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.

$4.8 trillion - Interest on U.S. debt

How can the U.S. afford yet another entitlement program? It needs to recognize America is a poor country.
Unless lawmakers make big changes, the interest Americans will have to pay to keep the country running over the next decade will reach unheard of levels.
By Jeanne Sahadi, senior writer

NEW YORK ( -- Here's a new way to think about the U.S. government's epic borrowing: More than half of the $9 trillion in debt that Uncle Sam is expected to build up over the next decade will be interest.

More than half. In fact, $4.8 trillion.

If that's hard to grasp, here's another way to look at why that's a problem.

In 2015 alone, the estimated interest due - $533 billion - is equal to a third of the federal income taxes expected to be paid that year, said Charles Konigsberg, chief budget counsel of the Concord Coalition, a deficit watchdog group.

On the bright side - such as it is - the record levels of debt issued lately have paid for stimulus and other rescue programs that prevented the economy from falling off a cliff. And the money was borrowed at very low rates.

But accumulating any more interest on what the United States owes at this point is like extreme sport: dangerous.

All the more so because interest rates will rise when private sector borrowers return to the debt market and compete with the government for capital. At that point, the country's interest payments could jack up very fast.

"When interest rates rise even a small amount, the interest payments go up a lot because of the size of the debt," Konigsberg said.

The Congressional Budget Office, which made the $4.8 trillion forecast, already baked some increase in rates into the cake. But there is always a chance those estimates may prove too conservative.

And then it's Vicious Circle 101 - well known to anyone who has gotten too into hock with Visa and MasterCard.

The country depends heavily on borrowing to fund what it wants to do. But the more debt it racks up, the more likely it becomes that creditors could demand a higher interest rate for making new loans to the government.

Higher rates in turn make it harder to pay off the underlying debt because more and more money is going to pay off interest - money, by the way, which is also borrowed.

And as more money goes to interest, creditors may become concerned that the country can't pay down its principal and lawmakers will have less to fund all the things government is supposed to do.

"[P]olicymakers would be less able to pay for other national spending priorities and would have less flexibility to deal with unexpected developments (such as a war or recession). Moreover, rising interest costs would make the economy more vulnerable to a meltdown in financial markets," the CBO wrote in its most recent long-term budget outlook.

So far, that crisis of confidence hasn't happened. And no one can predict with any certainty whether or when it could occur.

But should it occur, the change could be abrupt.

That's because the government frequently rolls over - or refinances - the debt it has issued as it comes due.

In other words, when a Treasury bond or note matures, the government must pay the investor the face value on that debt. In order to do that, the Treasury borrows money to pay back the investor, which means the debt would be refinanced at whatever the going interest rates are at the time.

Just how much churn is there? Of late, a fair bit it seems. A Treasury borrowing advisory committee reported in early November that "approximately 40 percent of the debt will need to be refinanced in less than one year."

Since rates may well stay low over the next year, it's possible that debt could be refinanced at the same or even lower rates. But that situation won't last forever.
So what will Washington do?

To help mitigate the potential risk of rising rates, the Treasury has said it would start increasing the average maturity of the new debt it issues. That way the debt it refinances in the next couple of years will be locked in at lower rates for longer periods of time.

And the Obama administration has promised to produce a deficit-reduction plan that would aim to bring down annual deficits to roughly 3% of GDP over the next several years, below the 4% to 5% currently projected.

If that happens, the $4.8 trillion in interest payments that CBO estimates for the next decade could go down if interest rates don't increase as much as CBO expects.

"There will be less debt outstanding than if we don't get the deficit down. It may also reduce [the average interest rate on the debt] since less debt means less pressure on interest rates," said William Gale, co-director of the Tax Policy Center.

But whether they can do that within a few years of an economic recovery is another matter. "Even under the president's [2010] budget as evaluated by the CBO we do not get anywhere close to that," Gale said.

That could mean the president's 2011 budget proposals would have to make a lot of changes to get closer to the 3% goal. Unpopular changes like tax hikes and spending cuts.

Budget hawks hope the president will push for a deficit-reduction commission to come up with ways to cut the deficit and then propose legislation that lawmakers would only be able to vote for or against. The reason: There is no political will to make the tough calls. Especially in a mid-term election year.

First Published: November 19, 2009: 11:58 AM ET

Thursday, November 19, 2009

Germany's health care ailments
By James A. White

Rising medical costs, higher unemployment and a rapidly aging population are putting the health-care system under tremendous financial strain. This all sounds close to home but a story in today’s WSJ says those problems are confronting health care in Germany, whose system is often held up as one of the world’s models.

Costs in the German system are shared between employers and workers, whose premiums are pegged to income, the paper reports. Everyone is obliged to pay into the plan — the world’s oldest publicly sponsored health-care system that dates back to Bismark in 1883 — and the government is looking to boosting employee contributions to cover a $11.1 billion shortfall expected next year, according to the WSJ.

But that’s only a short-term answer. “Germans already pay 8% of their gross wages into the centralized health-care pot, while their employers contribute an amount equal to 7% of gross wages,” the paper reports. Longer term, analysts expect Germany will be forced to make painful cuts to the system.

“Yet in a country where quality universal health care is considered a basic right, such proposals are extremely controversial,” the WSJ says. Contrast that with overhaul efforts going the other way in the U.S., where proposals to extend health-care coverage to more Americans are proving extremely controversial as well.
More on Germany's universal heath care system's financial problems:

Wednesday, November 18, 2009

Improper US Government Payments Hit $98 Billion

It's about time the federal government looks into improper payments and fraudulent claims. But for Office of Management and Budget Director Peter Orszag to say "This is one of the reasons why, as part of health reform, we believe there are crucial changes necessary to the Medicare Advantage program" seems far fetched. As written on page 50 of the 2010 Medicare & You, care providers under Medicare Advantage are paid a flat amount each month with no additional reimbursements. So how could abolishing Medicare Advantage reduce fraudulent claims?
"Medicare pays a fixed amount for your care every month to the companies offering Medicare Advantage Plans."
By: Reuters

Improper payments by the U.S. government to people, firms and contractors rose sharply to $98 billion in fiscal 2009 and President Barack Obama plans new rules to clamp down, the White House said Tuesday.

Over half the mistakes were made in the Medicare and Medicaid programs, and although some of the deterioration reflected stricter measurement, it also showed the need for healthcare reform, Office of Management and Budget Director Peter Orszag told reporters.

Improper payments in the Medicare and Medicaid programs totaled $55 billion in fiscal 2009, according to documents provided by OMB.

Medicare covers healthcare for the elderly and some disabled, while Medicaid does the same for the poor.

Orszag said the error rate for payments under Medicare Advantage, where private insurers offer coverage to Medicare beneficiaries, jumped to 15 percent, or to $12 billion, in fiscal 2009. The error rate was 10 percent in fiscal 2008.

"This was not the result of methodological changes. This is one of the reasons why, as part of health reform, we believe there are crucial changes necessary to the Medicare Advantage program," he said on a telephone conference call.

Obama has made overhaul of the $2.5 trillion U.S. healthcare industry his top domestic policy goal, pledging to expand medical coverage to millions of the uninsured and make healthcare more affordable.

Orszag stressed that tougher measurement, as well as higher government spending due to the recession, explained a big part of the jump in government waste.

The government made improper payments of $72 billion in the 2008 financial year. Fraud may also be partly to blame.

But Orszag stressed that the lack of tools to identify how much fell into this category made it impossible to estimate the size of the problem.

One exception to this rule was fraud connected with improper payments under unemployment insurance, which OMB said added up to around one-fifth of the $12 billion in improper payments in that program.

Obama will sign a new executive order within a week to improve transparency and to encourage people to play straight, Orszag said.

Part of this effort will aim to explore imposing penalties on anyone who knowingly gets an improper payment — for instance if they get paid twice for the same thing.

At the moment, all recipients have to do is return the money.

"It goes without saying that these results would be completely unacceptable in the private sector, as they should be in government, especially at a time of record deficits," said Democratic Senator Tom Carper, chairman of the Senate subcommittee on federal financial management.

