Small businesses don’t understand health reform requirements
Source: benefitspro.com
By: Kathryn Mayer
Most small businesses either incorrectly believe or aren’t sure whether they must provide health insurance to employees in 2014, according to a recent survey of small business owners by eHealth.
Beginning in 2014, the Patient Protection and Affordable Care Act requires businesses with the equivalent of 50 or more full-time employees to provide health insurance coverage for their workers. Businesses with fewer than 50 employees are exempt from this requirement, although employees may be required to purchase their own coverage.
The eHealthInsurance survey was conducted in August and received responses from 439 small businesses.
Based on their size (fewer than 50 employees), only two of the businesses surveyed would be required by the PPACA to offer health insurance coverage to employees in 2014. But one-third incorrectly believed that they were required to buy insurance for employees in 2014, while 35 percent weren’t sure. Nearly 70 percent either incorrectly believed or were not sure whether they would be required to pay a tax for not providing health insurance in 2014. Only 31 percent of respondents correctly said that the reform law does not require them to pay a tax if they don’t offer insurance.
Another main part of health reform—health insurance exchanges—isn’t factoring into employers’ strategies. Most small business owners (78 percent) said they weren’t familiar with health insurance exchanges and how they could impact their business. Exchanges, which are slated to come online by 2014, would make subsidized health insurance available to individuals who don’t have access to health insurance through an employer.
The eHealth poll is yet another survey reporting similar findings: Health reform is confusing both employees and their employers.
Though the Supreme Court upheld the PPACA in June, many employers continued their wait-and-see approach until after the presidential election. Republican Mitt Romney had promised that he would work on repeal of the law if elected.
The survey also found that nearly a third of small businesses (29 percent) said they would consider dropping coverage for their employees in 2014. The majority, at 68 percent, said they don’t have plans to do so, while 3 percent said they planned to stop offering coverage.
The survey also addressed their willingness to adopt new cost-cutting strategies.
To reduce costs, more than half (51 percent) said they would increase employees’ share of premiums. Nearly 40 percent would consider increasing employees’ deductibles. Nearly half of the employers surveyed (44 percent) felt it would be fair to impose penalties on employees who don't participate in wellness programs.
Countdown to Healthcare
Source: https://www.benefitspro.com
By Mark Roberts
America is just a few short days away from the election of a new presidential term, and the stakes have never been higher.
On one side is the juggernaut of the Federal government headed up by the incumbent Barack Obama, and on the other side is the locomotive traveling at breakneck speed toward the final depot, with engineer former Massachusetts Gov. Mitt Romney at the throttle. On Tuesday, Nov. 6, the nation will have either a new face in the White House come next January, or the same one inhabiting 1600 Pennsylvania Avenue for the last four years will just go back to the office for another term.
On the block is health care and either the demise or further propagation of the Patient Protection and Affordable Care Act. Both candidates have strong views about this landmark legislation, and both the Democrats and the Republicans have their own reasons why they love it or hate it. The PPACA has no middle ground, and it is fast becoming more entrenched into the fabric of the economy, both businesses and consumers, states and federal government agencies, and the health care environment. And health care is the focal point of much of the political landscape in this election year.
According to LifeHealthPro, health insurance channel editor Allison Bell reports that “the two candidates engage in platform-to-platform combat over the future of commercial insurance, Medicare and Medicaid.”
There are 6 key differences on health care between the two:
1. Commercial health insurance system change. President Obama says PPACA already is improving health care access for millions of Americans and “ending insurance abuses” by letting young adults stay on their parents’ coverage up till age 26; forbidding health insurers from imposing lifetime benefits caps; limiting insurers’ ability to impose annual benefits caps; requiring insurers to pay for checkups, vaccinations and other preventive care without imposing out-of-pocket costs on the patients; and requiring that plans that spend more than a certain percentage of revenue on administrative costs send their customers rebates.
Gov. Romney says he would return responsibility for regulating local insurance markets and providing care for the poor, the uninsured and the chronically ill to the states, and his administration would limit moves to apply federal standards and requirements to private insurers, he says. The Republican candidate says he would encourage use of health insurance exchanges, and that he would promote the use of high-risk pools, reinsurance and risk adjustment mechanisms to help people with chronic health problems who cannot qualify to buy conventional health insurance. Also, he would work to “prevent discrimination against individuals with pre-existing conditions who maintain continuous coverage” and “facilitate [health information technology] interoperability.”
