Tuesday, December 29, 2009

Where do you rank in terms of income?

By Kiplinger

Where do you rank as a taxpayer? You may not feel rich earning $35,000 a year, but you're in the top half of taxpayers. Make $70,000, and you earn more than 75 percent of fellow taxpayers.

Even as the Great Recession ends, we know the economic wounds it inflicted will take years to heal. The national unemployment rate has breached 10 percent, and unemployment is higher than 12 percent in California and above 15 percent in Michigan. A new study from the Department of Agriculture found that nearly 50 million Americans struggled at some point in 2008 to get enough to eat.

More than 40 million Americans are officially living in poverty. And you might be surprised at how little income it takes to not be considered poor by the federal government. For 2008, the poverty threshold for a single person under age 65 was an income of $11,201, or less than $1,000 a month. For a family of four, the threshold was $21,834. For a family of six, $28,769.

With that perspective, you may wonder just how your income stacks up against that of your fellow citizens. New statistics from the IRS provide an answer. The numbers here come from an analysis of 2007 tax returns, the most recent ones that have been studied.

The data show that an income of $32,879 or more puts you in the top half of taxpayers. Earning a bit more than twice that much -- $66,532 -- earns you a spot among the top 25 percent of all earners. You crack the elite top 10 percent if you earn more than $113,018.

And $410,096 buys top bragging rights: Earn that much or more and you're among the top 1 percent of all American earners.

Kiplinger has developed an online calculator to quickly show you -- based on your personal adjusted gross income -- into which income category you fall and, as a bonus, what percentage of the nation's tax burden is borne collectively by you and your fellow citizens who are in that income category. The following table shows the income categories and the percentage of income earned and tax burden paid by each category.

Monday, December 28, 2009

Accounting in health care, is it double counting?

Published: December 28, 2009

WASHINGTON — At the heart of the fight over health care legislation is a paradox that befuddles lawmakers of both parties.

Separate bills passed by the Senate and the House would squeeze nearly a half-trillion dollars from projected spending on Medicare over the next 10 years. These savings would help offset the cost of providing coverage to people who are uninsured.

At the same time, federal accountants say the money would shore up the Medicare trust fund, so the program could continue paying hospitals to treat older Americans in the future.

In other words, Medicare savings mean both more money available to spend now and the appearance of more money to spend later on Medicare.

How is this possible?

The Congressional Budget Office tried to answer the question last week. In effect, it said, the same money cannot be used for both purposes without double-counting.

“To describe the full amount of hospital insurance trust fund savings as both improving the government’s ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings, and thus overstate the improvement in the government’s fiscal position,” the budget office said.

But the clarification came too late to affect the outcome of debate over the legislation, passed Thursday in the Senate by a party-line vote of 60 to 39.

For weeks, Republicans had been saying that Democrats would plunder Medicare, raid it, use it as a “piggy bank” to pay for coverage of the uninsured under a new entitlement program.

Such fusillades frightened some older voters and prompted defensive maneuvers by Democrats, who said their bill would “save lives, save money and save Medicare,” while providing additional benefits to older Americans.

Senator Michael Bennet, Democrat of Colorado, offered an amendment that said nothing in the bill would result in a reduction of “guaranteed benefits” under Medicare. The amendment was approved, 100 to 0, on Dec. 3.

Richard S. Foster, the chief Medicare actuary, agrees with the Congressional Budget Office. He traces the confusion to different accounting rules used for the federal budget and for the Medicare trust fund.

The Senate bill would reduce the growth of Medicare spending and increase the Medicare payroll tax on high-income people. The combination of less spending and more revenue would lower the deficit, based on budget accounting rules, and extend the life of the Medicare trust fund.

However, Mr. Foster said, the same money “cannot be simultaneously used” to cover the uninsured and to extend the Medicare trust fund, “despite the appearance of this result from the respective accounting conventions.”

Senator Jon Kyl of Arizona, the No. 2 Republican in the Senate, summarized the situation with a pithy metaphor. “You can’t sell the same pony twice,” he said.

After issuing its clarification, the budget office reaffirmed its earlier estimate that the Senate bill would reduce the deficit by $132 billion in the next 10 years, compared with the deficits expected under current law.

The issue involves not only technical accounting matters, but also a huge political issue: the impact of a health care overhaul on Medicare and its beneficiaries, whose numbers are about to explode — to 60 million in 2019, from 46 million now.

On a purely technical level, the federal budget deficit — $1.4 trillion in the last year — is the difference between federal receipts and federal spending in a given year. It measures cash flows into and out of the Treasury. If Congress cuts Medicare spending, it reduces the deficit, assuming everything else stays the same.

By contrast, Medicare’s hospital insurance trust fund serves, in the words of the Congressional Budget Office, “primarily as an accounting mechanism.” Payroll taxes paid by workers and employers are credited to the trust fund. Medicare draws on this account to pay hospitals, nursing homes and certain other health care providers.

Under federal law, the Medicare hospital trust fund exists “on the books of the Treasury.” It may have a positive balance — enough money to pay expected claims for a decade or more — even though the government as a whole runs a deficit every year and borrows immense sums to pay its bills.

In one sense, money that “goes into” the Medicare trust fund cannot be used for other purposes. But it is part of a unified federal budget, which includes spending for dozens of other federal programs. So if Congress reduces Medicare payments to hospitals or private Medicare Advantage plans — and if everything else stays the same — the federal budget deficit will be lower and the balance in the Medicare trust fund higher than they otherwise would be.

The Congressional Budget Office says the Senate bill would cover 31 million uninsured people — about 10 percent of the population — while the House bill would cover 36 million. The budget office has not estimated the effects on total national health spending, but Mr. Foster, the Medicare actuary, has done so.

Mr. Foster estimates that the Senate bill would increase national health spending by a total of $234 billion, or 0.7 percent, in the decade from 2010 through 2019, while the House bill would increase it by $289 billion, or 0.8 percent.

If the savings in the Senate bill are achieved, Mr. Foster said, they would add nine years to the life of Medicare’s hospital trust fund, so it would be exhausted in 2026, rather than 2017.

But, Mr. Foster said, some of the estimated savings “may be unrealistic” because they assume increases in productivity that can probably not be attained by hospitals, nursing homes and home health agencies.

Sunday, December 27, 2009

20 States cry foul on Senate health bill

Here are a few excerpts from the NY Times article below on the unfairness on Medicaid reimbursement among different states:
In Arizona, ... the state, where voters approved an expansion of Medicaid in 2000, projects that in the first seven years of an overhaul, its share of Medicaid would be $17 billion under the Senate bill. Had Arizona not expanded coverage, the state’s share would have been $1.4 billion, the state estimates

... in general, the states without expanded coverage would be paid back 95 percent of their costs, while those that have already expanded coverage would be reimbursed between 80 percent and 95 percent. Medicaid reimbursement rates are based on per capita income; wealthier states have smaller shares of their costs paid back.

States that have expanded already would not get any new matching funds for those people. The Senate bill provides additional money only for those who are “newly eligible.”

... it would pay just 50 percent of the cost for most of those newly enrolled in California, because California already makes eligible working parents earning up to 106 percent of the poverty level and its Medicaid assistance is set at 50 percent. California would get a more generous reimbursement, about 83 percent, only for parents earning from 106 percent to 133 percent of the federal poverty level.

Published: December 26, 2009

States that have already broadly expanded health care coverage are pushing back against the Senate overhaul bill, arguing that it unfairly penalizes them in favor of states that have done little or nothing to extend benefits to the uninsured.

With tax revenues down and budgets breaking, the states — including Arizona, California, New Jersey, New York and Wisconsin — say they cannot afford to essentially subsidize other states’ expansion of health care.

The bill passed by the Senate on Thursday would move toward universal health insurance coverage in large part by expanding Medicaid, a program whose costs have traditionally been shared by the states and the federal government.

But the roughly 20 states that have already expanded coverage in some form will pay a greater proportion of their new Medicaid costs under the bill than those states, largely in the South, that until now have covered relatively few of their poorest residents.

Medicaid covers about 60 million Americans, mostly low-income families and pregnant women, though some states have expanded eligibility to include childless adults under 65. It accounts for about one-fifth of state budgets, on average.

States that have expanded coverage have generally broadened eligibility to include parents with relatively higher income levels and a greater number of childless adults. Even governors in some states without expanded coverage are suggesting that their budgets cannot afford a widened program without additional federal assistance.

“There is always an issue with Medicaid that different states are in different places,” said Diane Rowland, the executive director of the Commission on Medicaid and the Uninsured at the Kaiser Family Foundation. “Do you reward the leader states as well as the laggard states, the good states versus the bad? How do you equalize the assistance? That’s at the heart of this.”

The states with expanded coverage would get more relief from the cost-sharing provisions of the health care bill passed by the House in November.

In memorandums explaining the legislation, the drafters of the Senate bill argued that states without expanded coverage would need more help from the federal government to defray the costs of broadening their programs. But governors in the states that have done more to broaden coverage are now lobbying their Congressional delegations to eliminate the discrepancies as the two chambers reconcile the bills.

“We are, in a sense, being punished for our own charity,” Gov. David A. Paterson of New York said last week.

