Wednesday, July 31, 2013

IRS Workers Want Out of Obamacare

Friday, 26 Jul 2013 04:08 PM
By Todd Beamon
federal employees who will be responsible for administering Obamacare for the American people don't want it for themselves.

The National Treasury Employees Union, which represents workers at the Internal Revenue Service, is asking its members to write letters to Capitol Hill saying they are "very concerned" about legislative efforts requiring IRS and Treasury employees to enroll in the Obamacare exchanges.

"I am a federal employee and one of your constituents," one letter begins, Forbes blogger Avik Roy reported on Friday. "I am very concerned about legislation that has been introduced by Congressman Dave Camp to push federal employees out of the Federal Employees Health Benefits Program (FEHBP) and into the insurance exchanges established under the Affordable Care Act (ACA)."

Camp, the Michigan Republican referred to in the letter, is chairman of the House Ways and Means Committee, whose members oversee tax legislation in the House of Representatives. The U.S. Supreme Court ruled last year that Obamacare's insurance subsidies are technically tax credits, falling under the authority of the IRS.

Camp introduced legislation in April to put all federal employees on the healthcare exchanges in response to news reports that members of Congress and their staffs were seeking to be exempt from the Obamacare requirement that they enroll in the exchanges.

The effort by the Treasury Employees Union comes two weeks after representatives of three large labor unions fired off a strongly-worded letter to congressional Democrats, complaining that Obamacare would "shatter … our hard-earned health benefits" and create "nightmare scenarios" for their members.

The letter was signed by leaders of the International Brotherhood of Teamsters, the United Food and Commercial Workers International Union, and UNITE HERE, which primarily represents hospitality industry workers.

"It is insulting to the American people that the IRS is desperately trying to avoid complying with the very law they will be enforcing on American taxpayers," a Camp spokeswoman told Newsmax on Friday. "Not surprising — another day, another example of unions trying to skirt a law they spent so much time and resources supporting just a few short years ago."

Overall, Obamacare has 47 separate provisions that involve the IRS. It is the second-largest agency, after the U.S. Department of Health and Human Services, charged with implementing the Patient Protection and Affordable Care Act.

The IRS has to administer Obamacare's required purchase of health coverage, checking whether millions of Americans are in compliance.

However, "there is one legitimate issue regarding members of Congress and their staff enrolling in the exchanges," Forbes notes. "Today, federal employees are offered subsidies, or vouchers, which they can use to shop for insurance on the popular federal employees' exchange, called the Federal Employee Health Benefits Program.

"Because Obamacare was drafted so hastily, it's not clear whether the law allows similar subsidies to flow to federal employees on the Obamacare exchanges," Forbes reports.
A ruling on the matter is forthcoming from the U.S. Office of Personnel Management, according to Forbes.

"For inexplicable reasons," the Office of Personnel Management "has not clarified whether or not the government will be allowed to funnel subsidies through the Obamacare exchanges," Forbes notes.

"Nonetheless, it would be a very good thing for some federal employees to eat their own cooking, especially those who work for Congress, the IRS, and the Department of Health and Human Services," the Forbes report concludes. "They're the ones who are writing the Obamacare regulations; they're the ones who, in many cases, wrote the law itself.

"The IRS enforces Obamacare's individual mandate and eligibility for the exchange subsidies, among other provisions.

"They should be required to enroll in the same Obamacare exchanges that tens of millions of private citizens will have to," the report adds. "They should have to experience the same premium increases and limited flexibility that other Americans will endure there.

"Maybe then, we'll start to build a constituency for market-based reform."

Employer Mandate Delay Buys Time, But How Much?