2. Women’s health and abortion. The Obama team has worked to link the fate of PPACA to the fate of PPACA provisions that require most health plans to include benefits for contraceptive services in the package of basic preventive services that must be covered without imposing out-of-pocket costs on the patients; many insurance plans are beginning to fully cover birth control without co-pays or deductibles as part of women’s preventive care.
The Romney campaign website does not mention abortion or birth control in its discussion of health issues. The Republican Party, in its platform, says the following about federal health care policy and abortion: “Through Obamacare, the current administration has promoted the notion of abortion as healthcare. We, however, affirm the dignity of women by protecting the sanctity of human life.”
3. Medicare. The PPACA, according to the Obama campaign, already has made important changes in Medicare, such as requiring basic Medicare to impose a package of basic preventive services without imposing out-of-pocket costs on the patients, and reducing the size of the Medicare Part D prescription drug plan “doughnut hole” — the gap between the point at which routine prescription coverage ends and catastrophic coverage begins.
Governor Romney wants to modernize entitlement programs and guarantee their vitality for future generations.
“Instead of paying providers directly for medical services, the government’s role will be to help future seniors pay for an insurance option that provides coverage at least as good as today’s Medicare, and to offer traditional Medicare as one of the insurance options that seniors can choose,” he says. “With insurers competing against each other to provide the best value to customers, efficiency and quality will improve and costs will decline. Seniors will be allowed to keep the savings from less expensive options or choose to pay more for costlier plans.” Medicare would stay the same for retirees and near retirees. Younger workers would get a fixed amount that they could use to buy either traditional Medicare coverage or private plan coverage, and they would have to make up the difference out of their own pockets if they wanted to buy more expensive coverage.
4. Medicaid. President Obama says of Medicaid—the program for poor people and for eligible nursing home patients—mainly that he believes Romney would cut federal Medicaid funding.
Governor Romney says he would replace the current Medicaid funding formula with a “block grant” program that would provide each state with a set amount of cash that it could use as it wished. He says he would “limit federal standards and requirements” for Medicaid as well as for private insurance.
5. Tort reform. President Obama says nothing in his comments aimed at voters about “tort reform”—the idea of controlling health care costs by reducing what doctors and other providers spend to protect themselves against lawsuits.
Romney says he would promote free health insurance markets by capping non-economic damages in medical malpractice lawsuits.
6. Health accounts. The president says nothing on his campaign website about health savings accounts or health reimbursement arrangements on his websites.
Candidate Romney states he would “unshackle HSAs by allowing funds to be used for insurance premiums.” Although he has vowed to streamline the tax code, he also mentioned he would “end tax discrimination against the individual purchase of insurance” and encourage independent entities to rate health plans. Plus, he also has talked about wanting to let health insurance companies sell coverage across state lines.
Regardless of the discussion over health care between now and the election, one thing is for sure. There is going to be a winner and a loser. The debate over Obamacare can ramp up the rhetoric about how good or bad the PPACA is, and the electorate certainly gets energized when it is up for discussion.
Who is telling the truth? We’ll see come Nov. 6. Now, here is your obligation—exercise your inalienable right to vote. If you don’t and you find yourself on the losing side the next day, don’t blame the politicians.
Most employers to continue offering health care plans in 2014
Source: Business Insurance
By Jerry Geisel
The overwhelming majority of employers say they will continue to offer health care plans after core provisions of the health care reform law take effect in 2014, but most say they will need to make plan changes later to avoid a new excise tax on the most costly plans, according to a new survey.
Eighty-eight percent of employers surveyed by Towers Watson & Co. said they have no plans to terminate coverage in 2014 or after for full-time employees, while 11% were not sure. Just 1% said they planned to terminate coverage for some employees.
Under the Patient Protection and Affordable Care Act, starting in 2014, employers with at least 50 employees are liable for a fee of $2,000 per full-time employee if they do not offer qualified coverage to employees working at least 30 hours a week.
The Towers Watson survey results mirror numerous other surveys also reporting that most employers intend to continue to provide coverage. Benefit experts say there are several reasons for that continued employer commitment to offering coverage, including the penalty imposed by the law for not offering coverage, the costs employers would face in grossing up employees’ salaries to enable them to buy coverage on their own and the need for employers to stay competitive.