Wendy Saunders, New York’s deputy secretary for health, Medicaid and oversight, estimated that it would cost about $30 billion over 10 years to adjust the financing formula so that the Senate bill matches the more generous provisions of the House bill.

“Because it’s not a huge cost in the context of what is happening, we’re optimistic that it can be worked out,” Ms. Saunders said.

Massachusetts and Vermont, the states providing the broadest coverage, have already received some relief for the anticipated Medicaid costs in the negotiations that led to the passage of the Senate bill.

To secure the crucial 60th vote from Senator Ben Nelson, Democrat of Nebraska, Senate leaders permanently exempted his state from paying to expand Medicaid. But other states, many of them strong supporters of an overhaul, have been left in the lurch.

Existing Medicaid coverage varies widely. Arkansas, for example, extends Medicaid to working parents who earn up to 17 percent of the federal poverty level, and Alabama offers coverage for those making up to 24 percent of that level. Minnesota covers working parents making up to 215 percent of the federal poverty level, and New York, up to 150 percent. New York also covers childless adults up to 65 making up to 100 percent of the federal poverty level.

In Arizona, where state revenues are down 31 percent, the governor called an emergency cabinet meeting last week as the Senate bill was advancing and ordered the state to stop accepting applicants to its children’s health insurance program. The state, where voters approved an expansion of Medicaid in 2000, projects that in the first seven years of an overhaul, its share of Medicaid would be $17 billion under the Senate bill. Had Arizona not expanded coverage, the state’s share would have been $1.4 billion, the state estimates.

“You’ll have taxpayers in Arizona raising taxes on themselves not only to support their program, but to cover all the other states expanding,” said Thomas J. Betlach, the Medicaid director in Arizona. “I work for an insolvent entity; we can’t afford the program we have.”

The House bill would take effect in 2013 and expand Medicaid to cover Americans earning up to 150 percent of the federal poverty level, currently about $29,300 for a family of four and $14,400 for an individual. The Senate bill would begin in 2014 and extend Medicaid to Americans making up to 133 percent of the federal poverty level.

Under the Senate bill, the federal government would pay the entire cost of expanding Medicaid to those not already eligible under state coverage for the first two years of the program. The following three years, states that do not now have expanded coverage would be reimbursed at a higher rate than those states that do — in general, the states without expanded coverage would be paid back 95 percent of their costs, while those that have already expanded coverage would be reimbursed between 80 percent and 95 percent. Medicaid reimbursement rates are based on per capita income; wealthier states have smaller shares of their costs paid back.

The biggest hit to states that have already expanded will be in covering the people who are eligible now but have not signed up for coverage under the state’s current program. They are expected to enroll because the new legislation will require almost all Americans to have insurance.

States that have expanded already would not get any new matching funds for those people. The Senate bill provides additional money only for those who are “newly eligible.”

For example, the federal government would pick up the entire cost for the first two years and 95 percent of the cost for the next three years for newly covered working parents in Alabama, which now covers only those making up to 24 percent of the federal poverty level.

But it would pay just 50 percent of the cost for most of those newly enrolled in California, because California already makes eligible working parents earning up to 106 percent of the poverty level and its Medicaid assistance is set at 50 percent. California would get a more generous reimbursement, about 83 percent, only for parents earning from 106 percent to 133 percent of the federal poverty level.

“We support the policy, but we need to make sure the financial reality aligns with the policy,” said Toby Douglas, the Medicaid director in California.

New York expects nearly one million people who are currently eligible for Medicaid under a state expansion to sign up under the federal legislation.

Because the state has expanded coverage, the federal government would pay just 50 percent of the cost for all but about 100,000 of those people, Ms. Saunders said. The Senate bill would cost the state $1 billion a year, while the House bill would provide an additional $4 billion a year.

The House bill largely eliminates the problem of signing up people who are now eligible under state programs by counting anyone who signs up as “newly eligible.”

The recession has swelled Medicaid rolls already.

“We’d be having a very different discussion if the economy was humming and everyone was back to work,” said Carol Steckel, Alabama’s Medicaid director and the chairwoman of the National Association of State Medicaid Directors. “But I still think you’d see the different philosophies about who is responsible for the costs. There has to be a balance.”

Friday, December 25, 2009

When the Health Care Changes Could Take Effect


WASHINGTON -- For consumers, the most confusing part of the health-care bill may be when -- and if -- they will see its benefits.

Under the Senate bill scheduled for a vote Thursday, a slate of provisions designed to be immediately visible to consumers would kick in six months after the bill takes effect.

But those changes wouldn't affect people who stay in employer health plans. For people who buy insurance on their own, the provisions would only have an effect when they buy a new policy. And one of the health bill's most widely debated features -- a mandate that most Americans obtain health insurance or pay a fine -- won't take effect until 2014.

Starting next year, insurance companies would no longer be able to place lifetime caps on coverage, and they would begin to lose their ability to set annual limits on benefits. Insurers would have to pay the entire cost of preventive services such as mammograms, colonoscopies, flu vaccines and assistance to people trying to quit smoking.

But these changes apply only to new insurance plans purchased after the bill takes effect. Employer plans, under which more than 160 million Americans are covered, will be grandfathered in and won't have to adopt such changes.

Insurance companies say they may not be able to put some of the new provisions in place by next year. America's Health Insurance Plans, the main industry lobby, said it could take up to a year to put new plans on the market because they need regulatory approval.

"The timeline to implement new benefits isn't feasible," said Robert Zirkelbach, a spokesman for the group. A Senate Democratic aide said the bill's crafters factored in the time needed to make the changes and considered them reasonable, since they apply largely to new policies.

Other provisions begin to kick in six months after President Barack Obama signs the bill, which could happen next month at the earliest. These include the one where Medicare beneficiaries would get a 50% discount on brand-name prescriptions that fall within a coverage gap known as the doughnut hole.

Some of the bill's provisions could cost consumers money, but most of those will kick in after 2010. By 2011, all consumers would face caps on flexible spending accounts -- which allow people to use tax-free money for health expenses like prescriptions and doctors visits -- of $2,500 a year. Currently, some employers impose their own limits. The bill would also put new restrictions on withdrawals from health savings accounts.

In 2013, people with an insurance plan worth more than $8,500 for an individual and $23,000 for a family will face a new tax of 40% on the amount of the benefit that exceeds those levels. Insurance firms are expected to reduce the benefits in their plans in order to keep them under that level and avoid the tax.

The biggest changes for consumers wouldn't come until 2014. That is when the government will start to hand out tax credits to low- and middle-income Americans to offset the cost of buying insurance and expand the Medicaid federal-state program to provide insurance to a greater swath of the poor.

The most powerful insurance-market changes don't take effect until 2014. Insurance companies insist on getting all the healthy people in the system before they take all adults regardless of pre-existing conditions. Starting that year, insurers would no longer be able to charge older people more than three times as much for insurance. That is also the year states would set up new insurance exchanges where people without employer plans and small businesses would shop for coverage. In addition to plans from private insurers, the exchanges would offer plans administered by the same entity that handles insurance for government workers.

In 2014, consumers will face a $95 fee if they don't carry insurance and are deemed able to afford it. That penalty increases to $495 a year in 2015 and $750 a year by 2016. The Senate bolstered the fine last week so that consumers could have to pay up to 2% of their income, up to the value of the cost of a basic insurance plan, if that level is higher than the $750 fine.

There's a chance that some of the main provisions could end up taking effect a year earlier, in 2013, because that's when they start in the health bill passed by the House. But the Senate bill is expected to form the backbone of any final legislation, and starting them earlier could end up increasing the cost of the bill, something lawmakers want to avoid.

Write to Janet Adamy at janet.adamy@wsj.com
Here is an article from the NY Times, "Health Care Changes Wouldn’t Have Big Effect for Many":

The other proposed changes for employer-provided coverage seem aimed mainly at workers whose benefits are either very generous or exceedingly skimpy.

On the generous end, about a fifth of employers now offer health plans that could be affected by a new 40 percent excise tax in the Senate bill on so-called Cadillac policies, according to an estimate by Mercer, a benefits consulting firm. That tax, to be imposed on annual premiums that exceeded $23,000 for family coverage, would go into effect in 2013. For example, if an insurer, or a self-insured employer, offers a plan costing $25,000, it must pay a 40 percent tax on the $2,000 that is above the threshold, or $800.

If the excise tax survives the House-Senate negotiations, it is hard to predict how employers will respond. But almost two-thirds of the employers Mercer recently surveyed said they were likely to reduce employee benefits rather than pay the tax.

“They’re going to work hard to find a way to keep the cost of their plans below the threshold,” said Beth Umland, Mercer’s director of health and benefits research.

She predicts that many of those companies will rely on what she described as “the tried-and-true method” — passing along more of the costs to employees, in the form of higher deductibles and co-payments, in order to reduce overall premiums.

The public policy goal of the tax, in theory, is to have everyone spend less on medical care, even if it means using it less.

“We know people will use less care under such plans,” said Paul Ginsburg, president of the Center for Studying Health System Change, a nonpartisan group.

What is not so clear, Mr. Ginsburg said, is whether people will make — or be able to make — rational choices between treatments that are not particularly effective and treatments that may help them from becoming sicker later.

