 under the same circumstances would pay $912. Fines would be prorated for residents who have health coverage for a portion of the year. Residents with incomes less than 150% of the federal poverty level would not be penalized, according to the draft regulations.

State Revenue Commissioner Henry Dormitzer in a statement said, “We have worked hard to craft these penalties in a manner that is straightforward and easy to understand,” adding, “We hope they will encourage people who can afford health insurance to buy it.” The regulations will be finalized early this year. Residents can comment on the proposed penalties until Jan. 15, and they will not face the penalties until they file their 2008 tax returns.

The total number of residents facing penalties for being uninsured during a period in 2007 will be determined once 2007 tax returns are filed, according to the state revenue department and the Massachusetts Health Insurance Connector Authority. The connector estimates that 290,000 of the state’s 400,000 uninsured residents have enrolled in health coverage since the law took effect on July 1, 2007 (Krasner, Boston Globe, 1/1).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation© 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

Two recent studies found “uninsured people suffer significantly worse outcomes from cardiovascular disease, diabetes and cancer than those who have coverage,” providing the “most comprehensive evidence yet that a lack of health insurance is seriously harmful to a patient’s health,” according to a New York Times editorial.

According to the editorial, a Harvard Medical School study recently published in the Journal of the American Medical Association found that “uninsured near-elderly people got sicker at a faster rate than comparable people with insurance” and that those “disparities were sharply reduced when people turned 65 and became eligible for Medicare.” In addition, the study found that participants who “previously had insurance reported no significant change in their health as they transitioned to Medicare, but those with little or no prior coverage reported a substantial slowing of the decline of their health,” the editorial states.

Meanwhile, a recent American Cancer Society study found “substantial evidence that lack of adequate health insurance coverage was associated with less access to care and poorer outcomes for cancer patients,” as the “uninsured were less likely to receive recommended cancer screening tests and more likely to have their cancers diagnosed at a later stage, when they are less curable,” according to the editorial. In addition, the study found that they “had lower survival rates than those with private insurance for several cancers for which there are screening tests and effective treatments, including breast and colorectal cancer,” the editorial states.

The editorial concludes, “The two studies leave little doubt that health improves when people gain insurance coverage. That coverage should be available to all Americans” (New York Times, 1/3).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation© 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

The Los Angeles Times last month examined how the “verdict of small business owners could lift or sink the next president’s health care reform plan.” Small businesses are “at the core of both the policy problem and the thorniest political challenge” to reducing the number of uninsured U.S. residents, the Times reports.

While most large employers offer coverage, many small companies find the cost prohibitive. Nearly two-thirds of the working uninsured and about 40% of all U.S. workers are employed by companies with fewer than 100 employees, the Times reports. “So in terms of policymaking, it will be almost impossible to reduce the number of uninsured substantially without involving those who work for small firms,” according to the Times.

Small businesses traditionally have been “a solid GOP constituency,” but they are “being wooed by the Democratic candidates, who are offering to tweak their health care plans to make them more appealing,” according to the Times. However, the Times reports that small businesses “are a powerful lobbying force, and winning their support for significant changes may not be easy.” Denny Dennis, research director for the National Federation of Independent Businesses, said, “The politicians’ problem is coverage. Ours is cost,” adding, “If they can’t help us with cost, how can we help them with coverage?”

A survey by the federation showed that 9% of its 350,000 members said expanding coverage was the most important issue related to health care, while 74% named health care costs as the most important issue. The survey also found that 57% of federation members said they would support an individual health insurance mandate, while 40% said they would oppose it. An individual coverage mandate “is a cornerstone of universal coverage plans” proposed by Democratic candidates Sen. Hillary Rodham Clinton (N.Y.) and former Sen. John Edwards (N.C.).

Robert Blendon, a professor of health policy and political analysis at the Harvard School of Public Health, said, “The individual mandate is attractive in that it sounds like it could get their employees coverage, and it wouldn’t require (employers) to contribute very much” (Alonso-Zaldivar, Los Angeles Times, 12/23/07).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation© 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

California Gov. Arnold Schwarzenegger (R) and state Assembly Speaker Fabian Nunez (D) on Friday submitted to the state attorney general a proposed ballot initiative for the November 2008 elections that would provide the funding mechanism and other changes necessary to enact their plan to overhaul the state’s health care system, the Los Angeles Times reports. The submission “sets the stage for what is expected to be a costly and contentious battle pitting the two state leaders and their allies against some powerful opponents,” according to the Times (Rothfeld, Los Angeles Times, 12/29/07).

The proposal, approved by the California Assembly last month, would require most state residents to obtain health coverage. Under the bill, residents with incomes up to 250% of the federal poverty level would receive state subsidies for coverage, and residents with incomes up to 400% of the poverty level would receive tax credits to ensure that health care premium costs do not exceed 5.5% of their incomes. Insurers would be prohibited from denying coverage to residents because of pre-existing medical conditions (Kaiser Daily Health Policy Report, 12/21/07).