On other hand, 83% of employers say they are planning to take steps to control costs to avoid a health reform law-imposed excise tax that takes effect in 2018. Under that provision, a 40% excise tax will be imposed on premium costs that exceed $10,200 for single coverage and $27,500 for family coverage. Insurers will pay the tax on plans they insure, while third-party administrators will pay the tax for self-funded plans. Insurers and TPAs are expected to recover the taxes they paid from employer plans.
Other findings include:
• Employers expect health care plan costs to rise—after plan changes—by an average of 5.3% in 2013, boosting total costs to an average of $11,507 per employee. That compares with an expected 2012 average cost increase of 5.9%.
• Employer interest in offering account-based health care plans, such as plans linked to health savings accounts and health reimbursement arrangements—continues to grow. While nearly 60% of respondents now offer account-based plans, by 2018, 80% expect to be offering them.
The survey is based on the responses of 440 employers.
3 Ways Healthcare Tax Increases Affect Your Business
By Linda Doell
Source: OpenForum.com
If you don't know what's in the healthcare law and how it impacts your business, you're not alone.
A Wall Street Journal survey of small businesses in June found that two-thirds of small-business owners didn't know if their companies qualified for one of the key provisions of the law—a tax credit to offset the cost of providing insurance for their workers.
What's more, business groups and merchants alike have said the requirements are too complex for them to want to take advantage of programs under the law. Let's take a look at three ways the Affordable Care Act will effect your small business.
1. Small business tax credits. To qualify, companies must have less than 25 full-time equivalent workers, pay average yearly wages below $50,000 and pay at least 50% of the health-care coverage cost for their employees.
In return, small businesses get a tax credit up to 35% of its premium costs. In 2014, the tax credit rate increases to 50% of the premium costs. The tax credit will phase out for companies with average wages between $25,000 and $50,000, or businesses with employee numbers that add up to 10 to 25 full-time workers.
The government estimated 4 million small businesses were eligible for the tax credit. Just 170,300, however, claimed the tax credit in 2010, the U.S. Government Accountability Office said in a May report. Of that number, only 28,100 businesses were able to claim the full tax credit because of the average wage or full-time equivalent requirements. The rest of the businesses got a partial tax credit.
The low participation was partially due to small businesses not viewing "the credit as big enough incentive to begin offering health insurance," the report said. "While some small employers could be eligible for the credit if they began to offer health insurance, small business group representatives and discussion group participants told us that the credit may not offset costs enough to justify a new outlay for health insurance premiums."
The report also cited the complexity of the tax credit requirements being a deterrent to more employers seeking it.
2. Insurance mandate for small business. Beginning in 2014, businesses with more than 50 employees must either offer healthcare coverage or face paying a fine of $2,000 a year for each full-time worker over the first 30 employees if at least one of its workers is getting a tax credit for coverage.
The healthcare coverage itself must meet minimum standards or the business would risk more fines. Each state would set the minimum standards for policies issued within its borders. The states have to ensure the essentials healthcare package includes categories such as preventive care, hospital and doctor visits and maternity care.
Business groups and owners have voiced concern over the mandate, fearing it will drive up operation costs and force them to cut back on workers to make ends meet.
"Employers are left trying to financially prepare for unknown conditions such as the household income of their employees, leaving little certainty for their business," National Federation of Independent Business President and CEO Dan Danner says in a statement. "What’s more, those employers who are in a position to expand their operations may be inhibited from doing so if they want to avoid the 50 plus one threshold of the employer mandate."
3. Small business exchanges. By 2014, states are required to set up exchanges where small businesses can pool their resources—and therefore their buying power—to get health insurance.
Called "Small Business Health Options Programs," the exchanges will be administered by either a state agency or a nonprofit group and be open to companies with up to 100 workers. Each state also has the option to let larger businesses buy insurance from the exchange as well.
Linda is an award-winning journalist with more than more than 20 years' experience as a reporter, editor and blogger. Linda blogs via Contently.com.
