Source: The New York Times
Amazon, Berkshire Hathaway and JPMorgan Chase announced on Tuesday that they would form an independent health care company for their employees in the United States.
In a statement, chief executives at the three corporate behemoths expressed their frustration with the nation’s expensive, often confusing health care system. The news added further uncertainty to an industry already reeling from attempts by new players to attack a notoriously inefficient, intractable sector. The lines between traditionally distinct areas, such as pharmacies, insurers and providers, are increasingly blurring.
CVS Health’s deal last month to buy the health insurer Aetna for about $69 billion is just one example of the shifts underway. Amazon’s potential entryinto the pharmacy business is also reverberating.
The three companies provided few details about the new entity, other than saying it would initially focus on technology to provide simplified, high-quality health care for their employees and their families, and at a reasonable cost.
They said the initiative, which is in the early planning stages, would be “free from profit-making incentives and constraints.” Jamie Dimon, the chief executive of JPMorgan Chase, said in a statement that the effort could eventually be expanded to benefit all Americans.
“The health care system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” Jeff Bezos, Amazon’s founder and chief executive, said in a statement. “Hard as it might be, reducing health care’s burden on the economy while improving outcomes for employees and their families would be worth the effort.”
News of the announcement sent the stocks of established health care providers plunging, and touched off a wave of speculation about what the new company might do. It was unclear whether the new venture would make it easier for consumers to understand their health care costs and access medical records, or take on more ambitious changes like the wider use of telemedicine and virtual doctor visits.
One thing is clear: these are not companies known for narrow ambitions. The partnership brings together three of the country’s most influential companies to try to improve a system that other companies have tried and failed to change: Amazon, the online retail giant; Berkshire Hathaway, the holding company led by the billionaire investor Warren E. Buffett; and JPMorgan Chase, the largest bank in the United States by assets.
“It could be big,” Ed Kaplan, who negotiates health coverage on behalf of large employers as the national health practice leader for the Segal Group, said of the announcement. “Those are three big players, and I think if they get into health care insurance or the health care coverage space they are going to make a big impact.”
Even the three companies don’t seem to be certain how they intend to shake up the health care system. People briefed on the plan, who asked for anonymity because the discussions are private, said the leaders of the three companies decided to announce the initiative while it was still a concept in part so they can begin hiring staff for the new company.
“The ballooning costs of health care act as a hungry tapeworm on the American economy,” Mr. Buffett said in the statement on Tuesday. “Our group does not come to this problem with answers. But we also do not accept it as inevitable.”
One of these people said the new company wouldn’t replace existing health insurers or hospitals, though it’s too soon to say exactly what form it would ultimately take. One idea is an online health care dashboard that connects employees with the closest and best doctor specializing in whatever ailment they select from a drop-down menu, one of the people said.
The three backers of the new company foresee striking deals for employee discounts with service providers like medical testing facilities, the person added.
“Each of those companies has extensive experience using transformative technology in their own businesses,” said John Sculley, the former chief executive of Apple who is now chairman of a health care start-up, RxAdvance. “I think it’s a great counterweight to what government leadership hasn’t done, which is to focus on how do we make this health care system sustainable.”
Planning for the new company is being led by Marvelle Sullivan Berchtold, a JPMorgan managing director who was previously head of the Swiss drugmaker Novartis’s mergers and acquisitions strategy; Todd Combs, an investment officer at Berkshire Hathaway; and Beth Galetti, a senior vice president at Amazon.
One of the people familiar with the partnership between the companies said it took form as Mr. Bezos, Mr. Buffett, and Mr. Dimon, who are friends, discussed the complications of the country’s health care system and the challenges of providing insurance to their employees. They decided their combined access to data about how consumers make choices, along with an understanding of the intricacies of health insurance, would inevitably lead to some kind of new efficiency — whatever it might turn out to be.
Erik Gordon, a professor at the University of Michigan’s Ross School of Business, predicted that the companies would attempt to modernize the frequently cumbersome process of making appointments with physicians by making it more like booking a restaurant reservation on OpenTable, while eliminating the need to regularly fill out paper forms on clipboards.
“I think they will bring the customer-facing, patient-facing thing into your smartphone,” he said.
Amazon has long been mentioned by health care analysts and industry executives as a potential new player in the sector. But much else is also changing, from government programs like Medicare after the overhaul of the tax law, to the uncertain future of the Affordable Care Act. All the while, medical costs have persistently been on the rise.
The announcement on Tuesday again highlighted investor worry about Amazon disrupting the health care industry. Shares of UnitedHealth Group were down 4 percent in midafternoon trading, while Anthem’s were down 5.7 percent.
One group of more than 40 employers, including Coca-Cola, American Express and Verizon, has banded together to negotiate with pharmacy-benefit managers — who oversee drug coverage for health insurers — in an effort to lower costs. The group, the Healthcare Transformation Alliance, says it has further plans to better analyze health data and improve medical networks.