"Unfortunately, these numbers may still be just the tip of the iceberg since they don't even include estimates for several major programs, including the Medicare prescription drug plan," Carper said in a statement.

Tuesday, November 17, 2009

Stimulus surprise: 15 million may owe IRS
Treasury report estimates many may be getting paid more of the Making Work Pay credit than they should. Their refunds may be cut or they'll have to cough up the overpaid amount.
By Jeanne Sahadi, senior writer
Last Updated: November 17, 2009: 9:45 AM ET

NEW YORK ( -- Nothing with taxes is ever simple, even when you're getting a tax break.

An estimated 15.4 million tax filers may be getting paid more of the Making Work Pay credit than they should, according to a report from a Treasury Department inspector general publicly released Monday.

And that means they either will get less of a refund than they expected, or will actually owe money to the IRS on their 2009 taxes.

The IRS said in a written response to the report that the agency believes far fewer people than the inspector general estimates would be affected, and that the majority who might be would see less of a refund but would not have an out-of-pocket tax liability come April 15.

The taxpayers most vulnerable are those in two-earner couples; those who have dependents who earn wages; single or married filers who have more than one job at the same time; and filers who get pension payments or have a job and receive Social Security benefits.

The Making Work Pay credit, created as part of the stimulus legislation enacted in February, is equal to 6.2% of earnings up to $400 per person (or up to $800 per couples who file jointly). The full credit is paid to people making $75,000 or less ($150,000 per couple per household). A partial credit would be paid to those making above those amounts but no more than $95,000 ($190,000 for couples per household).
Bailout Tracker: Understand the rescues

For most who qualify, the 2009 credit is being paid in advance incrementally through their paychecks. And it's been automatic - meaning employers, based on what they know of a worker's income and using IRS withholding tables, automatically reduce the amount of taxes withheld from a worker's paycheck.

But an employer doesn't know the income of the worker's spouse or whether the worker is claiming a dependent who also is earning money, or whether the worker has income from other jobs.

So, for instance, two spouses might be receiving the full credit at their jobs when their joint income only qualifies them for a partial credit or none at all. Another scenario: A single person with more than one job might be receiving the full credit at each of his jobs, when in fact he's only entitled to $400 total.

You get the picture.

Such taxpayers could have increased their withholding to account for the possibility that they might receive more of the credit than they should. Indeed, when the credit was first passed, the IRS put out statements and created a calculator to help taxpayers in such situations figure out how much tax they should have withheld. But that doesn't mean that everyone did.

Those who have had too little tax withheld this year will either face a reduced refund or owe money to the IRS. The money primarily would be the amount of the credit overpaid to them. But a much smaller group might also owe a penalty if they were significantly underwithheld.

"More than 1.2 million taxpayers included in these groups may be subject to: 1) paying back some or all of the Making Work Pay Credit and 2) being assessed the estimated tax penalty or an increased estimated tax penalty as a direct result of the Making Work Pay Credit," the inspector general's report said.

The good news is that the IRS is likely to waive penalties for filers who may have to pay an estimated tax penalty or who would see their estimated penalty increased as a result of the Making Work Pay credit, according to the report.

The inspector general's report also recommended that the IRS embark on an expanded effort to publicize this issue more and specifically target the message to those tax filers most likely to be affected. To top of page
First Published: November 17, 2009: 3:55 AM ET

Monday, November 16, 2009

Report: Bill would reduce senior care
By Lori Montgomery
Washington Post Staff Writer
Sunday, November 15, 2009

A plan to slash more than $500 billion from future Medicare spending -- one of the biggest sources of funding for President Obama's proposed overhaul of the nation's health-care system -- would sharply reduce benefits for some senior citizens and could jeopardize access to care for millions of others, according to a government evaluation released Saturday.

The report, requested by House Republicans, found that Medicare cuts contained in the health package approved by the House on Nov. 7 are likely to prove so costly to hospitals and nursing homes that they could stop taking Medicare altogether.

Congress could intervene to avoid such an outcome, but "so doing would likely result in significantly smaller actual savings" than is currently projected, according to the analysis by the chief actuary for the agency that administers Medicare and Medicaid. That would wipe out a big chunk of the financing for the health-care reform package, which is projected to cost $1.05 trillion over the next decade.

More generally, the report questions whether the country's network of doctors and hospitals would be able to cope with the effects of a reform package expected to add more than 30 million people to the ranks of the insured, many of them through Medicaid, the public health program for the poor.

In the face of greatly increased demand for services, providers are likely to charge higher fees or take patients with better-paying private insurance over Medicaid recipients, "exacerbating existing access problems" in that program, according to the report from Richard S. Foster of the Centers for Medicare and Medicaid Services.

Though the report does not attempt to quantify that impact, Foster writes: "It is reasonable to expect that a significant portion of the increased demand for Medicaid would not be realized."

The report offers the clearest and most authoritative assessment to date of the effect that Democratic health reform proposals would have on Medicare and Medicaid, the nation's largest public health programs. It analyzes the House bill, but the Senate is also expected to rely on hundreds of billions of dollars in Medicare cuts to finance the package that Majority Leader Harry M. Reid (D-Nev.) hopes to take to the floor this week. Like the House, the Senate is expected to propose adding millions of people to Medicaid.

The Centers for Medicare and Medicaid Services administers the two health-care programs. Foster's office acts as an independent technical adviser, serving both the administration and Congress. In that sense, it is similar to the nonpartisan Congressional Budget Office, which also has questioned the sustainability of proposed Medicare cuts.

In its most recent analysis of the House bill, the CBO noted that Medicare spending per beneficiary would have to grow at roughly half the rate it has over the past two decades to meet the measure's savings targets, a dramatic reduction that many budget and health policy experts consider unrealistic.

"This report confirms what virtually every independent expert has been saying: [House] Speaker [Nancy] Pelosi's health-care bill will increase costs, not decrease them," said Rep. Dave Camp (Mich.), the senior Republican on the House Ways and Means Committee. "This is a stark warning to every Republican, Democrat and independent worried about the financial future of this nation."

Democrats focused Saturday on the positive aspects of the report, noting that Foster concludes that overall national spending on health care would increase by a little more than 1 percent over the next decade, even though millions of additional people would gain insurance. Out-of-pocket spending would decline more than $200 billion by 2019, with the government picking up much of that. The Medicare savings, if they materialized, would extend the life of that program by five years, meaning it would not begin to require cash infusions until 2022.

"The president has made it clear that health insurance reform will protect and strengthen Medicare," said White House spokeswoman Linda Douglass. "And he has also made clear that no guaranteed Medicare benefits will be cut."

Republicans argued that the report forecasts an increase in total health-care spending of more than $289 billion.
For more, read these Post columns:

AP Poll: Fine print in health care prompts worries
By RICARDO ALONSO-ZALDIVAR and TREVOR TOMPSON, Associated Press Writers – Mon Nov 16, 7:15 am ET

WASHINGTON – What's it going to cost me?

Americans are worried about the fine print in the health care overhaul, an Associated Press poll says, and those concerns are creating new challenges for President Barack Obama as he tries to overcome doubts in Congress.

Despite a widely shared conviction that major health care changes are needed, Democratic bills that aim to extend coverage to the uninsured and hold down medical costs get no better than a lukewarm reception in the latest results.

The poll found that 43 percent of Americans oppose the health care plans being discussed in Congress, while 41 percent are in support. An additional 15 percent remain neutral or undecided.

There has been little change in that broad public sentiment about the overhaul plan from a 40-40 split in an AP poll last month, but not everyone's opinion is at the same intensity. Opponents have stronger feelings on the issue than do supporters. Seniors remain more skeptical than younger generations.

The latest survey was conducted by Stanford University with the nonprofit Robert Wood Johnson Foundation.

When poll questions were framed broadly, the answers seemed to indicate ample support for Obama's goals. When required trade-offs were brought into the equation, opinions shifted — sometimes dramatically.

In one particularly striking finding, the poll indicated that public support for banning insurance practices that discriminate against those in poor health may not be as solid as it seems.

A ban on denial of coverage because of pre-existing medical problems has long been one of the most popular consumer protections in the health care debate. Some 82 percent said they favored the ban, according to a Pew Research Center poll in October.