Pay or play? A strategic HR response to PPACA
By Timothy Wojcik
Source: eba.benefitnews.com
With the recent Supreme Court ruling now finalized and the minimum essential health insurance provisions in place, companies have begun to ask us “What’s next?” or “What will the financial impact be for our company in 2014?” My belief is that by taking a proactive approach to the individual mandate and understanding the impact on your company’s financials, you will be able to make that critical decision whether to continue offering a group health care plan or allow employees to elect coverage through the state mandated exchanges.
Based on external research, a recent study by Deloitte has found that approximately one in ten employers in the U.S. intend to “Pay” the penalty imposed on employers for opting out of group health coverage. This number, however, does not reflect an additional 10% of employers who weren’t sure if they would continue coverage. An overarching theme heard from our clients is that the benefits program offered today is instrumental in attracting, retaining, and engaging employees.
Ultimately, the decision to Pay or Play is a strategic HR decision which will not only impact the company’s fixed costs, but also the level of engagement and retention within the company. A thorough analysis delicately weighing the financial and non-financial factors must occur to ensure that the decision falls in line with the company’s overall business and HR strategy.
Health Care Law to Cut Deficit, Says Budget Office
Copyright 2012 ProQuest Information and Learning
All Rights Reserved
Copyright 2012 Morning Sentinel
Morning Sentinel (Waterville, Maine)
BY RICARDO ALONSO-ZALDIVAR AND ANDREW TAYLOR
Associated Press
WASHINGTON -- President Barack Obama's health care overhaul will shrink rather than increase the nation's huge federal deficits over the next decade, Congress' nonpartisan budget scorekeepers said Tuesday, supporting Obama's contention in a major election-year dispute with Republicans.
About 3 million fewer uninsured people will gain health coverage because of last month's Supreme Court ruling granting states more leeway, and that will cut the federal costs by $84 billion, the Congressional Budget Office said in the biggest changes from earlier estimates.
Republicans have insisted that Obamacare will actually raise deficits -- by "trillions," according to presidential candidate Mitt Romney. But that's not so, the budget office said.
The office gave no updated estimate for total deficit reductions from the law, approved by Congress and signed by Obama in 2010. But it did estimate that Republican legislation to repeal the overhaul -- passed recently by the House -- would itself boost the deficit by $109 billion from 2013 to 2022.
"Repealing the (health care law) will lead to an increase in budget deficits over the coming decade, though a smaller one than previously reported," budget office director Douglas Elmendorf said in a letter to House Speaker John Boehner, R-Ohio.
The law's mix of spending cuts and tax increases would more than offset new spending to cover uninsured people, Elmendorf explained.
Tuesday's budget projections were the first since the Supreme Court upheld most of the law last month but gave states the option of rejecting a planned expansion of Medicaid for their low-income residents. As a consequence, the budget office said the law will cover fewer uninsured people.
Thirty million uninsured people will be covered by 2022, or about 3 million fewer than projected this spring before the court ruling, the report said.
As a result, taxpayers will save about $84 billion from 2012 to 2022. That brings the total cost of expanding coverage down to $1.2 trillion, from about $1.3 trillion in the previous estimate.
The Congressional Budget Office has consistently projected that Obama's overhaul will reduce the deficit, although previous estimates aren't strictly comparable with Tuesday's report because of changes in the law and other factors.
At the time it was approved in 2010, CBO estimated the law would reduce the deficit by $143 billion from 2010 to 2019. And CBO estimated that last year's Republican repeal legislation would increase deficits by $210 billion from 2010 to 2021.
That may sound like a lot of money, but it's actually a hair-thin margin at a time when federal deficits are expected to average around $1 trillion a year for the foreseeable future.
When the law is fully in effect, 92 percent of citizens and legal residents are estimated to have coverage, as compared to 81 percent now.
Democrats hailed Tuesday's estimates as vindication for the president. "This confirms what we've been saying all along: theAffordable Care Act saves lots of money," said Senate Majority Leader Harry Reid, D-Nev.
Actually, the government will spend more. It just won't go onto the national credit card because the health care law will be paid for with a combination of spending cuts and tax increases.
GOP leaders sought to shift attention from claims about the deficit and focused instead on the additional spending. "What we know from today's CBO report ... is that the new health care law is dramatically increasing health care spending and costs," said Senate Republican leader Mitch McConnell of Kentucky.