Congress also seems intent on establishing some minimum insurance standards so people with coverage could not end up with large piles of unpaid medical bills anyway. Both the House and Senate bills contain measures meant to eliminate lifetime maximum limits on coverage, for example.

But that might end up affecting relatively few people. Many plans limit how much they will pay out over a lifetime, but the ceilings are generally so high that the vast majority of people never hit them, according to a new study that used existing coverage for workers in California to compare the House and Senate proposals.

Still unclear is whether any of the new standards — the lifetime caps, the out-of-pocket maximums, the minimum coverage standards — would apply to employer-based policies.

Because most big companies already offer plans that would meet the minimum standards being set, their workers would probably be unaffected by the new rules in any case.

But it is a different story for small businesses. Much of the legislation is aimed at making it easier for them to provide affordable coverage by trying to make changes to the insurance market.

People working for small businesses — an estimated 40 percent of the private labor force — could see their coverage affected. And if their employer decided to use one of the new insurance exchanges, workers might have a much broader choice of plans than they do now.

The premiums a small-business employee are charged could also change, especially if that company’s work force is particularly young and healthy. Those people could wind up paying more, Mr. Ginsburg said, because the legislation tries to spread the risk of covering employees with expensive medical conditions by setting new rules over how insurers can determine premiums.

The real unknown, of course, is whether any final legislation will accelerate the rise in premiums or slow it. At least one impartial analysis, by the nonpartisan Congressional Budget Office, concluded that the legislation was not going to have much of an effect on the cost of premiums either way.

Thursday, December 24, 2009

Estate Tax Dilemma Looms in 2010

For at least the first few days of 2010, and probably longer, executors of the estates of people dying after Dec. 31, 2009, will be operating in a difficult environment after the Senate’s failure to extend the estate tax at its current rates.

The Senate is unlikely to act on legislation to extend the estate tax at 2009 levels before the end of the year because Democrats are divided over the terms of an extension and most Republicans oppose the tax, according to a report by CCH.

“For several years, most people have assumed that some sort of ‘fix’ to the estate tax that would avoid outright repeal but would also restrict the tax to relatively large estates would be enacted by the end of this year,” said CCH senior estate planning analyst Bruno Graziano. “Instead, if nothing is done, we’ll get outright repeal for 2010 and then a significant increase in the present tax in 2011.”

If Congress takes no action before the end of 2009, the following major changes will be made to the current transfer tax regime:
  • Estate and generation-skipping transfer (GST) taxes will be repealed for 2010;
  • Gift tax will be retained with a top rate of 35 percent and an exclusion amount of $1 million;
  • The stepped-up basis at death rules will be repealed and replaced with modified carryover basis. The recipient of the bequeathed property will receive a basis equal to the lesser of the adjusted basis of the property in the hands of the decedent, or the fair market value of the property on the date of the decedent’s death;
  • Executors will be able to increase the basis of estate property by up to $1.3 million, or $3 million in the case of property passing to a surviving spouse. Thus, an estate will be allowed to increase the basis of property transferred to a surviving spouse by as much as $4.3 million. However, the basis of an asset cannot be adjusted above its fair market value at the date of the decedent’s death; and,
  • Executors of estates will also be required to report certain details relating to transfers at death of non-cash assets in excess of $1.3 million and appreciated property received by the decedent within three years of death for which a gift tax return was required to be filed.
House lawmakers had previously approved the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Bill of 2009 (H.R. 4154) by a vote of 225 to 200 on December 3. That measure would have capped the tax at its current rate, with a $3.5 million exclusion.

However, the Senate had several major problems with the bill, mainly its failure to allow for inflation adjustments and the use of H.R. 2920, the Statutory Pay-As-You-Go Bill of 2009, to fund the legislation.

Short-term Extensions Fail
Democratic leaders in both houses had initially planned to attach a short-term extension to the Department of Defense appropriations bill (H.R. 3326). However, they abandoned that plan when it became clear that the Senate did not have the 60 votes needed to pass the legislation.

In what appeared to be a last-ditch effort, Senate Finance Committee Chairman Max Baucus, D-Mont., attempted on Dec. 16 to pass a three-month extension at current levels by unanimous consent (see Estate Tax to Temporarily Expire Until Next Year).

“It would be irresponsible to further the yo-yo effect by allowing current law to expire and create all this massive confusion, this chaos that will apply to heirs of the estates on January 1 because of this change in capital assets from step-up to a carryover basis, among other things,” Baucus said, appearing before the Senate.

The Republicans objected to the move, making unanimous consent impossible.
Under current law, the estate and the GST taxes expire at the end of 2009. Lawmakers have said they will revisit the tax early in 2010 and will likely approve retroactive provisions. However, the application of the estate tax retroactively could face constitutional challenges in court.

In addition, if no action is taken by Congress in 2010, the estate and GST taxes will come back into force in 2011.The estate and gift tax applicable exclusion amounts would be reunified at $1 million, and the top marginal tax rate would be 55 percent.

“The impasse concerning the estate tax will have an immediate impact on executors who find themselves administering the estates of decedents dying after December 31, 2009,” Graziano noted. “Due to the immediate effective date of the modified carryover basis regime, executors will be faced with an additional level of complexity with respect to decisions on selling or holding appreciated assets if the total appreciation exceeds $1.3 million. The sooner Congress makes its intent clear, the better for everyone.”

Wednesday, December 23, 2009

Inequalities in the Senate health care bill

  • Only seniors in Florida, New York and Pennsylvania can continue to participate in Medicare Advantage plans. Seniors in all the other states will not be able to do the same.
  • Nebraska will not be required to pay for any cost of expanded Medicaid forever.
  • Louisiana will get up to $300 million to help pay for Medicaid costs.
  • Residents of Vermont and Massachusetts will also receive federal help to defray their Medicaid costs.
  • Connecticut will get $100 million to help Sen. Chris Dodd build a University of Connecticut hospital.
  • Only construction companies with as few as 5 employees are penalized if they do not provide health insurance to their employees. Businesses in other industries are only penalized if they have more than 50 employees.
  • Only the indoor tanning industry is subject to a 10% tax to help pay for the cost of the health bill.
  • Doctors and hospitals in Montana, North Dakota, South Dakota, Utah and Wyoming, will get paid more than providers elsewhere under formulas in the bill.
  • Residents of Libby, Montana will be eligible to receive Medicare benefits regardless of age.
  • Pay for 100 percent of any new Medicaid costs for states that had seasonally adjusted unemployment rates of 12 percent or higher in August, and whose percentage of Medicaid enrollment was lower than the national average. Primary beneficiary? Nevada -- Majority Leader Reid's home state. Oregon also benefits from this provision.
  • Illegal aliens are not allowed to use their own money to buy coverage offered by private companies in the exchanges. Since the IRS will enforce the insurance mandate, this will discourage illegal aliens to file tax returns and jam up hospital emergency rooms.

For more, read:

Here is an article from the Kaiser Foundation on seven things you didn't know were in the health bill:

Read the latest news on the status of the health care bill:

Friday, December 18, 2009

FDIC fighting for survival

This Wall Street Journal article tells how Sen. Chris Dodd and Treasury Secretary Geithner try to strip the FDIC of practically of all bank supervisions even though FDIC chair Sheilar Bair was the only government official who predicted a wave of foreclosures back in 2007 when she directed her staff to study securitized subprime loans from 2004-2005 and discovered that 75% of them carried balloon payments due in a few years.

The article described a July meeting called by Geithner with Bair and Fed chairman Ben Bernanke in attendance where Geithner used profanity. Here is an excerpt from the article, "Mr. Geithner immediately lit into the regulators in an expletive-laced fury, at times raising his voice to the verge of shouting, according to several people familiar with the meeting."

Remember Geithner cheated on his tax return and had to pay back taxes during his confirmation hearing.

That article says 133 banks had failed year to date. But 7 more banks failed on Friday, making the total at 140.

Howard Dean continues to squawk

Former Democratic National Committee chair Howard Dean continues to push for scraping the existing health care bills and start all over. Of course, his view points are from the progressive side, such as no public option, no Medicare buy in, etc. He also complains about older Americans would have to pay as much as three times the premium young Americans have to pay. But he also compares the current proposal on the table as the one signed into law in MA as expanding coverage with no cost control elements. Here's an interview of him on Squawk Box:

See interview of Howard Dean on Good Morning America, http://abcnews.go.com/video/playerindex?id=9349688

The bottom line is that eliminating pre-existing conditions will cost more in premium and the more level the premium between young and old insureds would only mean the young will have to subsidize the old even more than it has been proposed. The half a trillion dollars cut to Medicare in the Senate bill and elimination of Medicare Advantage will hurt seniors.

In an interview with Florida Sen. Bill Nelson on December 16, 2009, the Senator said he had carved out language in the Senate bill to grandfather seniors in Florida so they can continue to participate in Medicare Advantage. He said several other states are also grandfathered, but did not name them. This is utterly unfair to treat seniors from different states differently, see 6 minutes into this video: http://gretawire.blogs.foxnews.com/will-there-be-health-care-reform/.

