According to a new report released by the Commonwealth Fund, a new set of proposed policies designed to accelerate innovation in care delivery could slow health spending growth by $2 trillion over the next decade. The report outlines a comprehensive set of policies to modify the way public and private purchasers pay for care, improve the accessibility of high-value care options, and address forces driving skyrocketing health care expenditures. Commonwealth estimates indicate that if the policies are implemented soon, with public and private payers acting in concert, federal spending could be reduced by $1.04 trillion, state and local government spending by $242 billion, and employer spending by $189 billion over the next decade. The proposed policies would also realize significant savings for families ($537 billion over a decade) as a result of lower future health insurance premiums and out-of-pocket costs. Click here for an executive summary of the report.

According to a new study for the National Institute for Health Care Reform (NIHCR), offering employer-sponsored health insurance will continue to make fiscal sense for businesses employing most workers (81%) now offered insurance. The study found that the economic incentives to offer coverage will remain strong under the Affordable Care Act (ACA) for most larger, higher-wage firms,  but will weaken for small and low-wage employers. These smaller firms are the companies already more likely to drop coverage to due rising costs. Pre-ACA, all businesses had the option to offer health insurance coverage. After 2014, employer premium contributions remain tax exempt, and two new policies will take effect. First,  larger employers that do not offer affordable health insurance will be penalized and second, premium tax credits for lower-income people to purchase insurance in new state exchanges if they lack access to affordable employer coverage will be available. The economic incentive to cover employees is calculated by adding the dollar value of the employer-sponsored insurance tax subsidy and the value of avoiding the penalty for not offering insurance, and then subtracting the value of the premium tax credits that eligible workers could use in an exchange if their employer does not offer coverage. After 2014, the largest firms (500 or more workers) will continue to have a strong economic incentive, with an average incentive of $2,503 per employee. However, the smallest firms (fewer than 50 workers) will face lower economic incentives because they are exempt from the penalty. Certain industries, such as food service, entertainment, agriculture, forestry and fishing, will have less incentive to offer employer coverage, as their workers will be eligible for exchange subsidies. The study draws on data from the 2008-2010 Medical Expenditure Panel Survey.

In a report released yesterday, the Center for American Progress (CAP) introduced the Senior Protection Plan, a proposal to reduce federal spending on health care delivery. Instead of shifting costs and/or ultimately increasing costs, the Senior Protection Plan, according to CAP, would improve health care delivery efficiency, eliminate waste, and improve the quality of care. This approach, in theory, would ultimately reduce health care spending. The Senior Protection Plan serves as an alternate to the other proposals made in the past years with the goal of reducing health care spending. Such proposals include transforming Medicare into a premium support or voucher program, raising Medicare's eligibility age to 67, increasing cost-sharing, and slashing Medicaid and increasing long-term care costs for seniors. The Senior Protection Plan would enhance competition based on price and quality, increase transparency of price and quality information, reform health care delivery to provide better care at lower cost, repeal the Sustainable Growth Rate (SGR) mechanism, reform graduate medical education and the workforce, reform Medicare premiums and cost-sharing, reduce drug costs, bring Medicare payments into line with actual costs, cut administrative costs and improper payments, reduce the costs of defensive medicine, reform the tax treatment of health insurance, and promote better health. CAP's Senior Protection Plan yields substantial savings, as scored by the Congressional Budget Office, without harming beneficiaries. The plan would save over $385 billion in federal expenditures over 10 years. In addition, the tax policies related to health care would generate up to $100 billion over 10 years. The plan also includes an array of reforms that would bend the cost curve over the long term. For the report summary, click here.

The Affordable Care Act's provisions to increase federal revenue through taxes on high-income workers are among the many proposals that policymakers will face next year, according to a new report released by the Congressional Research Service (CRS). The report provides an overview of the tax and spending policy changes set forth by the Act. Collectively referred to as the "fiscal cliff," these policies would extend current revenue policies (e.g., extending the Bush tax cuts) and change current spending policies (e.g., not allowing the Budget Control Act sequester to take effect) to increase the projected budget deficit relative to current law. The Congressional Budget Office (CBO) estimates that if current law remains in place, the budget deficit will fall by $502 billion between FY2012 and FY2013. In making these fiscal policy choices, Congress will have to weigh the benefits of deficit reduction against the potential implications of fiscal policy choices for the ongoing economic recovery. Maintaining current revenue and spending policies will add to the deficit, while increasing revenues and reducing spending, as under current law, could slow economic growth. Thus, deficit reduction measures must be balanced against concerns that spending cuts or tax increases could dampen an already weak economic recovery. CBO has concluded that allowing current law fiscal policies to take effect will dampen short-term economic growth, but accelerate long-term economic growth. Conversely, CBO has concluded that postponing the fiscal restraint would accelerate short-term economic growth, but dampen long-term economic growth. In that context, several policy observers have recommended implementing a credible medium-term plan that balances economic considerations with deficit reduction.

In a new analysis, the conservative think tank, the American Action Forum, reported that new Affordable Care Act (ACA) regulations have cost states and private companies over $27 billion. The report found that about $20 billion in ACA compliance costs will fall to private businesses, while $7.2 billion will fall to to state governments. Medicaid eligibility expansion will cost states approximately $580 million while private businesses will spend $757 million complying with new menu-labeling provisions, for example. State initiatives will include creating an insurance exchange, while the total for private employers is attributable to complying with the new healthcare requirements and coverage mandate. Already, the federal government has awarded billions of dollars in grants to help states establish exchanges and comply with other ACA provisions.

According to a new Employee Benefit Research Institute (EBRI) report, the uninsured rate shrank for working-age Americans last year. The percentage of non-elderly Americans with coverage increased to 82 percent in 2011, up from 81.5 percent in 2010. Employment-based health insurance coverage rates dropped, however. Although employer-sponsored coverage remains the dominant source of health coverage in the United States, providing coverage for 155.5 million people under age 65 in 2011, the percentage of non-elderly individuals with employer-sponsored coverage has declined every year since 2000.

A study recently released by the Health Care Cost Institute (HCCI) found that health costs paid by insurers grew faster in 2011 than the previous year. The 4.6 percent growth rate for 2011 (about $4,547 per person) trumped the 2010 rate of 3.8 percent. The report cited the primary drivers of these growing health costs as the rising prices that insurers pay doctors, hospitals, and drug companies. The authors discussed that it is not clear whether the data represent a return to the higher growth rates of the past, or if the rate is anomalous in the general slowdown. The data are based on 6 billion claims paid by insurers covering approximately 40 million people. Not included in the data were spending for consumers covered by Medicare, Medicaid, or for those who buy their own coverage. The study found that consumers spent more of their own money on health care in 2011, with out-of-pocket costs averaging $735 per person.