In the AP poll, when told that such a ban would probably cause most people to pay more for their health insurance, 43 percent said they would still support doing away with pre-existing condition denials but 31 percent said they would oppose it.

Costs for those with coverage could go up because people in poor health who'd been shut out of the insurance pool would now be included, and they would get medical care they could not access before.

"I'm thinking we'd probably pay more because we would probably be paying for those that are not paying. So they got to get the money from somewhere. Basically I see our taxes going up," said Antoinette Gates, 57, of Atlanta.

The health care debate is full of such trade-offs. For example, limiting the premiums that insurance companies can charge 50-year-olds means that 20-year-olds have to pay more for coverage.

"These trade-offs really matter," says Robert Blendon, a professor at the Harvard School of Public Health who follows opinion trends. "The legislation contains a number of features that polls have shown to be popular, but support for the overall legislation is less than might be expected because people are worried there are details about these bills that could raise their families' costs."

If the added costs — spread over tens of millions of people — turn out to be small, it probably won't make much difference, Blendon said. But if they're significant, Obama could be on shaky ground in the final stretch of his drive to deliver access to health insurance to most Americans.

More than 4 in 5 Americans now have health insurance, and their perceptions about costs will be critical as Obama tries to close the deal. Democrats in the House came together to pass a bill, but in the Senate, Democratic liberals and moderates disagree on core questions.

The poll suggests the public is becoming more attuned to the fact that when it comes to health care, details often make all the difference.

For example, asked if everyone should be required to have at least some health insurance, 67 percent agreed and 27 percent said no.

The responses flipped when people were asked about requiring everybody to carry insurance or face a federal penalty: 64 percent said they would be opposed, while 28 percent favored that.

Both the House and Senate bills would require all Americans to get health insurance, either through an employer, a government program or by buying their own coverage. Subsidies would be provided for low-income people, as well as many middle-class households.

And there would also be a stick — a penalty collected through the income tax system to enforce the coverage mandate.

Among Democrats, only 12 percent oppose the broad goal of requiring insurance. But 50 percent oppose fines to enforce it.

"I think it's crazy. I think it infringes on our rights as a citizen, forcing us to do these things," said Eli Fuchs, 26, of Marietta, Ga.

The poll found a similar opinion shift on employer requirements: 73 percent agreed that all companies should be required to give their employees at least some health insurance.

Yet when asked if fines should be used to enforce such a requirement on medium and large companies, support dropped to 52 percent. Most large and medium businesses already provide coverage. Uninsured workers are concentrated in small companies.

"The cost — who's going to pick up the cost? There's nobody to help that business out. If they can't afford to pay for the insurance, then what do they say, you either pay for the insurance or you go out of business?" said Emerson Wilkins, 62, of Powder Springs, Ga.

The poll was based on land line and cell phone interviews with 1,502 adults from Oct. 29 to Nov. 8. It has a margin of error of plus or minus 2.5 percentage points. The interviews were conducted by GfK Roper Public Affairs and Media. Stanford University's participation was made possible by a grant from the Robert Wood Johnson Foundation, a nonpartisan organization that conducts research on the health care system.

Drug Makers Raise Prices in Face of Health Care Reform
Published: November 15, 2009

Even as drug makers promise to support Washington’s health care overhaul by shaving $8 billion a year off the nation’s drug costs after the legislation takes effect, the industry has been raising its prices at the fastest rate in years.

In the last year, the industry has raised the wholesale prices of brand-name prescription drugs by about 9 percent, according to industry analysts. That will add more than $10 billion to the nation’s drug bill, which is on track to exceed $300 billion this year. By at least one analysis, it is the highest annual rate of inflation for drug prices since 1992.

The drug trend is distinctly at odds with the direction of the Consumer Price Index, which has fallen by 1.3 percent in the last year.

Drug makers say they have valid business reasons for the price increases. Critics say the industry is trying to establish a higher price base before Congress passes legislation that tries to curb drug spending in coming years.

“When we have major legislation anticipated, we see a run-up in price increases,” says Stephen W. Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota. He has analyzed drug pricing for AARP, the advocacy group for seniors that supports the House health care legislation that the drug industry opposes.

A Harvard health economist, Joseph P. Newhouse, said he found a similar pattern of unusual price increases after Congress added drug benefits to Medicare a few years ago, giving tens of millions of older Americans federally subsidized drug insurance. Just as the program was taking effect in 2006, the drug industry raised prices by the widest margin in a half-dozen years.

“They try to maximize their profits,” Mr. Newhouse said.

But drug companies say they are having to raise prices to maintain the profits necessary to invest in research and development of new drugs as the patents on many of their most popular drugs are set to expire over the next few years.

“Price adjustments for our products have no connection to health care reform,” said Ron Rogers, a spokesman for Merck, which raised its prices about 8.9 percent in the last year, according to a stock analyst’s report.

This year’s increases mean the average annual cost for a brand-name prescription drug that is taken daily would be more than $2,000 — $200 higher than last year, Professor Schondelmeyer said.

And this means that the cost of many popular drugs has risen even faster. Merck, for example, now sells daily 10-milligram pills of Singulair, the blockbuster asthma drug, at a wholesale price of $1,330 a year — $147 more than last year. Singulair is now selling at retail, on, for nearly $1,478 a year.

The drug companies “can charge what they want — it’s not fair,” Eric White, the 42-year-old owner of a small jewelry store in Queens, said as he left a pharmacy recently.

Despite having drug insurance, Mr. White says he now pays $110 a month out of pocket for two brand-name allergy medicines, even as he has cut prices in his jewelry store by at least 40 percent to keep customers coming through the door.

He shook his head. “What can I do?” he said. “I need my medicines.”

The drug industry has actively opposed some of the cost-cutting provisions in the House legislation, which passed Nov. 7 and aims to cut drug spending by about $14 billion a year over a decade.

But the drug makers have been proudly citing the agreement they reached with the White House and the Senate Finance Committee chairman to trim $8 billion a year — $80 billion over 10 years — from the nation’s drug bill by giving rebates to older Americans and the government. That provision is likely to be part of the legislation that will reach the Senate floor in coming weeks.

But this year’s price increases would effectively cancel out the savings from at least the first year of the Senate Finance agreement. And some critics say the surge in drug prices could change the dynamics of the entire 10-year deal.

“It makes it much easier for the drug companies to pony up the $80 billion because they’ll be making more money,” said Steven D. Findlay, senior health care analyst with the advocacy group Consumers Union.

Name-brand prices have risen even as prices of widely used generic drugs have fallen by about 9 percent in the last year, Professor Schondelmeyer said. But name brands account for 78 percent of total prescription drug spending in this country. And as long as a name-brand drug still has patent protection it faces no price competition from generics.

Ken Johnson, senior vice president of the industry association — the Pharmaceutical Research and Manufacturers of America — criticized the analysis Professor Schondelmeyer had conducted for AARP, saying it was politically motivated.

“In AARP’s skewed view of the world, medicines are always looked at as a cost and never seen as a savings — even though medicines often reduce unnecessary hospitalization, help avoid costly medical procedures and increase productivity through better prevention and management of chronic diseases,” he said.

But Professor Schondelmeyer’s analysis — which found prices for the name-brand drugs most widely used by the Medicare population rising by 9.3 percent in the last year, the fastest rate since 1992 — is in line with the findings of a leading Wall Street analyst, too.

Catherine J. Arnold, a drug industry analyst at Credit Suisse, said her latest study of the nation’s eight biggest pharmaceutical companies showed markedly similar results: list prices rising an average of 8.7 percent in the 12 months ending Sept. 30 — the highest rate of growth since at least 2004.

As does Professor Schondelmeyer, Ms. Arnold based her price calculations on reported wholesale prices and a formula that puts more emphasis on each company’s best-selling drugs.

Ms. Arnold said the prospect of cost containment under health care reform, as well as the tougher business environment, entered into the decisions of manufacturers to raise prices this year.

The industry stands to gain about 30 million customers with drug insurance from the legislation pending in Congress. But the industry also faces the prospect of tougher negotiations from both public and private buyers as the government tries to squeeze savings out of the health system.