One Democratic freshman House member, Larry Kissell, voted against the health care bill and is taking heat in his district. His reason for voting against the bill? "... because it would have cut about $399 million from Medicare to find savings (in the House bill). He said he was not willing to renege on his campaign promise never to cut Medicare funding." See http://www.washingtonpost.com/wp-dyn/content/article/2009/12/17/AR2009121704799.html

Senator Bernard Sanders says, “I don’t sleep well, ...I am struggling with this issue very hard, trying to sort out what is positive in this bill, what is negative in the bill, what it means for our country if there is no health insurance legislation, when we will come back to it.”

The senator added, “And I have to combine that with the fact that I absolutely know that the insurance companies and the drug companies will be laughing all the way to the bank the day after this is passed.” See http://www.nytimes.com/2009/12/18/health/policy/18liberals.html

For more on Democrat vs Democrat, see http://news.yahoo.com/s/ap/20091218/ap_on_go_co/us_health_care_overhaul

Here is an article in the Wall Street Journal, titled "Angry Liberals Edge Toward a Mutiny"

And SEIU says it won't support the bill:

Thursday, December 17, 2009

Estate Tax to Temporarily Expire Until Next Year

Washington, D.C. (December 16, 2009)
By WebCPA Staff

Senate Finance Committee Chairman Max Baucus, D-Mont., dropped efforts to temporarily extend the estate tax at its current level in the face of Republican opposition.

Baucus had tried to extend it for a two- to three-month period, but the effort was blocked by Republicans. Baucus said he would attempt to reintroduce the tax early next year instead. The 45 percent tax on estates of over $3.5 million for individuals, or $7 million per couple, is scheduled to expire on Dec. 31, 2009, only to return in 2011 at a 55 percent rate for all estates of over $1 million. During 2010, estates would be taxed at the capital gains rate of 15 to 28 percent when heirs sell off more than $1.3 million in inherited assets.

“Clearly the correct public policy is to achieve continuity with respect to the estate tax,” said Baucus on the Senate floor. “We clearly will work to do this retroactively, so that when the law is changed, it will have retroactive application.”

Jon Kyl, R-Ariz., and Blanche Lincoln, D-Ark., opposed Baucus’s efforts to temporarily extend the tax. They want the estate tax to be set at 35 percent on estates worth over $10 million.

“The fear of the unknown has taken hold in the sedate world of estate planning,” said Charles Schultz, director of private wealth and tax advisory services at RSM McGladrey. “What was once thought of as a remote possibility back in September now looks more and more likely - no estate tax passage before year-end.”

Wednesday, December 16, 2009

Senate Turns Down Drug Reimportation

With the help of the White House, the Senate voted down the reimportation of drugs from foreign countries such as Canada. That is 180 degrees from what presidential candidate Barack Obama had promised. President sold out the American people's pocket after making a $80 billion, 10 year deal with the pharmaceutical industry. See http://thehill.com/homenews/senate/71307-fda-opposes-senate-drug-importation-amendmen

December 15, 2009 — The US Senate today turned down a bipartisan amendment to allow the purchase and importation of prescription drugs from other countries.

The amendment to the Senate's healthcare reform package won support from a bare majority of senators, with a vote of 51 in favor and 48 opposed, but 60 votes were necessary under Senate rules for the measure to be enacted.

Sen. Byron Dorgan, D-North Dakota, the measure's chief sponsor, had argued on the Senate floor that his amendment would allow pharmacies and wholesalers to import prescription drugs from Canada, Europe, Australia, New Zealand, and Japan. Drug prices are far lower there because of government regulations and price controls.

"All we're asking for is fair pricing," he said. "We shouldn't be paying the highest prices in the world for prescription drugs."

The proposal would save the government $19 billion over the next 10 years, according to the Congressional Budget Office. Dorgan estimated that patients would save $80 billion as well. He cited price differences in drugs. Equivalent amounts of Nexium, a heartburn medication, cost $36 in Spain and $424 in the United States, he said.

The amendment was cosponsored by several Republicans including Sen. Olympia Snowe of Maine and Sen. John McCain of Arizona, who also argued fiercely for the amendment during several days of debate.

Opponents, including Sen. Thomas Carper, D-Delaware, argued that the amendment could allow unsafe, counterfeited drugs to contaminate the US drug supply. "We should make sure that the FDA [Food and Drug Administration] says it's safe before we reimport drugs from other countries," he said in a statement.

FDA Commissioner Margaret A. Hamburg, in a letter to the Senate, warned that her agency is not able to guarantee that drug imports would not be counterfeited or contaminated. The FDA has raised those concerns for years as Congress attempted to allow prescription drug imports.

The issue is complicated because President Obama, who had cosponsored a similar bill when he was in Congress, had reached a deal in which the pharmaceutical industry agreed to contribute $80 billion toward healthcare reform over 10 years in exchange for protection from further cuts.

Monday, December 14, 2009

No White House enthusiasm on health cost savings proposal


Here is an excerpt from the above news link:
Sen. Byron Dorgan, D-N.D.. is seeking a vote on his proposal to permit the importation of prescription drugs from Canada and other countries as a cost-saving measure for consumers. The proposal is opposed by the pharmaceutical industry and has drawn a noticeable lack of enthusiasm from the White House, which has been working closely with drugmakers in the months-long effort to enact health care legislation.

Sunday, December 13, 2009

Medicare extension is hardly a panacea

On Face the Nation this morning, Sen. Joe Lieberman says "no public option, no Medicare buy-in, CLASS Act which will add to our debt in the future." And Sen. Ben Nelson says he cannot support the health care bill without an anti-abortion clause. See transcript on page 7 at http://www.cbsnews.com/htdocs/pdf/FTN_121309.pdf. The liberals have kept moving their lines in the sand. If they continue to back off, then it appears a health bill will most likely pass with the above changes.

For more on Sen. Liberman's opposition to adding younger Americans to Medicare, see http://news.yahoo.com/s/ap/20091214/ap_on_bi_ge/us_health_care_overhaul

Democrats want to expand Medicare to those 55-64, but private insurance may be a better deal
By Ricardo Alonso-Zaldivar, Associated Press Writer

WASHINGTON (AP) -- Think Medicare is a great deal? Better ask grandma first. Senate Democrats are talking about allowing aging baby boomers into the program, but it's far from free.

Seniors now on Medicare pay an average of $4,400 a year of their own money for supplemental insurance, premiums, prescription copays, and deductibles for inpatient care and doctor visits.

That's even after taxpayers pick up most of the cost of covering the elderly. Under one scenario Democrats are considering, people age 55 to 64 would have to pay full freight to join Medicare. Private insurance plans could well be a better deal for them.

"It's more complicated than just saying, 'Open Medicare up to people 55-64,'" said health economist Marilyn Moon, co-author of a 1999 proposal to expand the program. "In theory, it's not a bad idea because you're taking an existing program that works very well for an elderly population and extending it to the next group of people. But the structure of Medicare is different from private insurance."

On the plus side, Medicare is widely accepted, with 74 percent of doctors saying they are taking all or most new patients. But many people in their late 50s are still supporting 20-year-olds, even teenage children. Would the Democrats let Medicare cover kids as well?

Medicare does not offer a family plan, and it's unlikely to under the Democrats' plan. The program, created under President Lyndon Johnson in 1965, covers more than 45 million older and disabled people. It's widely seen as a success because before Medicare about half of seniors were uninsured in life's declining years.

But the program's long term financial outlook is in question, with its giant trust fund for inpatient care projected to become insolvent in nine years.

The proposed expansion is part of an effort by Senate Majority Leader Harry Reid, D-Nev., to find a compromise that can secure the 60 votes needed to pass President Barack Obama's health overhaul plan. It would be paired with an idea to offer average Americans the option of signing up for health insurance through the same federal agency that coordinates coverage for federal employees and members of Congress.

That combination amounts to a consolation prize for liberals, facing the hard reality that the government insurance plan they wanted to create to directly compete with the likes of Aetna and Blue Cross Blue Shield lacks the necessary support in the Senate. The House bill includes a government option.

House Speaker Nancy Pelosi, D-Calif., has spoken approvingly of the Medicare expansion, without offering an endorsement. Some House liberals who long have backed the idea of Medicare-for-all were enthusiastic.

Senate Democrats rejected any notion that it was a last-minute ploy to get to 60 votes.

"To regard a Medicare buy-in as something ... we don't really want but it's what we have to settle for would be a total misinterpretation of the feelings among most of us," said Sen. Charles Schumer, D-N.Y. "The Democratic Party has long sought it."

AARP, which represents not only seniors but people over 50, is withholding judgment.

"I can't say we support it or don't support it until we know exactly what's being proposed," said John Rother, top policy strategist for the seniors' lobby. "The positive side is that this is a program that gives you unlimited choice of doctors and hospitals, and can be run efficiently. The negative is that it's likely to attract high-cost people, and therefore the premium payments are likely to be high."

The specific Medicare options Reid submitted to the Congressional Budget Office have not been released publicly. The budget referees are expected to report back in the coming week with their assessment of costs and other practical questions.

A Democratic official briefed on the discussions among liberals and moderates leading up to the tentative compromise provided a basic outline of the proposal. The official spoke on condition of anonymity because no final decision has been reached.