Jul 30 2013 7:09 am

The Internal Revenue Service has announced its intent to delay any excise tax penalties on employers with >50 employees (Full-time Equivalents or FTEs) failing to offer adequate and affordable coverage to FTEs in 2014. The penalties are expected to come online one year late, in 2015.
The Internal Revenue Service has announced its intent to delay any excise tax penalties on employers with >50 employees (Full-time Equivalents or FTEs) failing to offer adequate and affordable coverage to FTEs in 2014. The penalties are expected to come online one year late, in 2015.
The news is welcome to employers near or above the 50 FTE mark, yet brings into question how they should alter the plans which were being feverishly laid to comply on time. The major issues at stake relate to how these mid-sized and larger employers will measure and determine who is full-time and eligible for coverage, and how to comply with reporting and employee notification requirements (under Affordable Care Act sections 6055 and 6056) yet to be defined.
If the employer delays making a 30-hour per week employee eligible for coverage until 2015, no excise taxes will be levied for 2014. But employers are still under a tight time frame to build technology and administrative solutions to track hours for these employees. For employers planning to use a 12 month measurement and 12 month stability period for testing employee eligibility for 2015 (expected to be the norm), systems will still need to be operational this fall, about three months from now.
Reporting regulations on sections 6055 and 6056 are expected this summer, but will postpone the due date for compliance to 2015. The nature of the requirements will probably give employers until early 2016 to send information returns to the IRS and/or new certificates to employees.
Despite the delay in applying excise taxes, employers should still plan to implement many other ACA provisions, including the required public exchange notice to employees by the October 1, 2013 deadline.
http://getworkforce.com/news/employer-mandate-delay-buys-time/?goback=%2Egde_67222_member_261866755

Everybody loves a conspiracy

July 24, 2013

Conspiracies are as American as tin foil and talk shows. And can be just as entertaining (Area 51), mainstream (JFK) or dark (9/11).

And we’ve got a federal government willing to stumble spectacularly — and publicly — enough to keep those flames of conspiracy burning. (Between the IRS and the NSA, we’re set for at least another decade.)
So forgive me for indulging in a little bit of my own theorizing today. What if — now hear me out — the Patient Protection and Affordable Care Act wasn’t anything but another part of Obama’s stimulus package?
What if its primary goal wasn’t to cut costs (fiction from the start) or to expand coverage (questionable depending on your state) but simply developed as an economic driver? To keep jobs flowing into one of the few industries unaffected by the housing bubble or the collapse that followed?  (In fact, health care remained a growth industry during the great recession, creating jobs at something like a 12 percent clip.)
It’s hardly sinister, but it’s certainly very “Chicago.” Despite billions in bailouts over a year-and-a-half, the economy continued to slump along like a tradeshow hangover. Suddenly, health care reform emerged as an issue, and just like that we have reform. It was, after all, one-seventh of our economy last time I checked.
Which reminds me, since we’re speculating; do you think we’d have had health reform in a different economy? I can’t think of any other reason for the unions — who were taking a bath during the crisis — to get on board.
Only now, three years later, have the union bosses figured out that, oops, maybe this Cadillac Plan tax could screw us. I’d argue the administration decided long ago that the Cadillac tax would never come to pass and it was slipped into the law as a token effort to “fund” it while appealing to the angry Occupy Wall Streeters.
Either way, the unions are just the latest group to realize the grass ain’t as green as they thought it would be on the other side of reform. Hospitals, who jumped on board long ago, have also since realized they’re not only getting socked with more fees than ever, but they’ve got to pitch in with enrollment, as well — essentially translating into more work for less pay. Talk about the American dream.
Speaking of conspiracies, I’ve heard broker friends tell me for months the law’s intent all along was to drive enrollment in the exchanges. I’d always laughed that off, wondering what the end game could possibly be. Then it dawned on me last week in Chicago that if we moved everyone onto the exchanges — whether public or private — the feds could save billions by eliminating the employer health care tax break. (And don’t think for a second that won’t start cropping up more often as the tax reform talks heats up over the next 12 months.)

Finally, I just want to reiterate that despite the delay of the employer mandate —and the House’s 40th attempt at repeal — I maintain the October enrollment in the exchanges will move forward. It’s really all that’s left. And as important as this legislation is to what’s left of the president’s legacy, I honestly can’t see him backtracking further.

About the Author
Denis Storey is editor for BenefitsPro.com and Benefits Selling magazine. He can be reached at dstorey@benefitspro.com.

http://www.benefitspro.com/2013/07/24/everybody-loves-a-conspiracy?eNL=51f01aea160ba0a27f000067&utm_source=BenefitsBrokerPro&utm_medium=eNL&utm_campaign=BenefitsPro_eNLs&_LID=144817887

Deadly epidemic: Prescription drug overdoses

Mark Koba, CNBC 7:19 a.m. EDT July 28, 2013
Story Highlights
·         More Americans now die from painkillers than from heroin and cocaine combined
·         In the past 11 years, deaths from overdose increased more than 400% among women
·         About 45 deaths from prescription drug overdose are recorded each day in the U.S.
A growing epidemic of overdoses of prescription painkillers is leading to a record numbers of deaths, especially among women, according to the Centers for Disease Control and Prevention.