“If you’re going to take price increases,” Ms. Arnold said, “here and now might be the place to do that, because the next year and the year after that might be tough.”

Mr. Johnson did not dispute the Credit Suisse study or deny Ms. Arnold’s finding that American drug makers have raised prices at the fastest rate in five years.

He said both studies were incomplete by failing to include rebates that drug makers give distributors. But Ms. Arnold, Professor Schondelmeyer and a 2007 Congressional study of Medicare said the rebates often accrue to the middlemen, not consumers, and higher manufacturer prices lead to higher retail prices.

And the drug industry’s own major consulting firm, IMS Health, has also reported a significant run-up in prices. Back in April, IMS predicted that United States drug sales might actually decline this year.

Billy Tauzin, president of the industry’s trade association, highlighted the gloomy prediction in a June 1 letter to President Obama shortly before striking the deal to cut drug costs by $80 billion. In negotiating the deal, the drug makers argued that they could not afford to give up more than that.

But in October, IMS made an unusual change in the middle of its forecasting cycle, saying it now believed United States sales would grow at least 4.5 percent in 2009 — or $21 billion more than expected six months earlier.

A major reason, IMS said, was higher-than-expected price increases for drugs in the United States.

Friday, November 13, 2009

Right Way to Change Your Name

If you’re planning to change your name after getting married, making the change in a timely fashion is probably going to become even more important next year when a new program, called Secure Flight, will require that the name you use to make an airline reservation be exactly the same as the one you use on an ID, even if the rules may sometimes bend a little.

Too bad the process of figuring out how to change your name can be so tricky.

When I got married two years ago, what to change my name to wasn’t an issue. I used my maiden name professionally so I knew I wanted to keep it somehow. Since I wasn’t that attached to my middle name, I decided to drop it and replace it with my maiden name, adding my husband’s name as my new last name as many others do.

But as for how to go about changing my name, that wasn’t quite as simple. I looked online and followed the instructions I found on sites like and, filling out a myriad of paperwork and going through the varying steps required for each stage of the process.

I first ordered about a dozen extra certified copies of my marriage certificate and then brought one, along with the required form, to the Social Security office in New York City to get a Social Security card with my new name. When it arrived in the mail, I changed my name on my bank accounts and credit cards and finally, earlier this year after moving to California, got a driver’s license with my new name.

But I’ve never been sure if I’ve followed the proper procedure to officially change my name. So I decided to consult some experts to help other future newlyweds avoid the same confusion. Edited to add: (By the way, if you’re gay the process can be a bit more complicated; see our related post for more.).

According to those I spoke with, while the exact process varies state by state, it’s the act of getting married that allows you to change your name. Then, getting extra certified copies of your marriage certificate (two to three are recommended), changing the name on your Social Security card and telling your employer should be your first steps if you plan a more traditional change like adding your spouse’s last name, with a hyphen or without.

By changing your name with Social Security (and with your employer), you generally ensure that your wages will properly be posted to your number, that your tax refund won’t be delayed and that other agencies will recognize your name change.

“The way the process is defined, Social Security is the main place to change your name,” said Danielle Tate, whose three-year-old site,, helps streamline the name change process for newlyweds by providing and filling out the required paperwork. (Similar services also exist, among them Name Change Express and the Name Change Kit for Brides.) “Once Social Security has seen your document and agreed to change your name, the other offices follow,” she said.

Then, after you change your name with Social Security, how long you should wait before changing your license varies. Some states require that you wait for your Social Security card to be issued before you change your driver’s license, while others just require you wait 24 to 48 hours after filing the Social Security name change form. Others, meanwhile, don’t even require that you file first with Social Security. (Newlyweds will need to check with their state motor vehicle office to find out.)

At this point, you also should change your name on your passport by filling out and sending in the required form along with your marriage certificate, change your name for voter registration and change your name with the United States Postal Service. Ms. Tate also recommended filling out I.R.S. form 8822 to further insure that you don’t have any problems getting tax refunds.

But regardless of the requirements in your state, Ms. Tate recommended trying to file all the government change documentation within two months of your wedding (most states would like it done within 30 to 60 days, though there’s rarely a penalty) to avoid hassles like delayed tax refunds and missed flights, especially with the full enforcement of Secure Flight starting next year. Before I got my new driver’s license, for instance, I had to travel with my marriage certificate if tickets were booked in my new name.

Then, after you officially have a new name in the eyes of the government, you can worry about going through the various procedures for changing your name with your bank, creditors, utilities, medical professionals and insurers, among others. (See a more complete list here.) Some companies will change your name over the phone, while others require you send in a form and a copy of your marriage certificate. You can generally create a form letter that works for most.

That’s all there is to it.

“After marriage, it’s a lot easier to change your name than if you were doing it at another random time in your life,” said Emily Doskow, an attorney in California who specializes in family issues and writes about marriage and divorce issues for the legal information publisher Nolo. And all the procedures I outlined above apply to men who want to take their wife’s name in some states, including California, Hawaii and New York.

Unfortunately, the process is not as easy for those couples opting to merge their names or create new ones nor for men in certain states. And an increasing number of states are making it harder to make a maiden name a middle name as I did. In such cases, Ms. Doskow said, the name changer will need to go through the more traditional name changing process of filing a petition at court, paying the $100 to $400 or so filing fee, publishing a notice in a local newspaper and getting a court order.

Still, even if you don’t have to go through that process, it’s easy to forget about certain steps. I still feel as if I’m living a bit in limbo between Jennifer Saranow and Jennifer Saranow Schultz. Just recently, for instance, I realized I still needed to change my name at my gym and for all my frequent flyer accounts. One airline let me do it over the phone without any forms or proof, while another required I send in a copy of my marriage certificate.

I also just opened my passport to find that it still contains my old name — changing it is another thing I’ve added to my to-do list.

Readers, if you changed your name after you got married, how did you find the process and what ways did you find to make it easier?

10 Ways to Cut Health-Care Costs Right Now
Employers and hospitals don't have to wait for Congress to address inefficiencies and waste
By Catherine Arnst

Seven hundred billion dollars. That's a ballpark estimate of how much money is wasted in the U.S. medical system every single year, according to a new Thomson Reuters (TRI) report. A sum equal to roughly one-third of the nation's total health-care spending is flushed away on unnecessary treatments, redundant tests, fraud, errors, and myriad other monetary sinkholes that do nothing to improve the nation's health. Cut that figure by half, and there would be more than enough money to offer top-notch care to every one of America's 46 million uninsured.

None of the health-care reform bills on the table in Washington do anything meaningful to address that wasted $700 billion. Nor do they call for changes in the underlying flaw that drives much of the waste—the fee-for-service system that pays doctors and hospitals for the amount of medical care delivered rather than for its quality. Under fee-for-service there is no financial incentive for doctors to eliminate waste, since they wouldn't pocket any of the resulting savings. They would just earn less.

By leaving this perverse reward system in place, Congress is virtually guaranteeing that health-care reform legislation, if passed, will do nothing to "bend the curve" of rising health-care costs, as President Barack Obama originally set out to do. Even the few cost-cutting efforts that the bills do include won't go into effect until at least 2013. As a result, U.S. health spending is on track to double over the next 10 years, to $5.2 trillion, about 21% of the gross domestic product.

Or possibly not. Politicians may be reluctant to rein in the medical-industrial complex, but the private sector is forging ahead. Faced with health-care costs that keep rising 6% to 7% every year—even during this year of negative overall inflation—plenty of insurers, hospitals, employers, and communities are figuring out how to offer better care for less money. They are willing to take experimental leaps in an attempt to solve some of the health system's most intractable problems.

BusinessWeek has looked at 10 such attempts to lower health-care costs and improve patient care. These innovations cannot have the same impact as a comprehensive federal bill. Nor are the gains from private efforts assured. Paul B. Ginsburg, president of the nonprofit Center for Studying Health System Change, cautions that "there are a lot of things we know can improve health, such as wellness programs. But we don't know if they can save money on a large scale."