Republicans said they remain unswervingly committed to repealing what they dismiss as Obamacare. When combined with other budget-cutting measures, GOP leaders say that repeal will ultimately reduce deficits. Romney says if elected he will begin to dismantle the law his first day in office.
Medicaid has been one big question hanging over the future of Obama's law since the Supreme Court ruled.
Some GOP-led states, such as Texas and Florida, say they will not go forward with the expansion. Others are uncommitted, awaiting the voters' verdict on Obama in November.
Although the federal government would bear all of the initial cost of that expansion, many states would have to open their Medicaid programs to low-income childless adults for the first time.
CBO analysts did not try to predict which specific states would jump in and which would turn down the Medicaid expansion. Instead, they assumed that many states would eventually cut deals with the federal government to expand their programs to some degree.
As a result, the budget office estimates that more than 80 percent of the low-income uninsured people eligible under the law live in states that partially or fully expand their programs.
The big coverage expansion under the law doesn't start until 2014, with middle-class uninsured people signing up for subsidized private plans and more low-income people picked up through Medicaid.
Don’t Get Hit With Fines Under Health Care Reform
By Bonnie Lee
Source: smallbusiness.foxbusiness.com
With more than 500 provisions, the Patient Protection and Affordable Care Act contains hefty tax implications for small business owners.
Of the 500 provisions in health-care reform, more than 40 of these provisions affect the Internal Revenue Code, including incentives and tax breaks to individuals and small businesses to offset health-care expenses.
Some of the provisions also impose penalties for individuals and businesses that do not obtain health-care coverage for themselves or their employees. According to The Treasury Inspector General of Tax Administration which performed an audit of this law, “Revenue provisions contained in the legislation are designed to generate $438 billion to help pay for the overall cost of health care reform. Additionally, new reporting requirements have been established.”
One overlooked section in the reform fines both small businesses and corporations up to $500,000 for being discriminatory with their health insurance.
The Affordable Care Act requires businesses that offer health insurance to provide it to at least 70% of the employees. It also requires that company executives not discriminate by having better insurance plans for some of their employees. The IRS penalty for companies with 50 or more employees that are found to be discriminatory may be fined as much as $100 per day per person or 10% of the annual premiums whichever is less--up to a maximum of $500,000.
Brett Goldstein, director of retirement planning at American Investment Planners in Jericho, NY states, “Many businesses have health insurance or better benefits for owners and top employees. However under The Affordable Care Act, offering health insurance or different insurance to just a few key employees will be considered discriminatory.”
What constitutes discrimination under The Affordable Care Act? Goldstein says that offering the top employees health insurance with shorter waiting periods or lower premiums could be discriminatory and lead to fines.
Differences in health plans can exist between different classes of employees. For example, a company can have different benefits for salaried employees vs. hourly employees, but not for “executives” vs. other employees.
The IRS temporarily suspended the health insurance non-discrimination rules in 2010. However now that the Supreme Court has upheld the law, the IRS will now have to come up with specific rules regarding health insurance non-discrimination.
“Hopefully when the IRS issues regulations on health insurance non-discrimination they will relax some of the rules in the Affordable Care Act, such as the fines,” says Goldstein. “In the meantime, every business needs to be reviewing their health insurance to see if they are discriminating in favor of the owners and top paid employees.”
And it isn’t just businesses that will be penalized. According to the TIGTA audit report, an annual excise tax will be imposed on health insurance providers whose written net premiums exceed $25 million. It’s based on market share, with the total industry fee starting at $8 billion in 2014 and rising to $14.3 billion in 2018 and an indexed amount after that. And if an insurance provider fails to file their premiums report, they will be assessed a penalty of $10,000 plus the lesser of $1,000 times the number of days late or the amount of the tax imposed for which the report was required. This tax does not apply to employers who self-insure their employees or certain government entities. This becomes effective after December 31, 2013. And of course, the American way is to pass on any tax increases as well as additional administrative costs to customers.
HEALTH CARE LAW SAVES $3.9 BILLION ON PRESCRIPTION DRUGS FOR PEOPLE WITH MEDICARE IN 2012 ALONE
States News Service
Source: Lexis Nexis
BALTIMORE, MD
The following information was released by the Centers for Medicare & Medicaid Services:
As a result of the Affordable Care Act, over 5.2 million seniors and people with disabilities have saved over $3.9 billion on prescription drugs since the law was enacted. The Centers for Medicare and Medicaid Services (CMS) also released data today showing that in the first half of 2012, over 1 million people with Medicare saved a total of $687 million on prescription drugs in donut hole coverage gap for an average of $629 in savings this year.