Large corporations have often taken an active role in their employees’ health care. In 1915, Henry Ford opened a hospital in Detroit, The Henry Ford Hospital, to help serve his growing work force.
Source: The New York Times
Having wiped out the requirement for people to have health insurance, Republicans in Congress are taking aim at a new target: the mandate in the Affordable Care Act that employers offer coverage to employees.
And many employers are cheering the effort.
While large companies have long offered health benefits, many have chafed at the detailed requirements under the health law, including its reporting rules, which they see as onerous and expensive. Now that relief has been extended to individuals, some companies believe they should be next in line.
The individual mandate and the employer mandate are “inextricably entwined,” said James A. Klein, the president of the American Benefits Council, an influential lobby for large companies like Dow Chemical, Microsoft and BP, the oil and gas producer.
“It is inequitable to leave the employer mandate in place when its purpose — to support the individual mandate — no longer exists,” Mr. Klein said. “We are urging Congress to repeal the employer mandate.”
Opposition to the employer mandate could increase as more employers are fined for not offering coverage or for not meeting federal standards for adequate, affordable coverage. Since October, the Internal Revenue Service has notified thousands of businesses that they owe money because they failed to offer coverage in 2015, when the mandate took effect.
Representatives Devin Nunes of California and Mike Kelly of Pennsylvania, both Republicans, recently introduced a bill, supported by party leaders, to suspend the mandate, canceling any penalties that would be imposed for any year from 2015 to 2018.
“The employer mandate is a job-killer, a wage-killer and a business-killer,” Mr. Kelly said.
But Tom Leibfried, a health care lobbyist at the A.F.L.-C.I.O., called the proposals to repeal or weaken the employer mandate “a very bad idea.”
“The Affordable Care Act was built on a framework of shared responsibility,” Mr. Leibfried said. “If you get rid of the employer mandate, you will see people lose coverage from their employers.”
Such a move could also increase costs for the federal government. Even though Congress has eliminated the penalties for people who go without insurance, millions of consumers are still eligible for financial aid in the form of tax credits to help them pay insurance premiums. These subsidies increase with the rapidly rising cost of insurance. If fewer people receive coverage from employers, more will qualify for subsidized coverage in the public marketplaces created by the Affordable Care Act.
“The employer mandate holds down the cost of premium tax credits for the federal government,” said Catherine E. Livingston, a tax lawyer at the law firm Jones Day who was the health care counsel at the I.R.S. from 2010 to 2013. “Any employee who receives an offer of affordable coverage from an employer is not eligible for the tax credit. And the employer mandate provides a strong incentive for employers to offer affordable coverage.”
But it has also limited companies’ options in providing health benefits, they say.
“Most large employers like Hallmark provide employer coverage today,” said Tresia Franklin, the company’s director of employee relations. “Employers want flexibility to offer the health benefits that make the most sense for their employees.”
Employers with 50 or more full-time employees must provide information to the I.R.S. on what insurance, if any, they offer to each of their employees. They may also be required to report the value of coverage.
The I.R.S. has used such information to help enforce other provisions of the Affordable Care Act, including the individual mandate.
In addition, larger employers may be subject to tax penalties if they do not offer “minimum essential coverage” to employees who work at least 30 hours a week, on average. The penalty is $2,260 a year multiplied by the number of full-time employees in excess of 30.
The Congressional Budget Office has estimated that employers will pay $12 billion in penalties this year and a total of more than $200 billion in the coming decade.
Alden J. Bianchi, an employee benefits lawyer in Boston, said he had two or three dozen letters on his desk from the I.R.S. demanding payment of penalties by employers who had supposedly failed to offer coverage to employees.
In some cases, he said, the government is seeking “substantial penalties in the millions of dollars.”
The House passed legislation last year to dismantle much of the Affordable Care Act, including the penalty used to enforce the employer mandate.
The mandate “interferes with market-driven compensation arrangements, encourages employers to cut hours and employees, and stifles new job creation,” said a report on the bill by Republican members of the House Ways and Means Committee.
Democrats who support the Affordable Care Act say it has not harmed employment, hours of work or wages. And they note that millions of jobs have been created since the law was signed by President Barack Obama in 2010.
Members of both parties are trying to get rid of another part of the Affordable Care Act, which imposes a tax on high-cost employer-sponsored health coverage — the “Cadillac tax,” opposed by labor unions and employers.
Representative Kevin Brady, Republican of Texas and chairman of the Ways and Means Committee, said it was possible that lawmakers could delay the tax as part of a bipartisan deal on government spending that they are trying to negotiate.
“Even Democrats who put that awful tax in place believe it needs to be delayed,” Mr. Brady said.
Source: Post Bulletin
The IRS has extended until March 2 the deadline for employers and insurers to provide 2017 health insurance information forms to employees.