The ballot initiative submitted by Schwarzenegger and Nunez would ask voters to approve about $9 billion in fees and taxes to partially fund the $14 billion plan. The remaining funding would come from the federal government, consumer premiums and copayments (Chorneau, San Francisco Chronicle, 12/29/07). The initiative would nearly double the state tax on cigarettes to $1.75 per pack, from 87 cents per pack, in mid-2009. The initiative also includes an employer requirement that ranges from 1% to 6.5% of their payrolls, depending on the level of payroll. Funds raised by this fee would go into a new California Health Care Trust Fund to assist state residents who find insurance unaffordable. The initiative specifies that funds directed to the health care trust fund only could be used for the specified purpose.

In addition, the initiative would:

* Specify the process by which programs would be suspended if the state encounters insufficient funding;

* Levy new fees on hospitals; and

* Approve a $25 million loan from the state’s general fund to provide funding to families with children who will be dropped from city or county health care programs during the transition to the state program (Los Angeles Times, 12/29/07).

Process
Submitting the measure to the attorney general “is the first step” in qualifying it for the ballot, according to the Chronicle. The attorney general has seven weeks to review the initiative, assign it a formal title and write a summary that can be distributed to voters. Schwarzenegger and Nunez likely will need signatures from more than one million registered voters.

In addition to approval of the ballot measure, supporters of the health care proposal need to pass legislation (AB1X) that would make changes to the state and local government to allow the new health care system to operate. State Senate Pro Tempore Don Perata (D) has delayed a vote on the bill until mid-January, after a financial analysis is completed. If the bill is amended in a “substantial way, a new initiative would have to be drafted and the attorney general would have to begin his review again — costing backers of the plan precious time,” according to the Chronicle. The Chronicle reports that for supporters of the reform proposal, “time is running short to qualify the measure for the ballot and then effectively campaign for its passage” (San Francisco Chronicle, 12/29/07).

Problems With ERISA
The Christian Science Monitor on Monday examined how California leaders “are pushing forward with a health care reform effort … despite an ominous legal ruling last week” that found that a San Francisco health care program violated the 1974 Employee Retirement Income Security Act by requiring employers to spend a specified amount of money on health programs for their employees. ERISA prevents state and local governments from meddling with employer-provided benefits. The ruling “reiterates the almost Sisyphean nature of health care reform at anything but the national level,” and the submission of the ballot initiative by Schwarzenegger and Nunez “signal[s] they are still willing to try to push the boulder back up the hill,” the Monitor reports (Arnoldy, Christian Science Monitor, 12/31/07).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation© 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

Blue Cross and Blue Shield of North Carolina (BCBSNC) will waive the copayment on all generic medications that treat congestive heart failure, high blood pressure, high cholesterol and diabetes effective January 1, 2008. In addition, more than 40 brand-name drugs that treat these specific conditions will be moved into a lower-cost drug classification category to make them more affordable. It’s all part of a new medication adherence program, called Medication Dedication(SM), designed to make prescription drugs more affordable and encourage members with chronic conditions to take their medications as directed.

“The failure of patients to follow medication plans is a significant problem,” said Dr. Ron Smith, BCBSNC vice president of Employer Health and Pharmacy. “Medication Dedication makes it easier for our members with common chronic conditions to access affordable prescription drugs and stay on their medications.”

According to the World Health Organization, only 50 percent of patients with chronic illnesses follow their physicians’ long-term medication therapy recommendations. The cost of prescription drugs is often a barrier to taking medications for chronic conditions as prescribed. The Centers for Disease Control and Prevention reports that approximately 125,000 people die per year of cardiovascular problems because they did not take their medication(s) as prescribed. The problem costs an estimated $100 billion annually. By targeting these four prevalent chronic conditions, BCBSNC believes members will stay healthier and, in the long run, keep their overall medical costs down.

“We have shown that when patients can afford their medication, they take their medication,” said Smith. “Applying a copayment waiver for generic drugs used to treat specific conditions is the next logical evolution in our ongoing efforts to help control health care costs.”

According to the Food and Drug Administration, generic drugs are the same as their brand-name counterparts in active ingredients, dosage, safety, strength and performance. The only noticeable difference between generics and their brand-name counterparts may be the shape and color of the drug. Also, while generic drugs are just as effective as corresponding brand-name drugs, they typically cost up to 80 percent less.

BCBSNC saved members $80 million in 2006 in out-of-pocket costs when the company waived copayments on all generic drug prescriptions. Generic drugs were prescribed 58 percent of the time, up from 46.8 percent in 2004.

