The Health Shopper

A new study from the Kaiser Family Foundation and the Urban Institute suggests that for every percentage point increase in unemployment, 1.1 million more Americans will lose health coverage. An additional 600,000 children and 400,000 adults, according to the study, will move onto public insurance programs such as Medicaid and S-CHIP, which would cost a total of $3.4 billion in state and federal revenues. The New York Times notes increasing health costs coupled with concerns about the economy is also impacting individuals with health coverage. In a recent poll cited by the Times, 42 percent of adults said that someone in their family had foregone medical treatment due to cost.

President Bush has threatened to Veto a tax bill that could substantially raise administrative costs for HSAs. H.R. 5719, which passed by a vote of 23-17 through a House of Representatives committee, would require that banks and other HSA administrators have tools in place to verify that individual spending from the accounts goes toward qualified expenses. Currently, banks or other administrators do not need to confirm that HSA funds are used on health related expenses.

Proponents of the change say that the bill would help the IRS ensure that individuals who use HSAs for non-health expenses are taxed appropriately. Opponents of the bill argue that the regulations are unnecessary and would force banks to build elaborate verification systems that they would pass on to account holders through substantial fee increases.

The Bush Administration released a report finding that Medicare's hospital trust fund will be depleted by 2019. In addition, Medicare is projected to spend more this year than it receives in dedicated tax revenue, but will be able to make up for the shortfall by using interest from Medicare trust fund investments. According to the New York Times, Treasury Secretary Henry Paulson noted that "Medicare poses a far greater financial challenge [than Social Security funding]."

Medicare has a separate trust fund for physician services and outpatient medical care which also faces financial difficulties. Payments for outpatient medical services can be covered by general funds, however, and Medicare officials can also increase premiums and co-pays for physician services in order to make this part of Medicare more financially stable.    

The British National Health System has denied a cancer patient the right to pay for her own medication with her own money, spurring a debate there over what sorts of rights individuals have to pay for their own treatment. The 58 year-old breast cancer patient, Collette Mills, had been receiving treatment under England's state-sponsored system, but decided to pay for the drug Avastin-which is not covered by the NHS but which has been shown to improve outcomes for cancer patients-out-of-pocket.

Under the rules of the system, if she had paid for Avastin herself, she would have had to pay all costs associated with her cancer treatment, regardless of whether or not they would ordinarily be covered by the NHS. The government has defended its actions by saying that allowing people to use their own money to supplement state-sponsored treatment would create a "two-tiered system" for the rich and poor.

The case mirrors a case of a separate woman, Debbie Hirst, who also tried, unsuccessfully, to pay for Avastin with her own money to treat her cancer. The New York Times notes that Hirst's cancer has progressed, and in "a final irony Mrs. Hirst was told early this month that her cancer had spread and that her condition had deteriorated so much that she could have the Avastin after all – paid for by the health service."

In response to some of the recent controversy surrounding policy rescissions, America's Health Insurance Plans has started circulating a proposal to create independent state review boards to review policy rescissions. Under the proposal, the review boards would be staffed by health care professionals and lawyers, and their decisions regarding policy rescissions would be final. The proposal has drawn praise from Consumer's groups and activists, and will be considered at a meeting of the National Association of Insurance Commissioners next month.

According to a new study in Health Affairs, national spending on health care will double by 2017 to $4.3 trillion, assuming health spending continues to increase annually by 6.7 percent. As a result, estimates place per capita health spending in 2017 at $13,101, up from $7,026 in 2006. Because the study's authors project increases in health spending to outpace national economic growth, they suggest that by 2017, health costs will total 19.5 percent of the GDP.

Although the study's authors estimate increases in all areas of health spending, they project that the largest growth will occur in Medicare and other federal programs as baby boomers get older and move from private insurance to Medicare. Medicare alone, with a projected price tag of $844 billion, will account for one fifth of health spending by 2017, while the government's total share of health spending will increase to $2 trillion. Prescription costs are also expected to rise quickly from $761 per person in 2007 to $1,537 per person in 2017. The study's authors see out-of-pocket spending increasing to $464.3 billion in 2017, up from $269.3 billion in 2007.

Los Angeles City Attorney Rocky Delgadillo has filed a lawsuit against Health Net claiming that the insurer illegally rescinded policies of 1,600 policyholders who submitted expensive claims. Specifically, the lawsuit claims that applications for individual policies were complicated and ambiguous, allowing the insurer to rescind policies on the grounds that individuals had supposedly filled them out incorrectly. The city attorney is also considering criminal charges against Health Net employees.

In addition, the suit claims that the insurer improperly delayed paying for medical care, resulting in delays in medical care for thousands of patients.  The suit is part of a larger citywide effort to crack down on insurance companies, as last week, the city created a website, Protect the Insured, to allow city residents to report grievances against insurers.

A Health Net spokesperson denied the charges and noted that the company paid out more than $200 million in claims last year for people with individual insurance policies, and noted that the company has an independent board to review cancellations in order to protect policyholders.

The National Conference of Insurance Legislators, a national coalition of lawmakers with expertise in insurance regulations, will be voting in two weeks on whether or not to encourage states to raise age limits that cause children to be removed from their parents' insurance. Currently, most states have rules that limit the age of dependents on parents' employer-sponsored insurance to 23 for college students and 19 for adults. Proponents of raising the age limit-to 25, and potentially as high as 30-say the plan would make coverage affordable for as many as 1.4 million people who may otherwise be unable to afford insurance.

Critics of the proposal, including America's Health Insurance Plans and the Council on Affordable Health Insurance, argue that raising the caps would increase insurance premiums for current policyholders. Instead, they suggest that younger uninsured individuals purchase low premium, high deductible plans.

Florida Governor Charlie Crist has proposed that the state contract with private insurers in order to create low-cost, guaranteed issue health plans. Under the proposal, the state would exempt the new low cost plans from traditional health insurance mandates-such as that health insurance cover chiropractics-and would instead offer barebones plans for around $150 a month. These lower cost options might include catastrophic plans with high deductibles and relatively low lifetime policy reimbursement limits, or alternatively, limited benefit type plans that cover primary care and some emergency costs, but not expensive hospital treatment.  

New York Attorney General Andrew Cuomo has launched an investigation into health insurance reimbursements and has sued UnitedHealth. The lawsuit claims that UnitedHealth has systematically underestimated the usual and customary rates used to pay out-of-network doctors and hospitals, leaving policyholders to pay a larger portion of medical costs than they should have to pay. For example, Cuomo contends  that while the average billing rate for a 15 minute doctor visit is $200, UnitedHealth lists the average rate at $77. In effect, this means that instead of spending $40 out-of-pocket on a routine doctor visit, a policyholder ends up owing $138.

Cuomo has also subpoenaed records for other major health insurers in the state including Aetna and Cigna as part of an ongoing investigation.

Across the country in California, the Los Angeles City Attorney's office has developed a website, Protecting the Insured, to give city residents and medical providers online tools to file grievances and other complaints about health insurance companies. In a letter on the website, City Attorney Rocky Delgadillo says that the city's investigation stems from illegal policy rescissions that can leave individuals with hundreds of thousands of dollars in medical debt.