On August 22, the President signed an Executive Order requiring various government agencies, including the U.S. Office of Personnel Management, and their contractors to support health care pricing and quality transparency and interoperable health information technology. Last Friday, HHS Secretary Mike Leavitt encouraged all employers and health plans to adopt the tenets of the Executive Order. “If we are going to get a handle on health care costs — and we must — we first need to know what our costs are and what we are getting for our money,” Secretary Leavitt said. “Our nation’s private employers are the major source of health insurance for Americans, and they can help us provide the information consumers need to achieve better value for their health care dollars.”

Forbes Magazine features an interesting article discussing “What’s on Tap for Small Business in the New Senate”. The article describes ideas offered by the next Senate’s leaders for improving small business access to health care. Among those ideas is the possible resurrection of a Democrat initiative (S. 637) offered by Senators Dick Durbin (D – Ill.) and Blanche Lincoln (D – Ark.) as an alternative to Senator Enzi’s (R – Wyo.) association health plan idea that “would create a small firm buy-in system similar to federal employees’ health benefits program.”

As the current minority blocked consideration of Senator Enzi’s association health plan bill (S. 1955) and a similar House enacted bill (H.R. 525) even though the Republicans had a 55 seat majority, enacting such large scale changes strike me as unlikely as the Democrats will have a smaller 51 seat majority in the next Senate. But we shall see.

On Friday, November 17, 2006, OPM promulgated in the Federal Register an interim final regulation updating its employee payroll allotment rules to expressly provide for pre-tax payments for the new federal supplemental dental and vision programs known as FEDVIP and the federal employees health care and dependent care flexible spending account programs known as known as FSAFEDS. The comment period on this regulation is open until January 18.

Last week, OPM issued an updated Benefit Administration Letter (No. 06-405) announcing significant plan changes for 2007 Federal Employees Health Benefits (FEHB) Program Open Season. These changes principally pertain to the health maintenance organizations participating in the FEHB Program, which may have joined, expanded or reduced their service areas, added an option, or dropped out for 2007. This letter is always interesting reading.

From an AP report about a recent Pricewaterhouse Coopers report on rising health care costs:

American workers have been shielded from the rising cost of health care for decades, with the burden of rising medical costs borne largely by employers and the government, according to the report. Americans spent six percent of their personal budgets on medical costs in 1960, the same percentage of consumer spending as in 2004, it said.

The report notes that in recent years the Government and private sector employers have been shifting costs onto consumers. The report predicts the employer health care costs will climb by more than 10% in 2007 unless further plan changes are made. Business Insurance reported today about a Council of Insurance Agents and Brokers (CAIB) reports that supports PwCs predictions. (Of course, as noted in the FEHBlog, the Federal Employees Health Benefits Program had a 1.8% average premium increase for 2007. The FEHB Program’s Open Season began on Monday November 13 and ends on December 11. )

The CAIB survey report relates that 70% of responding brokers had sold a health savings account product to an employer client for the 2006 or 2007 plan year. The Wall Street Journal reported earlier this week that banks are now actively marketing HSAs as well:

Nearly 1,100 banks now offer the tax-favored spending accounts, more than triple the number at the end of 2005, according to market-research firm Information Strategies Inc.

The U.S. Court of Appeals for the District of Columbia Circuit ruled today that Teva Pharmaceuticals Ltd of Israel and Ranbaxy Laboratories Ltd of India have the exclusive right to sell the generic version of the anti-cholesterol statin drug Zocor (simvastatin) for 180 days following the expiration of the Merck patent in June 2006. Teva and Ranbaxy had been the first companies to apply for Food and Drug Administration approval of their generic versions of Zocor (the companies applied for different dosage levels). The FDA had argued to the Court that the six month exclusivity period is only available to generic drug manufacturers that challenge the name brand manufacturer’s patent rights in court. In this case, the FDA had approved Merck’s application to delist their Zocor patents from the FDA’s database.

The Court disagreed with the FDA, holding that

the FDA’s requirement that a generic manufacturer’s patent challenge give rise to litigation as a condition of retaining exclusivity when a patent is delisted is inconsistent with the Act, which provides that the first generic manufacturer to file an approved application is entitled to exclusivity when it either begins commercially to market its generic drug or is successful in patent litigation.