The Medication Dedication program is expected to run through 2009. Members only need to present their BCBSNC ID card to a network pharmacy to receive the generic copayment waiver. A list of the generic drugs that are part of this program and the brand-name medications that will move into a less-expensive drug category can be found online at http://www.bcbsnc.com.

About BCBSNC

Blue Cross and Blue Shield of North Carolina is a leader in delivering innovative health care products, services and information to nearly 3.6 million members, including approximately 825,000 served on behalf of other Blue Plans. For 74 years, the company has served its customers by offering health insurance at a competitive price and has served the people of North Carolina through support of community organizations, programs and events that promote good health. Blue Cross and Blue Shield of North Carolina is an independent licensee of the Blue Cross and Blue Shield Association. Access BCBSNC online at http://www.bcbsnc.com.

A Dec. 12 Wall Street Journal opinion piece written by Merrill Matthews, executive director of the Council for Affordable Health Insurance, highlights the “tragedy of state governments forbidding citizens from exercising the basic right to buy health insurance from other states,” John Graham, director of health care studies at the Pacific Research Institute, writes in a Journal letter to the editor (Graham, Wall Street Journal, 12/20). In the opinion piece, Matthews recommends that Congress pass the Health Care Choice Act — legislation sponsored by Rep. John Shadegg (R-Ariz.) that would allow U.S. residents to purchase health insurance in any state — to help make the market more competitive and reduce costs (Kaiser Daily Health Policy Report, 12/12).

According to Graham, “regional regulatory monopolies drive up health costs by making their residents pay for expensive mandates that benefit determined interest groups at society’s expense,” and state governments “also drive up health costs and taxes in less-regulated states because over-regulated states continuously lobby the federal government for more money to bandage their self-inflicted wounds.”

He writes that the “federal government’s out-of-control spending” on Medicaid and SCHIP “bails out states that drive private health insurance premiums sky high through overregulation.” As a result, “residents of states where health insurance is still affordable should be just as outraged as those in overregulated jurisdictions” and support the legislation, Graham adds (Graham, Wall Street Journal, 12/20).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

Presidential candidate Sen. Barack Obama (D-Ill.) on Wednesday at The Common Man restaurant in Concord, N.H., assembled six New Hampshire voters who told their stories about problems with health care costs and other issues, The Politico reports (Budoff Brown, The Politico, 12/20).

At the event, Sandra Burt, who last summer turned 65 and lost her manufacturing job, told Obama that she and her husband cannot afford their monthly prescription drug costs of $2,900 or heat for their home. Obama called her situation “outrageous” and criticized health insurers, pharmaceutical companies and other special interests for the problems with the health care system (Helman, Boston Globe, 12/20).

He said, “Nobody expects government to do everything for them. What people do expect is if you are working hard and doing the right thing, then you should be able to retire with dignity and respect and have some basic health care.” In addition, he said, “I know I can fix it if I’ve got the American people understanding that it needs to be fixed.”

According to The Politico, Burt “has become a bit of a mini-celebrity since August, when she lost her job, showed up at a rally” for presidential candidate and former Sen. John Edwards (D-N.C.), and “detailed her plight for the crowd.” Burt later appeared in a radio advertisement for AARP and works with New Hampshire for Health Care, an advocacy project sponsored by the Service Employees International Union (The Politico, 12/20).

Poll Gauges Top Issues, Health Priorities in Campaign
The December Kaiser Health Tracking Poll: Election 2008 finds that Iraq continues to top the list of issues the public wants to hear presidential candidates discuss. According to the poll, 35% of U.S. residents named the Iraq war as one of the top two issues in an open-ended question. Thirty percent said health care was one of the top two issues, followed by the economy (21%) and immigration (17%). Health care continues to rank second behind Iraq for Republicans, Democrats and independents alike. However, while health ranks clearly ahead of the economy and immigration for Democrats, it is more tightly packed with these issues for Republicans.

In addition, the poll found that Sen. Hillary Rodham Clinton (D-N.Y.) continues to be the candidate most associated with the health care issue, with 39% saying she is the candidate who is “placing the biggest emphasis on health care issues.” No other candidate, Democrat or Republican, is mentioned by more than 5% of the public on this question. On the separate question of which candidate best represents their own health care views, Clinton was named by 22% of the public overall and by nearly four in 10 Democrats. Former New York City Mayor Rudy Giuliani is the top pick among Republican candidates, with 5% of the public and 9% of Republicans saying he best represents their health care views.

This latest Kaiser Health Tracking Poll: Election 2008 was designed and analyzed by public opinion researchers at the Kaiser Family Foundation. A nationally representative random sample of 1,221 adults was interviewed by telephone between Nov. 28 and Dec. 9. The margin of sampling error for the survey is plus or minus three percentage points; for results based on subgroups, the sampling error is higher.

Full poll results are available online.

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.