The goal of the Medicare expansion is to provide immediate help to older working-age people, among the groups most at risk of losing health insurance in a bad economy. Under the underlying legislation, Americans will have to wait three years to four years before major federal aid for the uninsured starts to flow. Opening up Medicare could start to reduce the number of uninsured now.

The idea appears to be modeled on an earlier proposal by the chairman of the Senate Finance Committee, Sen. Max Baucus, D-Mont., for a transitional program until new insurance markets are set up under the legislation. People 55 to 64 who don't have coverage through an employer or a public program would be able to buy into Medicare. Premiums would have to cover the full cost of the expansion; Medicare financing for seniors' benefits would not be tapped.

The budget office modeled a similar plan and estimated that premiums would be high -- about $630 a month -- and enrollment limited to a few hundred thousand people. There's a reasonable chance premiums would be lower -- and enrollment higher -- under the Democrats' plan, since they would bring in people in their 50s, and the budget office analysis did not.

Democrats are also looking at ways to make the Medicare option available permanently.

"It sounds to me like it's a full employment program for people trying to figure out how to make this work," said economist Moon, now with the American Institutes for Research. "But I don't think this is an idea you can discard."

Saturday, December 12, 2009

Overhaul would raise health care costs

Long-term plan could 'face a significant risk of failure,' raise premiums
Associated Press

WASHINGTON - Democrats trying to push President Barack Obama's health care overhaul plan through the Senate got a sober warning Friday that costs will keep going up and proposed Medicare savings may harm the program.

A new report from government economic analysts at the Health and Human Services Department found that the nation's $2.5 trillion annual health care tab won't shrink under the Democratic blueprint that senators are debating. Instead, it would grow somewhat more rapidly than if Congress does nothing.

More troubling was the report's assessment that the Democrats' plan to squeeze Medicare for $493 billion over 10 years in savings relies on specific policy changes that "may be unrealistic" and could lead to cuts in services. The Medicare savings are expected to cover about half the nearly $1 trillion, 10-year cost of expanding coverage to the uninsured.

In still more bad news, the report starkly warned that a new long-term care insurance plan included in the legislation could "face a significant risk of failure" because it would attract people in poor health, leading to higher and higher premiums, and eventually triggering an "insurance death spiral." Sen. Chris Dodd, D-Conn., brushed that aside, pointing to an analysis by the Congressional Budget Office that found the program would be solvent for 75 years.

The one bright note: The bill would provide coverage to 93 percent of U.S. residents, reducing the number of uninsured people by about 33 million, the report said.

The analysis from the Office of the Actuary, which does long-range cost estimates for Medicare, was prefaced by a disclaimer saying it does not represent the official position of the Obama administration. Unlike estimates from the budget office, which have mainly focused on the legislation's impact on the federal deficit, the actuaries looked at total public and private costs over the next 10 years.

The analysts also used their years of experience with Medicare's finances to make a judgment call on whether the cuts proposed in the Democratic bills are politically sustainable. When previous Congresses have cut Medicare too deeply, providers have usually convinced lawmakers in subsequent years to restore at least some of the money. That same scenario is playing out this year as doctors try to persuade Congress to permanently repeal automatic spending cuts that would reduce their Medicare fees 21 percent next year.

The actuaries' analysis of the Senate bill echoes their previously released reports about the House bill. It addresses core provisions of both bills, and is unlikely to be affected by the latest changes Senate Democrats are proposing.

Republicans seized on the report as validation of their concerns that the overhaul bill is both unaffordable and unrealistic.

"This report confirms what we've long known — the Democrat plan will increase costs, raise premiums, and slash Medicare. That's not reform. This analysis speaks for itself. This bill is a sham," said Senate Republican Leader Mitch McConnell of Kentucky.

Sen. Pat Roberts, R-Kansas, said release of the report was "almost like Pearl Harbor — a day of infamy."

Democrats have sought to deflect the criticism by playing up the conclusions of the budget office, which show the bills would reduce the federal deficit and are not likely to drive up premiums for most people with job based coverage.

The actuaries' report projected that national health care spending would rise by an additional 0.7 percent under the bill from 2010-2019, mainly because newly insured people would be able to receive medical care they wouldn't otherwise have gotten.

In response, White House health care spokeswoman Linda Douglass emphasized the report's finding that "reform will have 'a significant downward impact on future health care cost growth rates.' As savings from reform kick in, national health expenditures are projected to increase at a slower annual rate under the Senate bill than under the status quo."

The findings on Medicare are a bigger problem for Democrats. The report suggests the Democratic plan hit the brakes too hard trying to hold down the growth of payments to hospitals, nursing homes, home health agencies and other service providers. And that could reduce access for seniors.

"Providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable," the report said. "Absent legislative intervention, (they) might end their participation in the program, possibly jeopardizing access to care for beneficiaries."

If the cuts stay in place, about one-in-five hospitals, nursing homes, and home care agencies could find themselves going in the red, the report said.

Also Friday, Sen. John Cornyn, R-Texas., head of the National Republican Senatorial Committee, sent a memo to Republican senators and candidates suggesting it was good politics to oppose the health overhaul, citing polling showing it is unpopular with the public.

"The Democrats' massive health care bill, coupled with their support for out-of-control government spending, are quickly developing into potent political issues for us," Cornyn wrote, urging Republicans to "continue to stand together in opposition to the Democrats' bill."

And in the latest offensive by foes of the overhaul effort, two business groups have begun airing a multimillion dollar TV ad campaign attacking the health legislation as a threat to the economy. The ads are scheduled to run through next Wednesday on national cable and in nine states whose senators are seen as wavering or politically vulnerable on the issue, including Arkansas, Connecticut and Maine.

"Congress' latest health care bill makes a tough economy even worse," says one of the two commercials. The spots are sponsored by Employers for a Health Economy and Start Over!, coalitions that between them represent more than 200 large and small business associations.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Sunday, December 6, 2009

Deals cut with health groups may be at peril

In an interview, Sen. Ben Nelson says Morgan Stanley believes the actual cost to the pharmaceutical industry on their deal with the White House is not $80 billion as reported, but only $20 billion.

"The Senate remains very unlikely to pass any bill containing an unbridled public plan that potentially could ultimately threaten significant price deflation for US sales," said Morgan Stanley pharmaceutical analyst Andrew Baum. "Any eventual healthcare reform is likely relatively benign to the pharmaceutical part of the healthcare value chain," Baum said in a note to clients.

In addition to the elimination of Medicare Advantage, which covers about 11 million seniors, the health care reform bill will also cut over $40 billion in Medicare on home care. These seniors will not be able to have the same health insurance plan and perhaps the same doctor as President Obama has promised.

By Lori Montgomery and Shailagh Murray
Washington Post Staff Writers
Sunday, December 6, 2009

Heading into a make-or-break week, Senate Democratic leaders are struggling to preserve the fragile support of interest groups for an overhaul of the nation's health-care system, even as lawmakers seek to change the carefully crafted provisions that brought the groups on board.

On the floor and behind closed doors, the Senate wrestled Saturday with amendments that would impose additional cost-control requirements on hospitals, doctors and drug companies, squeezing out savings beyond the considerable sums those groups had already volunteered to give up.

Of particular concern to seniors groups is an effort to strengthen a new independent board that would determine the future of Medicare, raising the possibility of cuts much deeper than those envisioned in the $848 billion health-care bill.

President Obama is scheduled to visit the Capitol on Sunday to rally Democrats to overcome lingering disputes, including the major flashpoints of abortion and a government-run insurance option. But other unresolved issues that have attracted less public attention pose a direct threat to deals cut by the White House months ago to appease the American Hospital Association, the Pharmaceutical Research and Manufacturers of America and other industry groups whose opposition proved lethal to President Bill Clinton's 1994 quest for health-care reform.

Although those agreements helped to clear a political path for reform to move forward, many Democrats view them as overly generous.

Hospital, drug concerns

Hospital groups, for example, are quietly steaming over a measure unveiled Friday by Sens. Joseph I. Lieberman (I-Conn.), Arlen Specter (D-Pa.) and Susan Collins (R-Maine), aimed at improving quality and lowering costs throughout the health-care system. One provision would impose stiff penalties on hospitals with high infection rates -- a top priority for Collins, who is being wooed by Majority Leader Harry M. Reid (Nev.) as a potential GOP convert.

Another pending amendment causing heartburn for Reid is a proposal by Sen. Byron L. Dorgan (D-N.D.) that would permit U.S. pharmacies and drug wholesalers to import lower-priced medications from other countries, including Canada. Drug reimportation is a popular bipartisan cause on Capitol Hill. As a senator, Obama supported an earlier version of the Dorgan bill, and White House Chief of Staff Rahm Emanuel was a leading advocate of drug reimportation when he served in the House.

A preliminary estimate by the nonpartisan Congressional Budget Office shows that the Dorgan amendment would save the government about $19 billion over 10 years -- and consumers, presumably, many billions more. But the drug industry has remained loyal to the White House since striking a deal this year to offer discounts worth $80 billion to Medicare patients in exchange for the promise of millions of new customers, and Dorgan expects some colleagues to take that relationship into account.

"The pharmaceutical industry has a lot of clout," he said. "My hope is the American people also have some support here in the chamber."