Millions of people with Medicare have been paying less for prescription drugs thanks to the health care law, said CMS Acting Administrator Marilyn Tavenner. Seniors and people with disabilities have already saved close to $4 billion. In 2020, the donut hole will be closed thanks to the Affordable Care Act.
These savings are automatically applied to prescription drugs that people with Medicare purchase, after they hit the Medicare Part D prescription drug coverage gap or donut hole. Since the law was enacted, seniors and people with disabilities have had several opportunities to save on prescription drugs:
In 2010, people with Medicare who hit the donut hole received a one-time $250 rebate. These rebates totaled $946 million for 2010;
In 2011, people with Medicare began receiving a 50 percent discount on covered brand name drugs and 7 percent coverage of generic drugs in the donut hole. Last year, these discounts totaled over $2.3 billion in savings;
This year, Medicare coverage for generic drugs in the coverage gap has risen to 14 percent. For the first six months of the year, people with Medicare have saved $687 million.
Coverage for both brand name and generic drugs in the gap will continue to increase over time until 2020, when the coverage gap will be closed.
Employers Lack Confidence in PPACA Understanding
By Rebecca Moore
Source: PLANSPONSOR
Just 40 percent of HR decision makers from large organizations are very confident about their understanding of employer requirements under the Patient Protection and Affordable Care Act (PPACA), according to an ADP Research Institute survey.
Even fewer respondents in small companies (20 percent) and midsized companies (17 percent) expressed that same level of confidence.
Worries Grow as Health Care Companies Send Jobs Overseas
Don Lee, Tribune Washington Bureau
Chattanooga Times Free Press (Tennessee)
WASHINGTON -- After years of shipping data-processing, accounting and other back-office work abroad, some health care companies are starting to shift clinical services and decision-making on medical care overseas, primarily to India and the Philippines.
Some of the jobs being sent abroad include so-called pre-service nursing, where nurses at insurance companies, for example, help assess patient needs and determine treatment methods.
Outsourcing such tasks goes beyond earlier steps by health care companies to farm out reading of X-rays and other diagnostic tests to health professionals overseas. Those previous efforts were often done out of necessity, to meet overnight demands, for instance.
But the latest outsourcing, which has contributed to the loss of hundreds of domestic health jobs, is done for financial reasons. And the outsourcing of nursing functions, in particular, may be the most novel - and possibly the most risky - of the jobs being shifted.
At the forefront of the trend is WellPoint Inc., one of the nation's largest health insurers and owner of Anthem Blue Cross, California's biggest for-profit medical insurer.
In 2010, WellPoint formed a separate business unit, Radiant Services, aimed at advancing outsourcing and other cost-saving strategies. WellPoint has eliminated hundreds of jobs in the U.S. over the last 18 months as it has moved jobs overseas, a company spokeswoman acknowledged.
The spokeswoman, Kristin Binns, said WellPoint's shifting of clinical jobs overseas was a small part of the outsourcing and being done through Radiant because it has the technical expertise and can ensure compliance with laws.
Nursing organizations, however, were cautious.
"It's obviously a very disturbing trend," said Chuck Idelson, a spokesman for the California Nurses Assn. "There are serious questions if you're talking about utilization reviews ... and making recommendations on procedures."
Nursing experts said there also may be licensing issues as states generally require certification for those practicing and dispensing health information.
Current and former Radiant executives declined to comment or weren't available.
It's not clear how many other U.S. health care companies have contracted with Radiant or other outsourcing specialists, but industry experts said companies were increasingly looking at more healthcare tasks that could be outsourced globally as they face greater cost pressures and sweeping changes in how they do business.
Aetna Inc. has an arrangement with EXL Service, a U.S.-based company with operations in Manila, to provide "targeted care-management support," spokeswoman Cynthia Michener said.
Health Net Inc., which is laying off dozens of information technology and accounting workers whose jobs are being sent to India, said its outsourcing has generally been confined to administrative and IT functions. UnitedHealth Group, the nation's largest health insurer, didn't respond to inquiries.