"More women are dying at rates that we have never seen before," CDC Director Dr. Thomas Frieden said about the findings, which were released earlier this month.

"Stopping this epidemic in women—and men—is everyone's business," Frieden added.

More Americans now die from painkillers than from heroin and cocaine combined, and since 2008, prescription drug-induced deaths have outstripped those from automobile accidents, according to the CDC.

The CDC's latest figures show that 16,500 people died from overdoses tied to common narcotic pain relievers — such as Vicodin, OxyContin, Opana and methadone — in 2010. Of those, 40% were women.

In the past 11 years, deaths from overdose increased more than 400% among women, compared with a 265% rise among men.

"It's not surprising with the greater access to medical procedures, like surgeries for knees, backs and hips," said Kent Runyon, director of Novus Medical Detox, a prescription drug private rehab center in New Port Rickey, Fla.

"Patients get prescriptions for pain drugs and then they get addicted, making it very hard to get off them," he said.

"Her life was a mess. ..."

"We had a woman here recently who sang in the church choir, was a stay-at-home mom, had beautiful children and a businessman husband," Runyon said. "She had back surgery, which led her to prescription drugs for the pain. And when she turned to alcohol, her life was a mess."

Americans consume 80% of opiate painkillers produced in the world, according to the American Society of Interventional Pain Physicians. Every hour, a baby is born in the United States with symptoms of opiate withdrawal, according to a study published in April by the Journal of the American Medical Association.

"I think it's our culture," Runyon said. "We are so oriented to finding easy solutions to problems, prescription drugs have become part of those solutions."

A record 4.02 billion drug prescriptions were written in the U.S. in 2011, up from 3.99 billion the year before, according to the journal ACS Chemical Neuroscience.

Antidepressants such as Zoloft and Celexa were the most prescribed class of drugs in 2011, with 264 million prescriptions filled. Slightly more than 131 million prescriptions were written for generic Vicodin.

Some 31.9 million prescriptions were written for generic Percocet, while 29.3 million were were written for generic Neurontin, which is frequently prescribed to manage long-term pain.

With so many prescriptions flowing from doctors, they might be an easy target for blame, as well as the pharmaceutical companies that make the drugs.

In the $600 billion worldwide pharmaceutical industry, for every dollar a company spends on "basic research," it puts $19 toward promotion and marketing, according to a report last year by BMJ, a London based medical journal.

"Manufacturers and prescribers have overestimated the benefits of these drugs," said Dr. Leonard Paulozzi, an overdose expert at the CDC. "The risks from these drugs were thought to be small for noncancer pain, but they are substantial," he added.

Runyon says it's hard to point to any one cause.

"A lot of patients don't ask about medications, and doctors might assume people know what they're getting into when taking the drugs," Runyon said. "There's no strategy on either side to get off them."

Pharma's response

Calls to AbbVie Pharmaceuticals, a major producer of Vicodin (hydrocodone bitartrate and acetaminophen) were not returned.

Purdue Pharma, which makes OxyContin (oxycodone HCl controlled-release) tablets issued these comments in a reply to e-mail questions:
"OxyContin prescriptions represent a very small share of the total opioid market (e.g., the volume of OxyContin prescriptions has never exceeded 4.4% of the total number of prescriptions written for opioid pain medications). In fact, our market share has declined since 2001.

"Studies and reports from medical examiners have shown that the vast majority of overdose deaths involving oxycodone, the active ingredient in OxyContin, Percocet and many generic pain medications, are caused by ingestion of multiple drugs, often in combination with alcohol.

"Purdue consistently provides information to healthcare professionals to encourage the appropriate use of OxyContin. The product's labeling has always included clear warnings about the potential for abuse and overdose.

"We are committed to working with healthcare professionals, law enforcement and the government to reduce the abuse of, and overdoses involving, prescription pain medications."

Efforts to control epidemic

In an attempt to stem prescription drug abuse, an advisory panel to the Food and Drug Administration voted in January to toughen restrictions on painkillers, such as Vicodin, containing hydrocodone.

The recommendation would limit access to the drugs by making them harder to prescribe. The FDA has not applied the restrictions.

The CDC has called for several steps, including "better tracking of prescription overdose trends to better understand the epidemic," as well as urging patients to discuss their medications with their doctors and talk about pain treatment plans that exclude prescription drugs.