The forms, which have the numbers 1095-B and 1095-C, detail the coverage provided to each employee during the year. The forms were originally due to be in employees’ hands by Jan. 31.
Individual taxpayers can use the information on the forms to determine whether they qualify for tax credits under the Affordable Care Act.
While employers and insurers have more time to send the forms to employees, the due dates for getting the forms to the IRS have not changed. If the forms are being sent on paper, they are due Feb. 28, and if they’re being filed electronically, the due date is April 2.
You can find more information on the IRS website, www.irs.gov.
Top 10 health care surprises
President Donald Trump stormed into office last January confident that he could knock off Obamacare in a nanosecond. It didn’t turn out that way — and from drug prices to the Tom Price travel scandal, a lot of health policy didn’t go according to plan. Here’s a look at 10 health care surprises from 2017.
1. Obamacare survives its seventh yearIn control of the White House and both chambers of Congress, Republicans had their best shot ever at Obamacare repeal — and even thought they could have it on Trump’s desk on Inauguration Day. The grand ambitions quickly met roadblocks. Members rebelled over policy details, GOP leaders struggled to find consensus, moderates mutinied, and virtually the entire health care industry — along with Democrats and Obamacare advocates — lined up against every plan that Republicans put forward.
Even so, the GOP eventually squeaked a bill through the House and after several false starts put a proposal on the Senate floor. That’s when Sen. John McCain (R-Ariz.) delivered perhaps the biggest stunner of the year: a late-night thumbs-down that sunk the Senate bill and effectively ended the GOP’s repeal effort … until 2018.
Still, Senate Republicans concede that with an even narrower vote margin, dismantling Obamacare may become, as Sen. Ron Johnson (R-Wis.) delicately put it, “a little more difficult.”
2. Price jets away from HHSAfter years of railing against Obamacare as a member of Congress, Tom Price finally got a chance to do something about it as Health and Human Services secretary. The former orthopedic surgeon would aid Republicans’ effort to repeal the law while simultaneously unraveling Obamacare’s web of regulations. He fell short on both counts. Price all but disappeared during the Senate’s bid to craft a repeal bill, frustrating Republicans and, more importantly, the president. Soon after, POLITICO revealed that he had routinely traveled by chartered private or military aircraft, costing taxpayers $1 million.
The scrutiny over his travel habits, combined with Trump’s irritation on Affordable Care Act repeal, sped Price’s resignation seven months into the job. He left few tangible accomplishments — other than the distinction of being the first Cabinet member to make his exit.
3. Tough talk and no action on drug pricesTrump lobbed insults at a host of health care targets, but perhaps none landed with more rhetorical force than his denunciations of the “disastrous” drug industry.
“The drug companies, frankly, are getting away with murder,” he seethed early on, suggesting he might empower Medicare to negotiate with pharmaceutical companies.
It didn’t happen. For all of Trump’s tough talk, he’s made no concrete moves toward cracking down on pharmaceutical prices. A promised executive order never materialized — and a leaked draft of the directive appeared largely pharma-friendly anyway.
In November, Trump nominated Alex Azar, a former pharmaceutical executive, to serve as his next HHS secretary. Azar has already rejected sweeping changes to rein in drug prices, like allowing drug reimportation or giving Medicare greater negotiating power. The administration’s agenda on drug prices now looks smaller, more traditional, and far less of a threat to the pharmaceutical industry.
4. GOP kills the individual mandate — in a tax billFor all their failures on repealing and replacing Obamacare, Republicans did land a major blow — it just took a tax bill to get the job done. The GOP’s sweeping tax overhaul zeroes out the penalty levied on most people for not purchasing insurance starting in 2019, effectively gutting Obamacare’s individual mandate.
Republicans had long made the mandate a top target for repeal. But it’s also a pillar of the health law — the mechanism that Obamacare supporters contend is crucial to keeping enough healthy people in the market to stabilize premiums.
Yet, in a twist, Senate Republicans who months earlier proved too skittish to dismantle Obamacare jumped at the chance to eliminate the mandate, despite Congressional Budget Office projections that it would drive up premiums 10 percent and leave 13 million more people uninsured over the next decade.
With just 12 days left in a year they’d vowed was Obamacare’s last, Republicans passed their tax bill — and in the process, made their only major legislative change to the health law.
5. Planned Parenthood’s funding goes untouchedThe GOP’s sweep into power also placed Republicans on the verge of accomplishing a second top health care goal: defunding Planned Parenthood. Once again, Republicans found themselves foiled by their own members. Moderate Sens. Lisa Murkowski (R-Alaska) and Susan Collins (R-Maine) used their leverage as Senate swing votes to protect the funding of an organization they ardently support.