The drug industry would suffer another costly blow under an amendment by Sen. Bill Nelson (D-Fla.) that would transfer about 6 million seniors eligible for Medicare into the Medicaid program, which pays much lower prices for the same drugs. Under Nelson's amendment, half the $106 billion in savings would be used to close the coverage gap in the Medicare prescription drug program known as the "doughnut hole."

Closing the hole, meanwhile, is the top priority of the AARP, which has sent signals that it could turn against the Senate bill unless Nelson's effort succeeds. Though AARP has not endorsed the legislation, the group's assurances have helped to inoculate Democrats in recent days from Republican charges that nearly $500 billion in proposed Medicare cuts -- the bill's major source of financing -- would decimate services for seniors.

AARP vs. the board

The unusual clout of AARP makes the behind-the-scenes battle over the scope of an Independent Medicare Advisory Board particularly sensitive. The board, consisting of 15 health experts, would be empowered to rein in Medicare spending if costs continued to soar after 2014, and Congress would be required to approve the panel's recommendations or enact savings plans of its own.

Senior White House officials view the board as a critical component of health reform, the enforcement mechanism to guarantee that all the well-intentioned ideas for making hospitals and doctors more efficient translate into savings for the government. But AARP and other groups have fought to weaken or kill the board, arguing that its narrow focus on Medicare could irreparably damage the program. The House has rejected the idea of relinquishing congressional control over Medicare.

"You can't, in isolation, whack away at Medicare if the broader health system isn't able to control costs, either," said David Sloane, AARP's senior vice president for government relations.

AARP and the National Committee to Preserve Social Security and Medicare, a nonprofit led by former congresswoman Barbara Kennelly (D-Conn.), are working with about a dozen Democratic freshmen on an amendment that would expand the board's duties to cover the entire health-care system, though any recommendation affecting the private sector would be strictly advisory.

The White House and other lawmakers are pushing in the opposite direction. Sen. John D. Rockefeller IV (D-W.Va.), the board's original author, wants to strip out exemptions in the first decade for hospitals and other providers who have agreed to reductions in Medicare payments. Rockefeller said he is also considering an amendment to undo changes Reid made that could tie the board's hands after 2019.

Those changes would allow the board to act only if Medicare spending rose faster than overall health spending. An earlier version, written by Senate Budget Committee Chairman Kent Conrad (D-N.D.), would have let Medicare grow just a bit faster than the national economy, a more frugal standard.

Deficit hawks, skeptical of assertions that the health-care bill would not increase deficits, say the changes would gut the board. Reid's version leaves it "essentially toothless," said Robert L. Bixby, executive director of the nonprofit Concord Coalition, which promotes balanced budgets. "It basically means that if health-care costs are growing out of control, so can Medicare."

But the endorsement of Kennelly's group is contingent on keeping Reid's language.

"If we're growing faster than overall health-care spending, it's a legitimate thing to cut the program back. But if we're doing our job and we're more efficient than health care in the general economy, then we should not have Medicare being punished," said Maria Freese, Kennelly's chief lobbyist and policy director.

Home Care Patients Worry Over Possible Cuts

Published: December 4, 2009

CARIBOU, Me. — Dozing in a big lift chair, propped up by pillows in the living room of her modest home here, Bertha G. Milliard greeted the nurse who had come to check her condition and review the medications she takes for chronic pain, heart failure, stroke and dementia.

Ms. Milliard, 94, said those visits had been highly effective in keeping her out of the hospital. But the home care she receives could be altered under legislation passed by the House and pending on the Senate floor as Congress returned to work this week.

As they are across the nation, Medicare patients and nurses in this town in northern Maine are anxiously following the Congressional debate because its outcome could affect Medicare’s popular home health benefit in a big way. The legislation would reduce Medicare spending on home health services, a lifeline for homebound Medicare beneficiaries, which keeps them out of hospitals and nursing homes.

Under the bills, more than 30 million Americans would gain health coverage. The cost would be offset by new taxes and fees and by cutbacks in Medicare payments to health care providers.

The impact of the legislation on Medicare beneficiaries has been a pervasive theme in the first week of Senate debate, which is scheduled to continue through the weekend.

Home care shows, in microcosm, a conundrum at the heart of the health care debate. Lawmakers have decided that most of the money to cover the uninsured should come from the health care system itself. This raises the question: Can health care providers reduce costs without slashing services?

Under the legislation, home care would absorb a disproportionate share of the cuts. It currently accounts for 3.7 percent of the Medicare budget, but would absorb 10.2 percent of the savings squeezed from Medicare by the House bill and 9.4 percent of savings in the Senate bill, the Congressional Budget Office says.

The House bill would slice $55 billion over 10 years from projected Medicare spending on home health services, while the Senate bill would take $43 billion.

Democratic leaders in the House and Senate justify the proposed cuts in nearly identical terms. “These payment reductions will not adversely affect access to care,” but will bring payments in line with costs, the House Ways and Means Committee said. The Senate Finance Committee said the changes would encourage home care workers to be more productive.

The proposed cuts appear to be at odds with other provisions of the giant health care bills. A major goal of those bills is to reduce the readmission of Medicare patients to hospitals. Medicare patients say that is exactly what home care does.

“It helps me be independent,” said Mildred A. Carkin, 77, of Patten, Me., as a visiting nurse changed the dressing on a gaping wound in her right leg, a complication of knee replacement surgery. “It’s cheaper to care for us at home than to stick us in a nursing home or even a hospital.”

Delmer A. Wilcox, 89, of Caribou, lives alone, is losing his vision, uses a walker and has chronic diseases of the lungs, heart and kidneys. He said his condition would deteriorate quickly without the regular visits he received from Visiting Nurses of Aroostook, a unit of Eastern Maine Home Care.

The Aroostook County home care agency, which lost $190,000 on total revenues of $1.9 million in the year that ended Sept. 30, estimates that it would lose an additional $313,000 in the first year of the House bill and $237,000 under the Senate bill.

The prospect of such cuts has alarmed patients and home care workers. “We would have to consider shrinking the area we serve or discontinuing some services,” said Lisa Harvey-McPherson, who supervises the Aroostook agency as president of Eastern Maine Home Care.

“Our staff are scared,” Ms. Harvey-McPherson said, “but it’s our patients who will pay the price if Congress makes the cuts in home care.”

The four agencies under the umbrella of Eastern Maine Home Care cover a huge geographic area. Its nurses aim to see five patients a day, and they drive an average of 25 miles between patients, traversing potato fields and forests of spruce, birch and maple trees — and a few bear, moose and lynx. In winter, they may need a snowmobile, or even cross-country skis, to reach patients in remote areas.

President Obama has said that the savings in Medicare would be achieved by eliminating “waste and inefficiency” and that “nobody is talking about reducing Medicare benefits.” Moreover, he said, health care providers stand to benefit because they would gain tens of millions of new paying customers.

Home care executives question the arithmetic.

“No family or individual should ever go without health care coverage,” Ms. Harvey-McPherson said, as she drove up to a patient’s home here. “But an increase in the number of people with insurance would not necessarily help our agency because we depend so heavily on caring for seniors, with 80 to 90 percent of our home care revenue coming from Medicare.”

The impact on Medicare is a major concern for Maine’s senators, Susan Collins and Olympia J. Snowe, both Republicans being courted by the White House. Ms. Collins, a longtime champion of home care, has indicated she will resist the proposed cuts.

“Deep cuts to home health care would be completely counterproductive to our efforts to control overall health care costs,” Ms. Collins said. “Home care and hospice have consistently proven to be cost-effective and compassionate alternatives to institutional care.”

Private insurance companies often follow Medicare’s lead. So cuts in home-care payments could also jeopardize home care for privately insured patients like Christopher M. Hayes, a 35-year-old police officer in Presque Isle, Me. His left leg was crushed when he was struck by a car while jogging. He is learning to walk again with the help of a physical therapist.

In trying to slow the growth of Medicare, Democrats in Congress assume that health care providers can increase their productivity at the same pace as the overall economy.

But Saundra Scott-Adams, executive vice president of Eastern Maine Home Care, said: “That’s a joke for home health care. We provide one-on-one care.”

Her doubts are shared by Richard S. Foster, chief actuary of the federal Centers for Medicare and Medicaid Services. Mr. Foster said the health care industry was “very labor-intensive” and could probably not match the productivity gains of the overall economy.

While nurses can monitor some patients with electronic telecommunications devices, they said they still needed to provide hands-on care to many.

Phillip H. Moran, a 65-year-old diabetic in Houlton, Me., lost his right leg several years ago. His kidneys are failing. Without regular visits from a home health nurse, Mr. Moran said, he would be in danger of losing his other leg because of complications from diabetes. As a double amputee, he would be more likely to go into a nursing home.

“The nurses’ visits are really important,” Mr. Moran said. “If they are cut, it could cost people their lives.”

Saturday, December 5, 2009

Side by Side Comparison between House and Senate Healthcare Bills

Here is a very comprehensive side by side comparison between the two health care bills in the House (H.R. 3962) and the Senate (H.R. 3590), from the Kaiser Family Foundation, not affiliated with the Kaiser Permanente Medical Group:

Friday, December 4, 2009

Energy Incentives for Individuals in the American Recovery and Reinvestment Act


Audio File for Podcast: Energy Tax Credits

The American Recovery and Reinvestment Act (ARRA) provides numerous tax incentives for individuals to invest in energy-efficient products.