Still, companies and hospitals are taking the initiative, and some results are in plain view. "Three years ago, professional medical organizations were very reluctant to talk about inappropriate treatments, but I already see that changing," says Robert Kelley, vice-president for health-care analytics at Thomson Reuters. He points out that the American College of Cardiology recently published several standards of care for angioplasty and other common treatments, aimed at preventing unnecessary and costly interventions. Given that about one in six U.S. health-care dollars is currently spent on cardiovascular procedures, "that's a big step forward," says Kelly. Here are some others.

Crime pays big when it comes to health care. This huge industry is run pretty much on the honor system. As law enforcement agencies have cracked down harder on illegal drugs, organized crime has diverted resources into multimillion-dollar medical scams, where there is less chance for detection. The FBI figures that fraudulent billings to Medicare, Medicaid, and private insurers account for 3% to 10% of total health spending, and the bureau concedes its estimates may be low. "Everywhere we look, we see evidence of fraud," says Lewis Morris, chief counsel for the Office of the Inspector General at the U.S. Health & Human Services Dept.

Medical fraud can range from fake claims to kickbacks to doctors to rigged payment schemes spanning several states. For years private insurers relied on law enforcement to chase down scams, with little effect. Now the industry is seizing the initiative. The Blue Cross & Blue Shield Assn. reports that its antifraud efforts resulted in savings of $350 million last year, a 43% increase from 2007. "Previously we had claims people investigate fraud," says Lee S. Arian, head of WellPoint's (WLP) antifraud unit and a former federal prosecutor. "Now we hire law enforcement professionals with experience investigating crime."

Insurers are also trying to stop crime before it starts. Anthem Blue Cross of California came up with a strategy designed to identify so-called phantom providers of medical equipment, phony companies set up to file fake reimbursement claims. Working with federal files on fraudsters, Anthem fingered 10% of 500 newly registered companies as fakes. An added bonus: News coverage of the effort caused requests at Anthem for new provider ID numbers to drop dramatically.

When Johnson & Johnson (JNJ) CEO William C. Weldon met with President Obama over the summer, he communicated a key message: Prevention pays. Weldon knows, because J&J has been offering comprehensive wellness programs to its 100,000 employees since 1995. Internal studies found that in the four years ended in 2002, those efforts saved $225 per employee per year.

J&J's experience proves wrong the conventional medical wisdom that it takes decades before efforts to help people develop healthier lifestyles can produce savings. Although many workplace wellness programs are little more than window dressing, serious efforts can yield important reductions.

J&J offers a huge array of programs, including free smoking cessation classes, online tools for weight and stress management, and 30 on-site fitness centers. Employees who enroll get a $500 discount on their insurance premiums. About 85% of employees participate as a result. "Seventy percent of health-care costs could be prevented through lifestyle modification," says Dr. Fikry W. Isaac, J&J's executive director of global health services.

A patient suffering from one or more chronic diseases may depend on several doctors, and rarely do they communicate with one another. This lack of care coordination means it's nearly impossible to arrange complementary treatments, cross-check prescriptions, and avoid ordering the same diagnostic tests over and over. The resulting duplications and follow-up care cost the nation $25 billion to $50 billion a year.

A solution is emerging from the medical trenches in the form of the "patient-centered medical home." Under this model, a primary-care doctor is the point person for all of a patient's medical needs, organizing care with specialists, pharmacists, and physical therapists and sharing electronic medical records with all. A 2004 study estimated the U.S. health-care bill could fall by 5.6% if every patient had a medical home.

North Carolina is already reaping savings. In 1998 the state set up Community Care of North Carolina (CCNC), a partnership between the state and some 4,000 primary-care doctors. Enrolled in the program are 870,000 Medicaid recipients and 97,000 children. CCNC pays doctors Medicare rates plus a monthly fee of $2.50 per enrollee to cover the extra time the doctors need to manage overall care. A Mercer study found that the program saved the state $161 million on health-care costs in 2006 alone.

We are not a fit nation. One-third of U.S. adults are obese, and health spending on this group grew 80% from 2001 to 2006, to $166.7 billion. Rochester, N.Y., has decided to do something about it.

In 2005, Wegmans Food Markets CEO Danny Wegman recruited six other local employers, including Bausch & Lomb, Eastman Kodak (EK), and Xerox (XRX), along with the Rochester Business Alliance, to set up a health and fitness program for all of the metropolitan area's 1.04 million people. The campaign, called "Eat Well. Live Well," challenges individuals to eat five cups of fruit and vegetables and walk 10,000 steps each day. More than 44,000 people have participated over the past three years, making it the world's largest wellness program.

The group's collaboration didn't stop at fitness. The companies joined with doctors and insurers to substitute generic drugs for brand-name medicines, had their own efficiency experts help three hospitals streamline operations free of charge, and contributed $685,000 toward establishing a regional electronic health records system. Wegmans Vice-Chairman Paul S. Speranza says Rochester's health costs have dropped from 5% below the national average in 2005 to 15% below this year. "We believe collaboration, in Rochester or nationally, is the answer," he says, "whether there is legislation or not."

Far too often, the biggest danger to patients is not their disease but the hospitals that treat them. Every year 1.7 million patients develop infections while in hospital, and 99,000 die as a result. These hospital-acquired infections add $30 billion to the nation's annual health-care bill—and almost all are preventable. "For a long time there was a sense that a lot of these infections were inevitable," says Dr. Donald Goldmann, senior vice-president of the nonprofit Institute for Healthcare Improvement. "But in the last five or six years medical professionals have come to realize we can do a lot better if we follow a zero-tolerance policy."

The key is keeping the hands and clothes of hospital personnel clean, as well as any tools that come in contact with patients. In 2001, Dr. Peter Pronovost of Baltimore's Johns Hopkins Hospital came up with a five-item checklist that proved highly effective at curbing contamination. It calls for all staff to wash their hands before touching patients; clean patients' skin with strong antiseptic; wear masks, caps, and gowns; and take other common-sense precautions. Using the list, the Keystone Project, a collaboration of 77 Michigan hospitals started in 2003, reduced catheter-related infections to zero. The state hospital association estimates 1,700 lives and $246 million were saved in the project's first three years. Keystone is now being rolled out to all 50 states.

Three out of four Americans do not take their medicine as directed. This noncompliance leads to additional doctor visits, hospitalizations, and treatments that together add some $177 billion a year to the nation's health-care bill, according to the National Council on Patient Information & Education.

People don't take their pills because they forget, they don't think the drugs work, they neglect to refill prescriptions, or they can't afford the medications. To address the problem, GlaxoSmithKline (GSK) and the American Pharmacists Association Foundation joined forces four years ago to start the Diabetes Ten City Challenge. Pharmacists closely monitored the medications of more than 1,000 participants at 30 companies and waived co-pays for prescriptions. Average care costs dropped nearly $1,100 per participant per year—and patients were healthier.

A 2005 study estimated that every dollar spent on such medication-adherence programs can save $7 for patients with diabetes, $5 for those with high cholesterol, and $4 for high blood pressure. It's "one of the best ways to improve care ... and get more out of each health-care dollar,"says Dr. John O'Brien, an assistant professor at the College of Notre Dame School of Pharmacy in Maryland. Consequently, the National Consumers League is planning a major campaign next year to persuade the public to take their pills.

One-quarter of Medicare dollars are spent in the last year of patients' lives. The costs of end-of-life care vary wildly, however. The Dartmouth Institute for Health Policy has found that spending is nearly three times higher in Manhattan than in areas of Colorado, mainly because patients in Manhattan average 21.9 days in the hospital during their last six months, compared with only 6.3 days in Grand Junction, Colo. Yet higher costs don't translate to longer or better lives.

Aetna (AET) discovered that high-quality care for the dying actually lowers costs. The insurer started its Compassionate Care program in 2004 to educate terminally ill patients and their families about treatments, living wills, and hospice care. "It was about dignity, not cost control," says Dr. John W. Rowe, former CEO of Aetna. Instead of unneeded tests and futile treatments, patients got more nursing care, pain management, and psychological support, says Rowe, now a Columbia University professor.

Program participants were twice as likely as average patients to choose hospice care. Costs came down 20%, yet surveys showed that both patients and their families were more satisfied than those not in the program. Such counseling efforts "are not about 'death panels,'" says Dr. Elliott S. Fisher, a professor at Dartmouth Medical School. "This is about better care, aligned with what patients want."

