Friday, September 20, 2013

Layoffs in Medical Community a Disturbing Trend

Two stories about major medical providers announcing massive layoffs caught our eye.  If nothing else, the expansion of coverage under Obamacare should increase demand for healthcare services.  However, at least two major health systems announced they are laying off hundreds of people.

Vanderbilt University Medical Center announced that it will be laying off hundreds of people with a goal of cutting 1000 by the end of the year.  They hope to cut $250m out of a $3b budget.  Vanderbilt is the largest employer in its region with over 20,000 employees, so the announced layoffs are a major hit.

The Tennesseean reports that Vanderbilt blames financial pressures caused by:

  •  An aging population, 
  • Lower reimbursement rates from insurance companies, 
  • A lack of Medicaid expansion in Tennessee and; 
  • A reduction in National Institutes of Health grant funding.

I'm not sure how an aging population hurts a healthcare provider, that should increase demand.  Lower reimbursement rates and the failure to expand Medicaid are probably the big drivers.

It's also frightening that an elite research university cannot get enough funding to keep its people.  It's not looking good for the folks down in Tennessee.

A similar story involves the Cleveland Clinic, the largest employer in that region.  The Cleveland Clinic will cut $300m from its budget likely resulting in layoffs.  3000 employees will be offered early retirement in October.  The Cleveland Clinic specifically blames healthcare reform for increasing its costs and driving it to make serious cuts.

Ohio, with a Republican governor and legislature, have not accepted the expansion of Medicaid. Governor Kaisich supports Medicaid expansion but the legislature has not acted.  Part of Obamacare calls for states to expand Medicaid to millions of low income Americans with most of the money coming from the federal government, but the Supreme Court in the Sebelius case ruled that states can reject the money if they want.  Some Ohioans have started a petition drive to force lawmakers to consider the issue and is the first step toward a voter referendum.

The people who get the worst treatment under Obamacare will be the ones who are Medicaid eligible but live in states that don't expand Medicaid.  Those people will be subject to the penalty tax of the individual mandate but won't get the help the Obamacare scheme assumes they will get from Medicaid. Once people start to figure this out, I'd expect a lot of pressure on states to expand Medicaid whether they like it or not.

Now for Today's Obamacare Headlines:

Rightwing Rants

Affordability rules may lead to children not being able to afford coverage.

Leftwing Cheerleading

Obamacare is misunderstood.

Republicans like "PPACA" better than "Obamacare."

Tea party wants to sabotage Obamacare.

Hard News

Obamacare leads to cuts in worker benefits.

Obamacare defunding vote to take place.

6th Circuit denies standing to company objecting to contraception mandate.

For Industry Insiders
PPACA may help with claims data.

Study shows hospitals not ready for Obamacare.

Ordinary HRAs are safe.

Tuesday, September 17, 2013

What if They Gave an Obamacare and Nobody Came--Part 5

Just when you think you know what you need to do to comply with Obamcare, they change the rules again.  PPACA requires every employer subject to the jurisdiction of the Department of Labor to provide notice of the opening of the exchanges by March 2013.  That date was moved back to October 1.

Many practitioners, including myself, believed that even though there was no penalty stated in the notice requirement that PPACA's general $100 per day penalty applies.

The Department of Labor has now announced that employers "should" give the required notice but face no penalty for failing to do so.  Employers can rest a bit easier, I suppose, but in my view I'd give the notice anyway.  Here's why.

The Society for Human Resource Management (SHRM) has a good explanation of the notice requirement and the latest developments.  SHRM quotes Keith McMurdy of Fox, Rothschild cautioning against employers becoming law in the face of law enforcement.  He points out the obvious reality that statutes and regulations have the force of law, government blog entries do not.  Given that employers can send the notices with relatively little effort, they can be sure to be in compliance if they send them.

If employers rely on the Department of Labor FAQ statement, they run the risk of getting in trouble for failing to provide the notices.  What if the government changes its mind later?  Maybe one could argue some kind of reliance or estoppel principle would prevent enforcement, but there's no way to be sure that argument will be win.  The surest course is to provide the notice to the employees.

Model notices can be found at the SHRM link above as well as at the Department of Labor link above.

Now for Today's Obamacare headlines:

Rightwing Rants

Obamacare, Medicaid and Poor Seniors.

Young people will get smaller exchange subsidies than expected.

Obamacare likely to flop.

Unions turn on Obamacare.

Medical device tax causes serious harm.

Leftwing Cheerleading

Poor people will suffer in states without Medicaid expansion.

HHS claims to save $1.2B for policyholders.

Georgia obstructs uninsured from market.


Hard News

Leak of 2400 people's records in Minnesota.

Obamacare brings out scammers.

Obamacare courtroom battles continue.

Contraception and abortion mandate reaches Supreme Court.

Should we be concerned about Obamacare delays?

Arizona exchanges explained.

October 1 is a soft launch.


For Industry Insiders

Employer notice regarding exchanges may be required under ERISA so do them anyway.

White House rejects union requests for exemption.