Residential Energy Property Credit (Section 1121): The new law increases the energy tax credit for homeowners who make energy efficient improvements to their existing homes. The new law increases the credit rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 for improvements placed in service in 2009 and 2010.

The credit applies to improvements such as adding insulation, energy efficient exterior windows and energy-efficient heating and air conditioning systems.

A similar credit was available for 2007, but was not available in 2008. Homeowners should be aware that the standards in the new law are higher than the standards for the credit that was available in 2007 for products that qualify as “energy efficient” for purposes of this tax credit. The IRS has issued Notice 2009-53 that will allow manufacturers to certify that their products meet these new standards.

Until the guidance is released, homeowners generally may continue to rely on manufacturers’ certifications that were provided under the old guidance. For exterior windows and skylights, homeowners may continue to rely on Energy Star labels in determining whether property purchased before June 1, 2009, qualifies for the credit. Manufacturers should not continue to provide certifications for property that fails to meet the new standards.

Residential Energy Efficient Property Credit (Section 1122): This nonrefundable energy tax credit will help individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, geothermal heat pumps and wind turbines. The new law removes some of the previously imposed maximum amounts and allows for a credit equal to 30 percent of the cost of qualified property. See Notice 2009-41.

Plug-in Electric Drive Vehicle Credit (Section 1141): The new law modifies the credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009. To qualify, vehicles must be newly purchased, have four or more wheels, have a gross vehicle weight rating of less than 14,000 pounds, and draw propulsion using a battery with at least four kilowatt hours that can be recharged from an external source of electricity. The minimum amount of the credit for qualified plug-in electric drive vehicles is $2,500 and the credit tops out at $7,500, depending on the battery capacity. The full amount of the credit will be reduced with respect to a manufacturer's vehicles after the manufacturer has sold at least 200,000 vehicles.

Plug-In Electric Vehicle Credit (Section 1142): The new law also creates a special tax credit for two types of plug-in vehicles — certain low-speed electric vehicles and two- or three-wheeled vehicles. The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500 for purchases made after Feb. 17, 2009, and before Jan. 1, 2012. To qualify, a vehicle must be either a low speed vehicle propelled by an electric motor that draws electricity from a battery with a capacity of 4 kilowatt hours or more or be a two- or three-wheeled vehicle propelled by an electric motor that draws electricity from a battery with the capacity of 2.5 kilowatt hours. A taxpayer may not claim this credit if the plug-in electric drive vehicle credit is allowable. For more information see: Questions and Answers, IR-2009-44, Notice 2009-54 and Notice 2009-58.

Conversion Kits (Section 1143): The new law also provided a tax credit for plug-in electric drive conversion kits. The credit is equal to 10 percent of the cost of converting a vehicle to a qualified plug-in electric drive motor vehicle and placed in service after Feb. 17, 2009. The maximum amount of the credit is $4,000. The credit does not apply to conversions made after Dec. 31, 2011. A taxpayer may claim this credit even if the taxpayer claimed a hybrid vehicle credit for the same vehicle in an earlier year.

Treatment of Alternative Motor Vehicle Credit as a Personal Credit Allowed Against AMT (Section 1144): Starting in 2009, the new law allows the Alternative Motor Vehicle Credit, including the tax credit for purchasing hybrid vehicles, to be applied against the Alternative Minimum Tax. Prior to the new law, the Alternative Motor Vehicle Credit could not be used to offset the AMT. This means the credit could not be taken if a taxpayer owed AMT or was reduced for some taxpayers who did not owe AMT.

Questions and Answers

If you have questions about the energy incentives for individuals, these questions and answers might help.

Related Items:

IRS Lowers Standard Mileage Rates


The Internal Revenue Service has issued its 2010 optional standard mileage rates for calculating the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

The rates for business, medical and moving purposes are slightly lower than last year’s rates, reflecting generally lower transportation costs.

Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car, van, pickup truck or panel truck will be:

• 50 cents per mile for business purposes;
• 16.5 cents per mile for medical or moving purposes; and,
• 14 cents per mile in service of charitable organizations.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

Taxpayers also have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. Revenue Procedure 2009-54 contains additional details on the standard mileage rates.

Thursday, December 3, 2009

House to Consider Estate Tax; Senate to Begin Long Health Reform Debate

By Mack A. Paschal
Publication date: 11/30/2009

The House is scheduled to debate and vote on legislation making the 2009 estate tax levels permanent, as the Senate begins in earnest a lengthy debate on a massive health care reform bill (H.R. 3590) during the Nov. 30 legislative week.

Following a week-long Thanksgiving recess, both chambers return to Capitol Hill with loaded agendas. The Senate returns to work Nov. 30 and the House will follow a day later on Dec. 1.

House Majority Leader Steny Hoyer (D-Md.) made it official Nov. 25 that House members can expect to vote on an estate tax bill (H.R. 4154) that would extend the current rate of 45 percent, rather than allow the rate to fall to zero in 2010 and then rebound to 55 percent in 2011 as would happen under current law.

The exemption levels in the bill, sponsored by Rep. Earl Pomeroy (D-N.D.), also would remain at 2009 levels, providing individuals with a $3.5 million exemption and couples with a $7 million exemption.

The bill could be considered on the House floor by Dec. 3, according the House schedule for the upcoming legislative week. The House Rules Committee is expected to meet by Dec. 2 to formulate a rule for floor debate of the bill.

House Has Reform Bills on Agenda
In addition to the estate tax bill, the House leadership plans to consider some financial regulatory reform measures earlier in the Nov. 30 week.

When the chamber reconvenes Dec. 1 at 2 p.m., members can expect to consider seven measures under suspension of the rules. They include a bill (H.R. 3029) to establish a research, development, and technology demonstration program to improve the efficiency of gas turbines used in combined cycle power generation systems and legislation (H.R. 3598) that would assist the Department of Energy in promoting energy efficient technologies that increase water use efficiency. Votes on legislation considered under suspension of the rules must pass by a two-thirds majority vote. Any requests for recorded votes on the legislation will occur after 6:30 p.m.

The House meets Dec. 2 and 3 at 10 a.m. each day for legislative business. On Dec. 2, the chamber will consider at least 10 more pieces of legislation, including a bill (H.R. 1242) that would amend the Emergency Economic Stabilization Act of 2008 to provide for additional monitoring and accountability of the Troubled Assets Relief Program.

Also on Dec. 2, the House leadership has scheduled legislation (H.R. 2873) that would give the Securities and Exchange Commission more enforcement authority. Members also will consider a resolution (H. Con. Res. 197) that would encourage banks and mortgage servicers to work with families affected by contaminated drywall to allow temporary forbearance without penalty on payments on their home mortgages.

The chamber likely will consider the estate tax measure on Dec. 3.

Health Care Debate Looms
Senators are preparing for a debate on health care reform that could last up to at least the projected Dec. 18 adjournment target for the First Session, if not longer.

The Senate reconvenes Nov. 30 at 2 p.m. At 3 p.m., the Senate resumes consideration of H.R. 3590, the legislative vehicle for the Senate Democratic reform bill, offered by Senate Majority Leader Harry Reid (D-Nev.).

Prior to the recess, the bill overcame a major hurdle, achieving the 60 votes needed to advance the measure for debate on the Senate floor. The vote of 60-39 taken the Saturday before the congressional recess was strictly along party lines. This action will allow senators to begin offering amendments to the legislation during the upcoming debate.

Currently pending is a substitute amendment offered by Reid. However, when the chamber reconvenes, both Reid and Senate Minority Leader Mitch McConnell (R-Ky.) will be allowed to offer amendments. There will be no roll call votes on Nov. 30.

The House passed its health reform package Nov. 7 (H.R. 3962) on a party line 220-215 vote.

Appropriations Update
The Senate also could consider, on a dual path, unfinished fiscal 2010 appropriations legislation. Prior to adjourning, the Senate completed work on its ninth spending bill, the military construction-Department of Veterans Affairs appropriations bill (H.R. 3082).

With only five of the 12 regular appropriations bills signed into law, most of the federal government programs are operating under a continuing resolution through Dec. 18.

Four of the remaining bills are awaiting conference committee action.

Meanwhile, congressional committees have scheduled hearings on a variety of topics, including the Bernanke nomination, financial stability, internet gambling, over-the-counter derivatives, and transportation issues.

Climate Change Meetings
Lisa Jackson, administrator of the Environmental Protection Agency, is scheduled to testify at a Dec. 2 hearing before a joint hearing of the Senate Environment Committee and its Subcommittee on Superfund, Toxics, and Environmental Health. The 2:30 p.m. meeting will examine the Federal Toxic Substances Control Act, which gives EPA the authority to require reporting, recordkeeping and testing requirements, and restrictions relating to chemical substances and/or mixtures.

The Senate Energy Committee will meet Dec. 2 to discuss policy options for reducing greenhouse gas emissions.

Transportation Issues
The Senate Commerce Committee has scheduled a Dec. 2 hearing on transportation security challenges since Sept. 11, 2001.

