Key Takeaway from Day 3:

Based on the Justices tough questions to law’s challengers and defenders, anything is possible.

What happened:

Two questions were considered on Day 3. The first question asked whether other parts of the law should be struck down if the individual mandate was struck down. The Solicitor General (SG) argued if the mandate were to be struck down, then the guaranteed issue and community rating provisions should also be struck down, but the rest of the law should stand. The Challengers argued if the mandate were to be struck down, the rest of the law should go with it. The Court appointed a third party lawyer to argue if the mandate were to be struck down, everything else should stay in place. The justices were equally tough on all three arguers, and by the end of the day the consensus was that the court could conceivably go in any of these directions if the mandate were struck down, although some suggested that striking down the mandate while leaving everything else in place was the least likely option.

The second question asked whether Medicaid expansion called for by the Affordable Care Act (ACA) was unconstitutional. The ACA offers to pay 90% of the costs of expanding Medicaid coverage to all state residents earning less than 133% of the Federal Poverty Level. States that refuse to do so could risk losing not only those funds but all federal Medicaid funding. The ACA’s challengers argued that such an arrangement was coercive, a way to force states to spend more on health care coverage for low-income residents at a time when state budgets make that difficult. Justices from across the ideological spectrum questioned the challengers’ argument, but they also pushed the SG for examples of why the Medicaid expansion did not constitute coercion. Many commentators noted that none of the lower courts had ruled that the Medicaid expansion unconstitutional, and one could speculate that the nature of the Court’s questions would suggest it was poised to follow suit.

The Justices will vote on all questions of the case in their private Conference, and then begin to write the opinions, which are expected to come out by the end of June. After researching the ongoings these last few days, it seems the only conclusion to come to is that anything is possible. I don’t envy their task.

John Barkett

Director, Extend Health, Inc. and former HHS analyst
Extend Health, Inc.

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare exchange.

Key Takeaway from Today: 

The constitutionality of the individual mandate seems up in the air after tough questions from the bench.

What Happened:

Today the Court heard oral arguments on the constitutionality of the individual mandate (IM).  The Solicitor General (SG), arguing on behalf of the Obama Administration, was faced with a barrage of questions from four of the Justices (Kennedy, Roberts, Alito, Scalia), while the fifth (Thomas) did not ask a question but is widely expected to vote against the constitutionality of the mandate.   Their questions aimed at establishing whether there are any limiting principles that apply to the mandate to purchase health insurance.  In other words, if the Court were to declare the mandate is constitutional, would they be setting a precedent that an individual mandate for any product is also constitutional, or are there aspects of health insurance that make it special in the eyes of the constitution?  The SG’s response, over and over again, was that health insurance is different than other products.

The question of whether health insurance was meaningfully “different” from other products continued to be debated during the challengers’ oral arguments.  The questions of four justices (Kagan, Sotomayor, Ginsburg, and Breyer) seemed to suggest they agreed with the argument the Solicitor General had put forth.  Despite his earlier questions, Justice Kennedy, who is often the swing vote when the court votes 5-4, left room for the possibility that health care is, in fact, different than other products:  “…And the government tells us that’s because the insurance market is unique. And in the next case, it’ll say the next market is unique. But I think it is true that if most questions in life are matters of degree, in the insurance and health care world, both markets — stipulate two markets — the young person who is uninsured is uniquely proximately very close to affecting the rates of insurance and the costs of providing medical care in a way that is not true in other industries.  That’s my concern in the case.”

Oral arguments often but not always signal where a Supreme Court justice is on a given issue.  But many commentators today suggested the challengers presented the more effective argument.

For a more detailed recap of the day’s events, go here.

And for an interesting perspective on whether insurance is different than other products, read this post on Robert Toth’s Business of Benefits blog.

John Barkett

Director, Extend Health, Inc. and former HHS analyst
Extend Health, Inc.

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare exchange.

To listen to audio recordings of the Supreme Court oral arguments, or read written transcripts, go to

Monday 3-26-2012

Tuesday 3-27-2012

Wednesday 3-28-2012

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Key Takeaway from Today:

The Supreme Court is likely to decide on the constitutionality of the law this June.