When McCain joined them in voting down repeal in July, it also put the defunding efforts on hold indefinitely. And now facing only a two-vote advantage in the Senate in 2018, it’s unclear whether the GOP can find the political will to take federal action against Planned Parenthood.
6. The vaccine controversy that never wasWhen high-profile vaccine skeptic Robert Kennedy Jr. traveled to New York in January to meet with Trump, it looked like the start of a controversial plan to boost the scientifically disproved theory that vaccines can cause autism. Trump had previously suggested vaccines could be dangerous, and Kennedy emerged from Trump Tower touting plans to chair “a commission on vaccine safety and scientific integrity” at the president-elect’s behest.
“President-elect Trump has some doubts about the current vaccine policies and has questions about it,” Kennedy said.
But Trump’s team never confirmed Kennedy’s assertions, and after Inauguration Day any momentum for a vaccine commission appeared to fizzle out. The chiefs of the administration’s Food and Drug Administration, Centers for Disease Control and Prevention and National Institutes of Health all advocate for vaccines, and there hasn’t been a peep from the White House so far about taking any close look at vaccine safety beyond the normal regulatory oversight.
7. Single payer gets seriousAt this time last year, single-payer health care was a progressive pipe dream. Now it’s a rallying point for liberal Democrats, a possible litmus test for 2020 hopefuls and a serious policy proposal that’s won the backing of nearly a third of the Senate Democratic Caucus.
Sen. Bernie Sanders’ universal health care plan vaulted into the mainstream in September, after high-profile Democrats trying to strike a contrast to the GOP’s Obamacare repeal efforts latched onto the goal of universal coverage.
“Quality health care shouldn’t be the providence of people’s wealth. It should be a virtue of us being United States citizens,” Sen. Cory Booker (D-N.J.), one of several likely 2020 candidates backing the plan, said at the time.
The single-payer push exposed divisions over how exactly to achieve universal coverage, and several Democrats have put forth their own ideas on how to move more gradually. But the shift in the Democratic platform is clear: Three years after Sanders (I-Vt.) failed to win a single co-sponsor for his plan, universal health care is becoming a defining issue for Democrats in the run-up to 2020.
8. Medicaid as a wedge issueIn a year that was supposed to be all about Obamacare, Congress spent much of its time on Medicaid. The GOP’s Obamacare repeal bills all targeted the low-income health insurance program as well. Their proposals would have profoundly changed the nature of Medicaid — not just the expansion that was part of Obamacare but the traditional parts that predated the ACA by decades.
That’s where the GOP’s health care effort hit perhaps its most intense resistance, as Medicaid — traditionally overshadowed by Medicare — suddenly became a third rail. Democrats seized on projections that capping federal funding would drive deep coverage losses and leave the nation’s most vulnerable worse off. State governors on both sides of the aisle warned that the changes would cripple their ability to deliver crucial services. Swing vote Republicans balked at deep cuts at a time when Medicaid offered the first line of defense against the growing opioid epidemic.
That hasn’t stopped the GOP from taking on Medicaid in other ways. The Trump administration is encouraging states to impose work requirements and has made entitlement and welfare reform — both of which could involve Medicaid — a priority for 2018.
9. Shkreli goes to jail over Hillary’s hairThat Martin Shkreli will finish off this year from prison isn’t a surprise — but it’s what put him there that was unexpected.
The former Turing Pharmaceutical CEO, who gained notoriety for hiking the price of an AIDS drug, was convicted of securities fraud in August. But he was living freely while awaiting sentencing until he offered $5,000 on Facebook for a strand of then-presidential candidate Hillary Clinton’s hair. The post qualified as a “solicitation of assault,” a judge ruled, before revoking Shkreli’s bond and sending him to prison.
It’s just one of many strange twists in Shkreli’s saga, which included calling congressmen “imbeciles” on Twitter hours after refusing to answer questions at a House committee hearing; livestreaming on YouTube for hours on end, including right after his conviction; and purchasing the sole copy of a 2015 Wu-Tang Clan album for more than $1 million. He’ll now serve jail time over his request for Clinton’s hair until a mid-January sentencing hearing.
10. Collins, Murkowski play power brokers in the SenateThe most moderate members in a Republican Conference that narrowly controls the Senate, Collins and Murkowski were always going to be crucial players. But GOP leaders may not have anticipated just how much they’d flex that power.
Collins and Murkowski held out throughout the repeal effort over Medicaid cuts and skimpier subsidies they worried would hurt their states — and tanked a top GOP priority. At the end of the day, both voted for the big tax bill, with its individual mandate repeal. Collins got a promise from Senate leaders that two ACA stabilization bills would be included in Congress’ year-end spending agreement — though the bill have been pushed into 2018 and are in trouble, given the House opposition.
With Republicans’ margin in the Senate set to narrow to just 51-49 next year, Collins and Murkowski appear set to exercise even more influence over the party’s direction come 2018.
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