Stimulus tracking will be discussed at a Dec. 2 hearing by a House Transportation subcommittee. The hearing will focus on issues surrounding the building of border stations by the General Services Administration.

Aviation safety, focusing on pilot fatigue, will be the topic of a Dec. 1 hearing before a Senate Commerce subcommittee.

Issues Regarding Bankruptcy
The Senate Judiciary Committee again will attempt to mark up a bill (S. 1624) that would provide leniency to homeowners facing bankruptcy due to a catastrophic illness or serious medical problems.

A House Judiciary panel has scheduled a Dec. 3 hearing on protecting employees in airline bankruptcies.

The Subcommittee on Health, Employment, Labor, and Pensions of the House Education and Labor Committee Dec. 2 is scheduled to examine the impact of the Delphi bankruptcy on workers and retirees.

The complete text of this article can be found in the BNA Daily Tax Report, November 30, 2009. For comprehensive coverage of taxation, pension, budget, and accounting issues, sign up for a free trial or subscribe to the BNA Daily Tax Report today. Learn more »

© 2009, The Bureau of National Affairs, Inc.

Monday, November 30, 2009

California cap in malpractice cases an issue

By Dan Walters

One of the many contentious issues in the national health care debate is something that began 34 years ago in California when Jerry Brown, in the first year of his first governorship, signed legislation imposing a $250,000 limit on pain and suffering damages in medical malpractice cases.

The version of a national health care bill that Speaker Nancy Pelosi pushed through the House contains a provision that would push – but not quite compel – California and other states with malpractice damage caps to repeal them.

A little history: During the mid-1970s, insurance premiums for malpractice insurance skyrocketed in response to some big damage judgments. They rose so high that many doctors threatened to leave the state, or abandon specialized practices, particularly obstetrics. At one point, doctors' wives staged a sleep-in protest in Brown's outer office, albeit with the fashionably dressed demonstrators sleeping in down sleeping bags and noshing on catered meals.

Brown and the Legislature responded with the Medical Injury Compensation Reform Act (MICRA), imposing the $250,000 limit on "noneconomic" damages, which had been the form of the big malpractice verdicts, despite opposition from lawyers who represented plaintiffs in the personal injury suits and collected percentages of the damages as their fees.

MICRA's enactment had three effects: materially lowering malpractice insurance costs, encouraging 30-plus states to enact limits of their own, and igniting a decades-long war in the California Legislature between trial lawyers and medical care providers, backed by insurers.

The lawyers have made several high-powered efforts to repeal or modify the cap in California, contending that injured patients were being denied fair compensation. But they failed even when their bills were carried by speakers of the state Assembly.

The law, however, has been a full-employment act for lobbyists for rival factions and has generated many millions of dollars in campaign contributions.

Advocates of the cap contend that if President Barack Obama and Congress are serious about reining in medical costs, they'll make it part of national health care. The Congressional Budget Office, in fact, says such a cap would save $54 billion in health care costs over a decade, and other estimates are higher.

Obama has been noncommittal, but Pelosi and other Democratic leaders of Congress, as a gesture toward the national trial lawyer lobby, included a provision in their bill that would give "incentive payments" to states that establish a "fair resolution" process for malpractice claims but only if a state "does not limit attorneys' fees or impose caps on damages."

It's likely to be a major issue when House and Senate leaders try to iron out a compromise bill, and if it survives, Brown, who aspires to return to the governorship in 2010, may have to decide whether the cap he supported in 1975 will be repealed.

Wednesday, November 25, 2009

Retirement news from the IRS

Here is a publication from the IRS called "Retirement News for Employers". However, it has excellent info for everyone.


Saturday, November 21, 2009

FAQ: guide to health care reform


If you've recently found yourself wondering, "What the heck is going on with the health care reform debate?", you're not alone. The American legislative process is unwieldy, and never more so than in the United States Senate. Now that the Senate voted Saturday to move its bill to a full debate, some big hurdles remain.

Because we think you may have some of the same questions we did, and the bill being discussed would constitute one of the most consequential reforms in a generation if passed, we thought we'd put together a quick primer on what to expect in the weeks to come.

So, what exactly happened Saturday?

Saturday night at 8 p.m. ET, Senate Majority Leader Harry Reid brought his proposed bill to the floor of the Senate for a procedural vote to kick off a full debate and amendment process. To get things started, he needed 60 votes for a "motion to proceed." He got them.

The big suspense was over whether or not the bill would be successfully filibustered by opponents who wanted to stop the bill from moving forward.

What the heck is a filibuster?

Saturday night's "motion to proceed" vote was the first time the process could be stopped by a filibuster. There are two more times remaining.

With a filibuster, Republicans can prevent a vote by extending debate indefinitely by, for example, reading Sarah Palin's new book over and over and over again and refusing to stop. To bypass a hypothetical "Going Rogue" loop, Harry Reid needs 60 senators to vote to end any filibuster. This is called a "cloture" vote.

After Saturday, opponents will get their next chance to filibuster when the Senate votes to end full debate and send the bill to its final phase.

Who would filibuster and why?

Excluding the outside possibility that Olympia Snowe would break ranks, all 40 Republicans would likely support a filibuster. So, to prevent Democrats from getting the 60 votes necessary to break one, only one Democrat or independent would need to defect.

The most likely suspects for this are independent Joe Lieberman and conservative Democrats Mary Landrieu, Ben Nelson, and Blanche Lincoln. Recent speculation has focused on Lincoln, who faces low approval numbers in conservative Arkansas and an upcoming re-election bid in 2010. Nelson and Landrieu are also both from conservative states, though neither is up for re-election in 2010. Lieberman is not up for re-election and is from more liberal Connecticut, but may be influenced by the large insurance industry presence in his state.

What happens if the Senate does pass a bill?

After weeks of speeches and amendments and filibuster threats, if the Senate passes a bill, it moves on to a "conference committee." Here, members of both the House and the Senate will negotiate over the final details while trying to merge the bill passed by the House with the bill passed by the Senate.

All the hot-button issues will be on the table. If the Senate passes a bill without a "Public Option" it will need to be debated again. Many House Democrats want the controversial Stupak Amendment, which bans funding or subsidies for any insurance plan that funds abortion, removed in conference.

If these issues are ironed out, the committee will create a "conference report," or final bill, that will need to be passed yet again by both the House and the Senate. Yet again this vote in the Senate can be filibustered, so any ''conference report'' will need the support of 60 senators one last time.

If the "conference report" is passed in both houses of Congress, it will be sent to President Obama's desk for his likely signature.

When will all of this be over?

Up until last week, few people thought that this process could be completed by the end of the year. But the Senate Democrat's bill recently received positive feedback from the Congressional Budget Office, the nonpartisan federal agency that advises Congress on financial matters. This has led some political observers to think that maybe, just maybe, Americans will know whether or not their country's health care system will be dramatically overhauled in time for the holidays.

-- Thomas Kelley and Brett Michael Dykes are contributors to the Yahoo! News blog

Friday, November 20, 2009

Key Provisions of the Senate Health Care Bill

This post was written by CBS News correspondent Nancy Cordes and CBS News producer John Nolen

Senate Majority Leader Harry Reid unveiled his health care proposal "The Patient Protection and Affordable Care Act" on Wednesday night.

The Congressional Budget Office says the bill would cost $848 billion dollars over 10 years, reduce the deficit by $130 billion and would extend coverage to 94 percent of eligible Americans, reducing the number of uninsured individuals by 31 million leaving about 24 million people uninsured.

Here's a look at some of the key provisions of the bill:

• Effective Date 2014

• Requires most individuals to purchase coverage through their employer, privately or through a public plan. Includes exemptions for economic hardships. Fines for individuals not complying would start at $95 in 2014 phased-in over time up to $750.

• Creates a new public federal health insurance plan, the so-called "public option" which would compete with private insurers. States would have the choice of opting out by passing a state law.

• Establishes Health Insurance Exchanges, a marketplace where individuals, small businesses and others could purchase health care coverage.

• Insurance companies could not refuse coverage based on pre-existing condition. Would not allow higher premiums for pre-existing conditions or based on gender.

• Allows children to stay on their parents plan up to age 26.

• There's no employer mandate, but fines are paid by companies if the government subsidizes employees coverage.

• Extends tax credits to individuals and families earning up to 400 percent of the poverty level, on a sliding scale depending on income. On the low end of the scale Americans would pay no more than 2 percent of their income on premiums, rising to 9.8 percent at the high end of the scale.

• Forty percent Tax on high premium insurance plans, so-called "Cadillac" plans, those plans costing over $8,500 for individuals and $23,000 for families.

• Creates a new 5 percent tax on elective Cosmetic Surgery

• Increases Medicare payroll taxes by one-half percent to 1.95 percent for individuals earning more than $200,000 or couples earning more than $250,000.

• Limitations on Health flexible spending accounts, capping annual contributions at $2,500.

• Provides for one year additional $500 dollars for seniors before hitting the Medicare donut hole, but does not close the donut hole.

• Expands Medicaid program for low – income people from 100 percent of poverty level to 133 percent of poverty level.

• Immigrants in the country illegally would not receive health care subsidies, nor would they be able to obtain insurance through an insurance exchange.