Outsourcing jobs out of the country has become a hot issue in the presidential campaign: President Barack Obama is pounding Republican challenger Mitt Romney for his private equity company's involvement with companies that sent jobs abroad.
Although such outsourcing has been going on for years, American manufacturers in recent years have brought some jobs back to the U.S. as labor costs have risen in China and elsewhere.
Some experts argued that sending jobs abroad could help U.S. companies by enabling them to tap global talent and efficiencies, making them more profitable. When U.S. companies are stronger, the thinking goes, it creates more opportunities for Americanworkers. Also, shifting operations to lower-wage countries can help consumers by holding down prices.
Outsourcing jobs to places such as the Philippines can save U.S. health care companies 30 percent in labor costs, according to experts. But the practice remains controversial, especially with the U.S. unemployment rate hovering above 8 percent.
Patient advocates worry about crucial decisions involving a patient's care being in the hands of foreign insurance adjusters. Analysts said there was another concern as well: patient privacy.
Even something as straightforward as medical transcription can raise questions, said Uwe Reinhardt, a healthcare economist at Princeton University. Over the last year, Iowa Health System and hospitals in Utah and Washington state have joined other medical centers that have outsourced the transcribing of doctors' notes and other records.
"Suppose I'm an AIDS patient," Reinhardt said. "That person in India would know - and (the information) could be valuable to someone.... For the U.S., there's nothing more personal than health care."
Dr. Kaveh Safavi, head of the North American health practice for Accenture, a major consulting and outsourcing company that has partnered with WellPoint's Radiant, said nearly all countries have laws for protecting patient privacy.
And to safeguard patients' records, he said, heath care companies store and maintain their records locally.
As for outsourcing services that are more clinical in nature, he said, "People are looking at all the tasks that can safely and responsibly be moved. It's still an emerging market. We're still trying to understand the market's tolerance for it."
In general, hospitals are moving more slowly than health insurers to send jobs overseas. But with financial pressures intensifying and the uptake of electronic record-keeping accelerating, analysts and industry people see more consolidation and outsourcing ahead.
"When you have people's medical, billing and other records kept electronically, then it opens it up to establishing a call center virtually anywhere," said Steve Trossman, a Los Angeles spokesman for the Service Employees International Union, which represents hospital workers. "There is no longer a reason for it to be physically in the same place as the paper records."
Moreover, the health care reform law could prod insurers to move more jobs to cheaper-wage countries. The new law requires companies to spend 80 percent to 85 percent of premiums on medical care, limiting the amount available for administrative expenses.
Few have been as aggressive as WellPoint, which made a profit of $2.65 billion last year on revenue of $60.7 billion. WellPoint's total employment at the end of last year was 37,700, down from 40,500 two years earlier.
In one of its recent efforts, WellPoint laid off pre-service nurses in Colorado and Nevada so the work could be done in Manila, according to a Labor Department filing by a WellPoint human resource manager in Denver. WellPoint spokeswoman Binns said none of the decisions that involve denial of procedures or treatment for patients is made overseas.
(EDITORS: STORY CAN END HERE)
Overall, Binns said, fewer than 2.5 percent of the 37,000 employees, or at most 925 workers, had lost jobs in the last 18 months as a result of work sent overseas. Only about 50 of those positions involved clinical management of care, she said.
WellPoint's "sourcing strategies have enabled us to make our services more effective, accessible and affordable to our customers, while allowing us to expand our programs and maintain our service levels," she said.
WellPoint's offshoring covers a wide range of departments and tasks involving claims, enrollment, billing, post-service clinical claims review, utilization management and pre-service nursing, according to filings made by company managers and state government officials. Both were helping secure federal trade-assistance benefits for WellPoint workers who have lost jobs because of outsourcing or import competition.
Shannon Cunningham of Columbus, Ohio, who processed medical claims for WellPoint, was laid off last month after a colleague went to the Philippines to train people to do her job.
Cunningham, 43, said she received eight weeks of severance pay. She and others working in medical claims earned $30,000 to $40,000 a year with health benefits, she said.
"I know other countries need work," said Cunningham, a company employee for three years. But "I just felt like it wasn't fair. We're having a rough time too."