What Happened:

Today the Court heard arguments from three parties on whether the Anti-Injunction Act (AIA) applies to challengers of the individual mandate. The AIA prohibits parties from bringing forth a lawsuit that challenges a tax before the tax has actually been assessed. The Court appointed a third party lawyer to argue the case for the AIA’s application, as neither the Justice Department nor law’s challengers (26 states, the National Federation of Independent Businesses, and various independent parties) were willing to argue that the mandate’s penalty is a tax.

The overwhelming consensus among commentators today was that the Justices were skeptical that the penalty should be considered a tax. In other words, the road has been cleared for the justices to decide on the individual mandate’s constitutionality. For a longer-but-still-in-plain-English write-up on the day’s activities, see here:

For a 15 minute audio play-by-play, see here:

I’ll be back tomorrow with an update on the day’s SCOTUS activities.

John Barkett
Director, Extend Health, Inc. and former HHS analyst
Extend Health, Inc.

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare exchange.

On March 26 the U.S. Supreme Court will begin hearing arguments in the case on health reform. At the center of the controversy is the constitutionality of the individual mandate. Advocates say the mandate is the key to making the law work and congress has the power to regulate commerce among the states, but opponents argue that Congress does not have the authority to require all citizens to buy health insurance or pay a penalty.

The decision, due in late June, could be one of the most important the Supreme Court has ever made. The Court will hear six hours of arguments over three days – more time than any case in over 45 years. So, what happens if the Court strikes down the individual mandate?  Will the entire health care law go down with it?

The individual mandate is an integral part of the health care law. Its purpose is to increase participation and minimize the adverse selection that could happen if a large percentage of healthy people do not buy insurance.  But is the mandate the only way to ensure enough participation? Many, including the GAO, have suggested alternatives that might work as well, maybe even better than, the individual mandate. Here are a few of the proposed options:

  • Strict enrollment periods. If missed, the individual would have to wait until the next year to be eligible for insurance.
  • Levy a tax on those who don’t purchase insurance and offer a tax credit to those who do.
  • People could opt-out without paying a penalty, but would be ineligible for benefits for a specified length of time. In addition, people who neither opt out nor purchase insurance would be charged a penalty.
  • Raise premiums for people who don’t purchase insurance during the initial open-enrollment period. This option is similar to rules for enrollment in Medicare Part B and Part D, where individuals who don’t enroll during their initial elegibility period pay a penalty in the form of a higher premium, for as long as they are Medicare beneficiaries.
  • Let states adopt their own individual mandates.

If the court finds that the “individual mandate provision is both unconstitutional and ‘necessary and essential’ to the health care reform law, then the entire law will go down with the provision,” according a recent InsuranceNewsNet artcle by Bryce Williams. If the court strikes down the mandate, but allows the rest of the health care law to stand, there are many alternatives that could take its place. But would Congress be able to work together – during an election year – to revise the health care law? More likely, any changes to the law to ameliorate the loss of the individual mandate would have to wait until 2013 after a new Congress is seated.

Opinions and predictions from experts on both sides of this political – and now legal – football abound. At Extend Health, we tend to believe that the Court will uphold the mandate, and if they don’t uphold it, they will rule that it is severable from the rest of the ACA’s provisions. No one knows for sure, but you can count on the prognostications and rhetoric to continue as we all wait for the court to announce its decision in June.

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare exchange.

If you’re evaluating a Medicare exchange solution for your retirees, you may be wondering how much time the transition will take so you can figure out when to get started. After five years of experience at Extend Health, we have developed a process and a recommended timeline that works. If you are planning to move your retirees to coincide with the change to the RDS taxable status, this article will help you understand what you need to do to make the transition before the change takes place on January 1, 2013.

The actual start date for the process is determined by the start date for new insurance benefits. Employers can choose any start date they wish. In an ideal world the process would take place over a five to six month period, divided into four phases as follows, with key milestones in place during each phase:

  • Planning: Starts four to five months before enrollment begins (seven to nine months before new coverage start date) and lasts six-eight weeks
  • Retiree Education: Starts 45 days before enrollment begins and lasts six to seven weeks
  • Enrollment: Starts 90 days before start of new coverage. Employers have the option of designating the dates or length of time during which they want enrollment to take place; we recommend allowing four to six weeks.
  • Post Enrollment: The employer’s responsibilities during this phase are minimal. Extend Health takes over all administrative tasks for the newly-enrolled retirees.