In 2009, UnitedHealthcare (UNH) introduced the Diabetes Health Plan, a new type of benefit that offers financial rewards to patients who manage their disease properly. Three companies, including General Electric (GE), are testing the plan, and 15 more workplaces signed on to roll it out in 2010. Employees who participate in the UnitedHealthcare plan must adhere to specific treatment guidelines and agree to be tracked by the insurer to make certain they are sticking with the program. In return, co-pays on their diabetes drugs are waived, along with other fees related to managing their disease.

The United plan is part of a larger trend in managed care called "value-based insurance design." The idea is to contain costs by giving financial incentives to patients based on their particular health issues rather than offering one-size-fits-all plans. "One issue in the health-reform debate is that we're paying an awful lot for health care and yet we don't have the healthiest outcomes," says Dr. Edmund J. Pezalla, national medical director for pharmacy management at Aetna (AET), which is also experimenting with value-based insurance design. "There are things providers and patients can do together to achieve better outcomes."

The impact of tailoring plans to employees with specific diseases could be significant. United estimates that diabetes costs the health-care system $174 billion a year.

When Floyd "Jack" Fowler Jr. holds focus groups of heart patients, he's amazed at their misplaced faith in the benefits of medical procedures. "They all think they'll die if they don't have bypass surgery or angioplasty," says Fowler—even though studies show that both procedures extend lives or prevent heart attacks in only a tiny minority of especially sick patients. But hardly anyone knows this, he says.

Fowler's nonprofit Foundation for Informed Medical Decision Making has sought for years to give patients both that knowledge—and a choice. The idea is to explain thoroughly to people the benefits and risks of medical procedures they may be facing. At the Spine Center at Dartmouth-Hitchcock Medical Center, for example, patients with back problems are shown a video that walks them through various procedures and provides data showing that outcomes are similar whether or not they have surgery. Once the program started, spinal surgery rates dropped 30%.

So far, shared decision-making efforts reach only a small number of patients. But given that as much as 37% of health spending is wasted on unnecessary care, the idea is catching on. Washington State passed the nation's first law two years ago encouraging informed decision-making, and other states are expected to follow, says Dr. Lance Lang, senior medical director at Health Dialog.

Doctors regularly complain that fear of malpractice suits forces them to order far more tests and procedures than necessary. Although President Obama has said he is open to legislation that would limit malpractice awards, there may be a simpler solution. Sometimes all it takes is an apology.

The Sorry Works! Coalition, founded in 2005, is persuading hospitals to disclose mistakes to patients and their families. Under the policy, as soon as a hospital discovers an error, the patient is informed, the cause is investigated, and changes in procedure are recommended. If the provider is at fault, the patient is offered a settlement.

The University of Michigan Health System adopted the policy in 2001 and reports that malpractice claims fell from 121 a year to 61 in 2006. The honesty "takes away some of the anger of patients and the 'gotcha' of plaintiff lawyers," says Douglas B. Wojcieszak, who founded Sorry Works! after losing his brother to a medical error. "You don't need any legislation, judge, or politician to do this—it's simply customer service." The University of Illinois Medical Center in Chicago started a formal apology program in 2006 and says the number of claims has since declined 40%, despite a 20% increase in clinical activity.

With Esmé E. Deprez, John Carey, and Arlene Weintraub

Arnst is a senior writer for BusinessWeek based in New York.
Also see

Getting Ex's Social Security

Is it true that as a 64-year-old divorcee, who was married for 13 years and hasn't remarried, I would be eligible to collect half of my ex-husband's Social Security benefit? My ex-husband is 67 and has been collecting full Social Security for more than a year. I have been waiting to collect my full retirement benefit from Social Security until age 66, rather than taking reduced benefits early.

If I could collect half of his benefit now, could I switch to my own full benefit at 66? Then, could I switch again, to collect my ex-husband's full benefit, if he dies before I do? Also, could I collect his benefits retroactively?

S.A. Reagan

You don't have a choice between collecting your own benefit or your ex-spouse's until you reach your full retirement age.

If you are between age 62, which is the youngest age at which you can collect reduced retirement benefits through Social Security, and your full retirement age, which varies based on the year you were born, your application for benefits generally will be based on your earnings record, says Dorothy Clark, a spokeswoman for the Social Security Administration in Baltimore. If the portion of your ex-spouse's benefit to which you are entitled at the age you apply is greater than your own, you could receive a benefit equal to that amount.

But if you wait until your full retirement age to file for Social Security, you can restrict the scope of your application to your ex-spouse's benefit only, and continue to accrue credits for delaying your own retirement benefit up to age 70, Ms. Clark says.

Generally, here are the requirements for collecting based on an ex-spouse's earnings record: Your marriage had to have lasted at least 10 years; you can't be remarried; you have to be at least 62; and your ex-husband has to be entitled to Social Security retirement or disability benefits. Finally, unless you have postponed your own retirement benefit as described above, the benefit you are entitled to receive based on your own work has to be less than the benefits you would receive based on your ex-spouse's work.

If your ex-spouse has died, you can receive survivor benefits at age 60 (or age 50 if you are disabled), if your marriage lasted at least 10 years, and you aren't entitled to a higher benefit based on your work record. (You may be eligible if you still have a child at home as well.)

If you are at full retirement age or older when your ex-spouse dies, you generally would be entitled to up to 100% of his or her basic benefit amount. But you would continue to get your own amount, plus the difference between yours and his—and only if it is greater than what you are entitled to based on your own earnings record.

So, if the reader above waits until her full retirement age to file for Social Security and elects to receive half of her ex-husband's benefit at that point, she could switch to her own maximum benefit at age 70. And then, if her ex-spouse dies first, she could switch to his benefit again, as long as his benefit was greater than hers at that point.

However, if she starts collecting Social Security before her full retirement age, she is stuck with her own reduced amount, plus any portion of his to which she is entitled (whichever is greater), throughout her retirement. If her ex-spouse dies and she hasn't yet reached her full retirement age, she also could get a portion of his benefit amount (the percentage would be based on her age), if the amount were greater than what she was receiving at that point.

Write to Kelly Greene at

Lowdown on Home-Buyer Tax Credits

Last week, President Barack Obama signed a law that extends through next spring a temporary tax credit of up to $8,000 for some first-time home buyers, which was due to expire Nov. 30. The law also adds a new tax credit of up to $6,500 for certain repeat home buyers. The package, which the government estimates will cost a total of $11 billion, is intended to help spur housing sales, a critical part of the economy.

Here are some answers to common questions about the new rules.

Q: What has stayed the same in the new law?

1) First-time home buyers still get a credit of as much as 10% of the purchase price, up to a maximum $8,000. "First-time" means people, including both partners of a married couple, who haven't owned a principal residence for three years before the purchase.

2) All taxpayers who claim a credit must use the home as a principal residence for the next three consecutive years.

3) The credits offer dollar-for-dollar reductions of tax and are refundable. This means that a taxpayer who doesn't pay enough tax to offset the credit can get a refund. For example, if you qualify for an $8,000 credit but only owe $5,000 in tax, you could receive a $3,000 check from the Internal Revenue Service.

4) Under the new law, as under the old, 2009 home buyers may claim the credit on either their 2008 or 2009 returns, and 2010 buyers may claim the credit on either their 2009 or 2010 returns.

5) Taxpayers do not qualify for a credit if they buy from a lineal ancestor or descendent (sic), including parents or grandparents and children or grandchildren.

Q: What has changed?

Several important features took effect as of Nov. 6:

1) To take advantage of the tax credits, a buyer must have a contract in place before May 1, 2010, and the deal must close before July 1, 2010. No further extension is expected.

2) The price of the house is now capped. For purchases made after Nov. 6, no credit is available for any home costing more than $800,000.

3) There is now a tax credit for repeat buyers as well as for first-time buyers. Taxpayers who have lived in one residence for five consecutive years of the past eight can now qualify for a tax credit of as much as 10% of the purchase price, up to a maximum $6,500, of a new principal residence. The new home does not have to cost more than the old one.