The six month exclusivity period is lucrative for generic manufacturers particularly in the case of a blockbuster drug like Zocor. Merck continues to sell brand name Zocor at a price that is lower than that charged before its patent expired. Merck also has made a contract with Dr. Reddy’s Laboratories Ltd. of India to sell a so-called authorized generic version of Zocor.

A copy of the opinion in Ranbaxy Laboratories v. Leavitt, No. 06-5154 is available here.

America’s Health Insurance Plans, the trade association for U.S. health insurers and health maintenance organization, released a set of legislative proposals intended to expand health benefits to all Americans. According to AHIP’s press release,

The AHIP plan calls for enactment of federal legislation that provides significant financial incentives to states and makes changes to federal tax policy to make health coverage more affordable.Key elements of the AHIP plan include:

• Expanding the State Children’s Health Insurance Program (SCHIP) to make eligible all uninsured children from families with incomes under 200 percent of the Federal Poverty Level (FPL).
• Improving and expanding Medicaid to make eligible all uninsured adults, including single adults, with incomes under 100 percent of the Federal Poverty Line.
• Establishing a Universal Health Account (UHA) to allow all individuals to purchase any type of health care coverage and pay for qualified medical expenses with pre-tax dollars, with federal matching grants for contributions made by working families to the UHA.
• Establishing a health tax credit of up to $500 for low-income families who secure health insurance for their children.
• Establishing a new $50-billion Federal Performance Grant to assist states in expanding access to coverage.

The plan is designed to expand access to health insurance coverage to all children within three years and 95 percent of adults within 10 years. AHIP estimates that full implementation of this proposal would cost the federal government approximately $300 billion over a 10-year period.

AHIP also conducted an opinion survey whose results supports its proposed solution.

• The U.S. Labor Department issued health savings account (HSA) guidance on October 27 (Field Assistance Bulletin No. 2006-02) in the context of Employee Retirement Income Security Act (ERISA) compliance. The guidance provides answers to the questions that employers most frequently have asked the Department since the first FAB 2004-01 on HSAs was issued. Although FEHB Program HSAs and related High Deductible Health Plans are not subject to ERISA, the guidance is worthwhile background reading for anyone interested in these products.
• Steve Barr reported in his Washington Post Federal Diary column yesterday that Long Term Care Partners, LLC, the company that provides long term care insurance coverage to federal and postal employees, has launched a website Benefeds.com that beginning Monday Nov. 13, eligible federal postal employees and annuitants can use to enroll in a new federal supplemental dental or vision plan. Long Term Care Partners also manages OPM’s new voluntary payments portal which employees will be able to use to make pre-tax contributions for supplement dental and vision and flexible spending account coverage and to their HSAs.

The Democrats did win control of the Senate, and the conventional wisdom about a brief lame duck session that I mentioned on Wednesday has proven to be wrong. The Washington Post reports this morning that the new sense of bipartisanship will lead to a longer lame duck session of the 109th Congress. During the lame duck session, Congress may reverse the statutorily mandated 5% cut in Medicare reimbursement to physicians before that cut takes effect on January 1.

Govexec.com continues to prognosticate about the 110th Congress. According to Govexec.com, NARFE‘s wish list is that the new Congress block any expansions of Health Savings Accounts in the FEHB Program. As you may recall, OPM sent a legislative proposal to Congress last May recommending that Congress amend the FEHB Act to permit the government wide service benefit plan to offer a third HSA option. NARFE also hopes that the new Congress will amend the federal tax code to permit federal and postal annuitants to make their FEHB plan contributions on a pre-tax basis. That proposal has budget ramifications.

NARFE reportedly is banking on the likelihood that Rep. Steny Hoyer will become the Majority Leader in the 110th Congress. Congressman Hoyer, who currently is the minority whip, also has been a proponent of increasing the Government contribution toward FEHB plan coverage (H.R. 633), a proposal which obviously has its own.

The Internal Revenue Service annually adjusts the maximum dollar amount that may be contributed to a health savings account (HSA) and related high deductible health plan (HDHP) minimum deductible and out of pocket expense limits for Consumer Price Index – Urban changes from August to August. Business Insurance reports that the IRS officially released the 2007 changes today.

The changes, which vary depending upon whether the individual has self only or self and family HDHP coverage, are as follows:

The IRS explains that individuals 55 and older who are covered by an HDHP can make additional catch-up contributions each year until they enroll in Medicare. The additional “catch-up” contributions to HSA allowed for 2006 is $700 and for 2007 it will be $800.