Phase One: Planning

Ideally, this phase takes place four or five months before enrollment begins. Once the decision to move forward has been made, there are a number of key elements that need to be put in place before announcing the change, including:

  1. Employer and Extend Health team meet to plan transition
  2. Do data analysis to determine retiree HRA funding amounts
  3. Write and distribute employer announcement of benefits change

Phase Two: Retiree Education

This phase, which starts 45 days prior to enrollment, is focused on making sure retirees understand the changes to their benefits and the process for enrolling new coverage. During this phase:

  1. Getting Started Guide, first Extend Health mailing, delivered to retirees. Includes welcome letter, FAQ, and workbook to assist in creating profile
  2. Retirees create profile either on-line or on the phone with a benefit advisor
  3. Retirees schedule enrollment appointments
  4. Retiree on-site meetings take place

Phase Three: Enrollment

The start date of the enrollment phase is calculated by looking at the start date for new coverage and counting back 90 days. The employer can choose any start date it likes. For example, if an employer wants new coverage to start on June 1, then enrollment should begin on March 1. This allows time for insurance carriers to process the new applications and mail insurance cards to retirees in time for the start of coverage. During this phase:

  1. Retirees receive the Extend Health Enrollment Guide, including Medicare basics plan education, what to expect on the enrollment call, and appointment confirmation.
  2. Enrollment calls take place.
  3. Extend Health delivers reminder post cards and (if necessary) certified mail to those retirees who do not respond in a timely manner.

Phase Four: Post-Enrollment

The employer’s role is minimal during the post-enrollment phase. Retirees often have questions during this phase but Extend Health has a team of benefit advisors and customer service representatives who will help them with carrier or HRA issues, or any future changes to their medical and prescription drug requirements. During this phase:

  1. Extend Health delivers plan selection confirmation letter
  2. Insurance carriers send out welcome guides and new insurance cards
  3. Extend Health delivers a welcome letter and the HRA packet

Example timeline

If an employer wants new retiree benefits to start on September 1st, the timeline for a smooth transition would look something like this:

  • Phase 1 planning begins between February 15 and February 28
  • Phase 2 retiree education begins April 15
  • Phase 3 enrollment begins June 1
  • Phase 4 post-enrollment begins with the start of new coverage on September 1

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare exchange.

If you are considering a move to a Medicare Exchange for your retirees, now is the time to start thinking about an off-cycle transition. Because the Retiree Drug Subsidy loses its tax-deductible status starting in 2013, many corporate employers are timing a new retiree strategy to coincide with this pivotal legislative change. Extend Health and CMS anticipate a very busy fall season in 2012 due to this tax event, as employers decide to make transformative changes to retiree benefit plans.

Making a change to your Medicare population does not have to coincide with the Annual Enrollment Period (AEP) in the fourth quarter. Changes can be made at any time during the year. Many Extend Health clients have chosen to transition to the Medicare exchange platform for effective dates other than January 1st.

Among the advantages of making an “off-cycle” transition in 2012 is the ability to avoid the busy fall enrollment season, when existing Medicare beneficiaries can and often do review and change their Medicare Advantage or Medicare Part D coverage. Retirees who lose group coverage always have guaranteed Issue status during a special enrollment period that allows them to move into the individual supplemental Medicare market — no matter what time of year the change takes place.

An off-cycle transition also separates retiree benefits management tasks from the usual end-of-year enrollment period for active employees. HR departments can focus on the retiree transition without also having to manage the administration of active employee enrollment at the same time.

If you choose an off-cycle transition, you can have full confidence that Extend Health will take good care of your retirees and that it will allow them (and you) to avoid the AEP rush.

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare exchange.

CMS released the 2013 preliminary Medicare Advantage payment and policy guidelines last week. They will finalize this on April 2nd. The guidelines published in April may vary slightly from the information presented here, but it should be very close.

The preliminary estimate of the Medicare Advantage rate increase for 2013 is 2.47%, which is a weighted average across all counties. Consistent with the election year politics, this will be the highest rate increase proposed in 4 years. This will help ensure retirees maintain a choice of plans without significant increases in premiums or decrease in benefits. If macro health trends remain low as it did last year, we could see another year of low single digit premium trends for MAPD plans.

Here is an excellent summary of the advance notice put together by the Gorman Health Group.

Addtional resources:

CMS Press Release

Reuters article

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