4) Income limits for people who qualify for a tax credit are far more generous than under the previous law. For single filers, the credits now phase out between $125,000 and $145,000 of modified adjusted gross income; for married couples, the range is $225,000 to $245,000. For most people, modified adjusted gross income will be the same as adjusted gross income.

5) The new law contains anti-abuse measures designed to stem fraud, which became a problem with the previous home-buyer tax credit. Most buyers must be 18 or older, and no taxpayer may take a credit if he or she is claimed as a dependent on someone else's return. Taxpayers taking the credit will also have to furnish proof of purchase. According to Robert Dietz of the National Association of Home Builders, this will usually be a HUD-1 form.

6) People taking the tax credit, as under the old law, aren't allowed to buy a home from a lineal ancestor or descendent. The new law, applying to purchases made after Nov. 6, also says a person may not take a credit if the home is purchased from a spouse or the spouse's lineal relatives.

Q: If I bought a house last spring or summer, can I get a tax credit?

You qualify if you are a first-time buyer and meet the other requirements, but not if you are a repeat buyer. The new credit for repeat buyers applies only to purchases made after Nov. 6.

Q: What is the definition of "principal residence"?

If you own more than one home, your principal residence is usually the one where you spend most of your time. In determining residence the IRS may also consider where your family lives and your mailing address for bills and correspondence, among other factors.

Q: Can a principal residence be something besides a conventional house?

Yes. A principal residence may also be a condominium, co-op apartment, attached or semi-attached townhouse, or even—if it has eating, sleeping and toilet facilities—a boat, motor home or trailer. Manufactured homes qualify in some states.

Q: Does the person who claims the credit have to use the home as a principal residence?


Q: If I buy a new home and live in it, do I also have to sell my old one in order to take advantage of the credit?

This is unclear. The law appears to allow repeat buyers to retain their old home, for which no tax credit was given, while claiming a credit for the new one. What is clear is that if you buy a new home using the credit, you must use it as your principal residence.

Q: How may the credits be allocated among two or more unmarried buyers?

This also is unclear. But if the IRS adopts the rules that applied to the previous tax credit, which are detailed in IRS Notice 2009-12, there is room for planning. The notice says that taxpayers may use "any reasonable manner" to allocate the credit. It even provides an example in which two unmarried buyers allocate the credit to the lower earner in order to qualify for it.

Q: I need the credit refund to help make the down payment. What can I do?

There's no rushing the IRS. But one option is to adjust your current withholding from your paychecks to reflect the fact that you will be taking the credit later. But be careful: If you don't make the purchase, then you may owe interest and penalties. Consult a tax adviser.

Q: Is it possible to qualify for a credit if I am building a home on a lot I already own?

Yes, according to the National Association of Home Builders. The purchase date is usually considered to be the date of first occupancy, so you would need to move in before July 1, 2010.

Q: May I take a credit if I am building a large addition to my home?

No; these credits apply only to the purchase of a home.

Q: Are there special rules for the military?

Yes. In general, members of the military and foreignservice and intelligence communities who are serving overseas on "official extended duty" for at least 90 days during 2009 and the first four months of 2010 have an extra year to take advantage of these credits. Consult a tax adviser who specializes in this area.

Q: Where can I get more information?

Go to, a Web site sponsored by the National Association of Home Builders. You can also look for links from the IRS's home page,, or search for Homebuyer Credit. Another option is to consult a professional tax adviser.

Write to Laura Saunders at

Wednesday, November 11, 2009

Donating this year? Uncle Sam needs your help
If you're irked by the U.S. debt, you can make tax-deductible contributions to pay it down. Fiscal year 2009 saw $3.1 million in donations. Only $12 trillion left to go!
By Jeanne Sahadi, senior writer

NEW YORK ( -- You've probably heard about the country's giant debt load - $12 trillion and rising.

Did you know you can help reduce it?

Under a little-known law enacted in 1961, Uncle Sam accepts tax-deductible contributions to pay down the country's debt.

Not that the Treasury Department does much to publicize the program.

You can find it under the header "Accepting Gifts" in the U.S. Code. Or, if you're not an avid reader of dusty legal books, you can check the FAQ section on the Web site of the Bureau of Public Debt, an agency within Treasury. Or flip to page 91 of the IRS' 2009 Instruction Booklet for Form 1040.

Contributions made are typically small -- under $100. But there have been a few humdingers over the years.

The largest single gift ever made was in 1992 for $3.5 million, said Mckayla Braden, a spokesperson for the Bureau of the Public Debt.

For fiscal year 2009, all donations totaled just over $3 million. That's well more than what was donated in any single year in the decade prior. But it's far less than the nearly $21 million collected in 1994.

The money credited to the "Gifts to Reduce the Public Debt" account in theory reduces the amount of money the government has to borrow to finance its debt. But the dent is not deep or lasting.

"We might have to finance a tiny bit less that week," Braden said.

The nuts and bolts
So who are the folks who send Uncle Sam money of their own volition?

"Usually someone dies and leaves a gift. And many contribute regularly," Braden said. "On average, we get five donations a week."

Sometimes, she said, a large donation is made by an estate but is paid out over a number of years.

The names and addresses of the donors are not released. And blessedly, unlike most charities that reward you for giving by bombarding you with solicitations for more money, Uncle Sam will acknowledge your gift but then never bother you again.

There are two ways to give. One is to send a check directly to the Bureau of Public Debt, an agency within the Treasury Department. The address: Attn: Dept G, Bureau of the Public Debt, P.O. Box 2188, Parkersburg, WV 26106-2188.

The other is to include a check -- separate from any tax payment you make - with your federal income tax return.

Hate writing checks? You soon may be able to donate online. "We are going to make it very easy in the future to make gifts to reduce the public debt through PayPal on a regular basis," Braden said.

Would you give?'s video team took to the streets of New York to ask random passers-by if they were aware of the program. No one was.

When asked if they'd contribute now that they know, the majority said that wouldn't be happening.

One woman put it this way: "They can use my tax dollars to do that and work it out." One man was a little more blunt. "Hell no. Hell no."

But others weren't so put off.

"I think I could give $10 to $20. And if everyone could do that it would make a good dent in the debt," another woman said. Another man figured he could "help the government out" with a hundred bucks.

Of course, with the national debt at $12 trillion, it would take more than a few $100 contributions to get back to even -- 120 billion of them, in fact.

-'s Ian Orefice and CNN's Ross Helman contributed to this report.

First Published: November 11, 2009: 4:11 AM ET

Tuesday, November 10, 2009

Confessions of an ObamaCare Backer
A liberal explains the political calculus.

The typical argument for ObamaCare is that it will offer better medical care for everyone and cost less to do it, but occasionally a supporter lets the mask slip and reveals the real political motivation. So let's give credit to John Cassidy, part of the left-wing stable at the New Yorker, who wrote last week on its Web site that "it's important to be clear about what the reform amounts to."

Mr. Cassidy is more honest than the politicians whose dishonesty he supports. "The U.S. government is making a costly and open-ended commitment," he writes. "Let's not pretend that it isn't a big deal, or that it will be self-financing, or that it will work out exactly as planned. It won't. What is really unfolding, I suspect, is the scenario that many conservatives feared. The Obama Administration . . . is creating a new entitlement program, which, once established, will be virtually impossible to rescind."

Why are they doing it? Because, according to Mr. Cassidy, ObamaCare serves the twin goals of "making the United States a more equitable country" and furthering the Democrats' "political calculus." In other words, the purpose is to further redistribute income by putting health care further under government control, and in the process making the middle class more dependent on government. As the party of government, Democrats will benefit over the long run.

This explains why Nancy Pelosi is willing to risk the seats of so many Blue Dog Democrats by forcing such an unpopular bill through Congress on a narrow, partisan vote: You have to break a few eggs to make a permanent welfare state. As Mr. Cassidy concludes, "Putting on my amateur historian's cap, I might even claim that some subterfuge is historically necessary to get great reforms enacted."

No wonder many Americans are upset. They know they are being lied to about ObamaCare, and they know they are going to be stuck with the bill.

Printed in The Wall Street Journal, page A24

Mr. John Cassidy's article is at

FDIC Disowns Geithner Embarrassment
By Dan Freed

WASHINGTON, D.C. (TheStreet) -- The Treasury Department, not the Federal Deposit Insurance Corp., should be held responsible for a public relations gaffe last month in which the FDIC closed a Chicago bank just hours after it received an award from Treasury Secretary Tim Geithner, according to FDIC spokesman David Barr.

Park National Bank of Chicago received $50 million in tax credits to encourage investment in poor communities at an Oct. 30 ceremony attended by Geithner. Hours later, though, it was seized along with eight other banks around the country that formed part of a holding company called FBOP Corp. and sold to U.S. Bancorp (USB).

One financial services executive, who did not want to be on the record for fear of running afoul of regulators, accused the FDIC of timing the closure as it did in a deliberate effort to embarrass Geithner.

FDIC Chairman Sheila Bair has tangled with Geithner before over issues such as her approval of Wells Fargo (WFC)'s acquisition of Wachovia after the failed bank had initially struck a deal with Citigroup (C), according to a Bloomberg News report last year. The report said Geithner tried to push Bair out of office.

FDIC Spokesman Barr says questions over the issue should be directed to John Dugan, the Comptroller of the Currency, which is a bureau within the Treasury Department. Barr says Dugan sits on the FDIC's board and could have warned Geithner of the impending closure, since the FDIC took bids on FBOP Bank October 20 -- 10 days before the bank was closed.

"Why aren't you asking John Dugan's people why they didn't call up their own boss, since they're a bureau within the Treasury Department and the FDIC is an independent regulatory agency?," Barr told

However, in a follow-up e-mail, Barr noted that there are "statutory firewalls..that insulate the Treasury officials from knowing about impending failures." Asked why this firewall did not apply to Dugan, Barr wrote "ask them (the OCC) how it works."

A spokesman for the Office of the Comptroller of the Currency declined to comment.

Though Park National was relatively healthy, it was shuttered because it could not cover the losses of other banks in the FBOP holding company.

In addition to the usual real estate loans gone bad that have dogged virtually every institution from Bank of America (BAC) to Goldman Sachs (GS), the FBOP banks had big losses on preferred shares of Fannie Mae (FNM) and Freddie Mac (FRE), according to a report in the Wall Street Journal last week.

Treasury spokespeople did not respond to calls or e-mail messages

--Written by Dan Freed in New York.

Sunday, November 8, 2009

House passes historic health-care reform bill
Vote is key procedural victory for Obama; action turns to Senate
By Robert Schroeder, MarketWatch

WASHINGTON (MarketWatch) -- The House of Representatives late Saturday night approved a historic bill to remake the U.S. health-care system, delivering President Barack Obama a key procedural victory on his top domestic priority after a lengthy and sometimes emotional day of debate on the nearly 2,000-page measure.

By a vote of 220-215, lawmakers approved a 10-year, $1.055 trillion bill that aims to put in place near-universal health-care coverage in the United States, would require individuals to buy and most businesses to offer coverage, and expand Medicaid. Poorer Americans would get subsidies to buy insurance under the bill, and insurers would be barred from denying coverage to people with pre-existing conditions.

The bill would also establish a government-run health-insurance plan option to compete with private insurers -- the controversial "public option" strongly backed by Obama but sharply opposed by Republicans.

Just one Republican, Rep. Joseph Cao of Louisiana, voted for the White House-backed bill. A substitute bill offered by the GOP failed on a vote of 176-258. The House Democrats' bill will now need to be melded with a bill awaiting action in the Senate.

Before the vote, House Speaker Nancy Pelosi, D-Calif., said it was "an historic moment for our nation and for America's families."

House lawmakers began debating late Saturday morning and were immediately caught up in partisan fighting. But House Democratic leaders were upbeat about the bill's prospects after an early afternoon meeting with Obama, who made a rare Saturday trip to Capitol Hill to press members to pass the measure.

Obama made health-care reform a plank of his history-making presidential campaign and this year made a full-court press for an overhaul, lobbying members of Congress and stumping for reform in speeches around the country.

"This bill is change that the American people urgently need," Obama said in the White House Rose Garden after meeting lawmakers Saturday. "Now's the time to finish the job," he said, stressing that the bill is fully paid for and will lower health-care costs for families and businesses.
Action moves to Senate

Action on health reform now moves to the Senate, where a bill unveiled by Majority Leader Harry Reid, D.-Nev., is awaiting a cost analysis from the Congressional Budget Office. The Senate bill would let states opt out of the government-run "public option," but the overall Senate and House measures share broadly similar language.

House Democrats needed 218 votes for the bill to pass. Party leaders spent the week trying to shore up support from wavering members of the rank and file who were concerned about abortion and immigration language in the bill.

Members passed an amendment Saturday night that would bar federal funds for abortions. The vote was 240-194.

Thirty-nine Democrats voted against the health-care overhaul bill.

In spirited debate, Republicans charged that the Democrats' bill was an unprecedented expansion of government.

"Speaker Pelosi's takeover of health care spells disaster for patients and doctors," said Rep. Tom Price, R.-Ga., a physician. House Republican leader John Boehner of Ohio said the bill would actually raise the cost of health insurance, as well as create a "mega-bureaucracy."

House Democratic leaders say that their bill would extend coverage to 36 million Americans. It would set up health-insurance "exchanges" where consumers could shop for coverage, and expand Medicaid beginning in 2013 to people with incomes up to 150% of the federal poverty line. Illegal immigrants wouldn't be covered under the bill. See bill text.

Obama and other Democrats say the "public option" will keep private insurers honest and expand choice. Republicans charge it could lead to private insurers being pushed out of the market. The president of America's Health Insurance Plans, a trade group representing insurers, said after the vote that the public option would cause millions of people to lose their coverage.

Bitter business opposition
Business groups, meanwhile, bitterly oppose the requirement that employers provide their workers with health-care coverage. The requirement applies to all companies but those with annual payrolls under $500,000.

In a statement on Sunday, the Business Roundtable, an association of chief executives of top U.S. companies, said it was disappointed by the passage of a House bill that "will threaten the coverage that 177 million Americans currently have through their employer-based system."

The group objects to the government-run health plan and to what it calls the "'play or pay' mandate for employers that would limit the flexibility employers have to develop innovative plans" for employees. And withal, the Business Roundtable said, "the bill fails to meet the bipartisan goal of controlling costs."

Karen Ignagni, president and chief executive of America's Health Insurance Plans, a trade group for health insurers, had said in a Saturday statement that the House bill "fails to bend the health-care-cost curve and breaks the promise that those who like their current coverage can keep it.

"A new government-run plan will cause millions to lose their existing coverage, and draconian Medicare Advantage cuts will force millions of seniors out of the program entirely."

The AARP and the American Medical Association -- the powerful seniors' and doctors' groups, respectively - have said they support the bill.

AMA President J. James Rohack said in a Sunday statement that the bill "will significantly expand health-insurance coverage to Americans; empower patient and physician decision-making; institute meaningful insurance-market reforms; make substantial investments in quality; institute prevention and wellness initiatives; provide incentives to states that adopt certificate of merit and/or early offer liability reforms, and reduce administrative burdens."

Obama wants to sign a bill by the end of the year, but legislative action in the Senate could slip until early 2010 -- pushing the health-care debate into an election year. Read MarketWatch health reform coverage.

The House Republicans' bill would have allowed Americans to buy insurance across state lines, permitted small businesses to pool together and offer health care at lower prices, ended "junk" lawsuits and taken other steps. Read summary of Republican plan.

The Democrats' bill would be financed by about $500 billion in cuts to Medicare and Medicaid, as well as new taxes on high-income earners. Employers and individuals who don't buy coverage would also be required to pay fines.

Paying for the legislation is a key difference between the House and Senate measures. While the House bill would tax families making more than $1 million a year, the Senate's would tax insurers offering high-value plans.

The House's bill would also end a longtime exemption for the insurance industry from antitrust laws covering price-fixing and other things. An amendment with similar goals is expected to be offered on the Senate floor when lawmakers debate their version of the reform bill.

Robert Schroeder is a reporter for MarketWatch in Washington.

For more articles, see