Americans may finally — if slowly — be catching on to the dangers. Prescription drug spending last year fell to $325.8 billion from $329.2 billion in 2011. That's the first drop in spending in the last 58 years, according to the IMS Institute for Healthcare Informatics.

"There are some encouraging steps that some deaths in certain states are falling for reasons unknown, but overall I don't think we'll see a decline when we get to 2012 numbers," said the CDC's Paulozzi.

Some 45 deaths from prescription drug overdose are recorded daily in the U.S.—quadruple the number in 1999, according to the CDC.

Until more people in pain realize what they're getting into with prescription drugs, the situation will only get worse, said Runyon.

"We've had to turn away patients because we don't have the room," said Runyon. His center holds 12 patients, nine of whom are being treated for prescription drug addiction.

"We're expanding our facilities to 31 beds because we know we have to," he said.

http://www.usatoday.com/story/money/business/2013/07/28/deadly-epidemic-prescription-drug-overdoses/2584117/

Setting the Record Straight:

The Social Security Disability Insurance Program

Created in 1956, the Social Security Disability Insurance Program (SSDI)[1] provides modest but essential support to 14 million working-age individuals with disabilities and children.[2] Recently, the SSDI program has come under attack by policymakers and others critics who suggest that the program's spending is "out of control." Critics contend that unless drastic changes are made, including sharp reductions in benefits, the system will go bankrupt.  These exaggerated attacks conceal the real reasons for growth in the program, and inspire policy proposals that would unduly burden SSDI beneficiaries and their families.   Below are some of the most common questions about the Social Security Disability Program and clarifications for some of the most common misinformation.
  • How hard is it to qualify for disability? Don't most people who apply get approved?
The standards for obtaining Social Security Disability benefits are strict, with only about 40% of adult applicants being approved.[3] Nearly one-third of successful applicants are approved only after an appeal.[4]
Applicants for SSDI benefits must first show they have sufficient work history to qualify. This generally means an applicant must have worked at least 25% of their adult lives and for at least five of the last ten years.[5] 
To obtain SSDI benefits, it is not enough to be sick or unemployed.  Applicants must prove they have a severe impairment that will last at least 12 months or will result in death.[6]  And indeed, many applicants for SSDI benefits are terminally ill: 20% of male beneficiaries and 14% of female SSDI beneficiaries die within five years of receiving SSDI benefits.[7]
Applicants must likewise show that their impairment precludes engaging in substantial work. In 2013, substantial work is any employment that earns at least $1,040 per month.[8] Finally, applicants must complete a five month waiting period after the onset of their disability before benefits may begin.[9]
  • Is enrollment in the SSDI program growing and if so, what are the likely causes?
While it is true that SSDI enrollment is growing, demographic factors rather than program inefficiency explain most of this growth.  In December 2012, 8.8 million people received SSDI benefits.[10]  This number has tripled since 1980 and doubled since 1995.[11] Meanwhile, the working-age population has grown much less rapidly.[12] In short, a greater proportion of the working-age population is receiving disability benefits now as compared to twenty or thirty years ago.
Several demographic factors have contributed to the growth in SSDI enrollment.  First, the large baby-boom cohort has entered their high disability years. [13]The likelihood of receiving SSDI benefits increases sharply with age because potentially disabling health conditions tend to intensify as people get older.[14] Workers are twice as likely to become disabled at age 50 as at age 40 and twice as likely at age 60 as at age 50.[15]
Second, with more women now in the work force, more women are being awarded disability benefits on their own earnings records and work history.[16] For much of the last 50 years, many women did not have enough Social Security-covered work history to qualify for SSDI.  It has only been since women joined the workforce in large numbers during the 1970s and 1980s that they acquired enough work history to qualify.[17] Now, as more women have worked long enough to qualify for SSDI, women receive the benefit as often as men.[18]
Nevertheless, even when adjusted for age and sex, disability rates have grown. From 1995 to 2005 adjusted disability rates grew from 3.5% percent of the working population to 4.6%-- a 30% increase.[19] While this increase is not as large as some critics of the program have suggested, it is significant. It is unclear exactly what accounts for this rise, although there are a number of plausible hypotheses.  (See the Center on Budget and Policy Priorities Social Security is Vital to Workers with Severe Impairments)
  • Does the SSDI program encourage people to leave the workforce in favor of collecting disability benefits?
For the most part, SSDI does not encourage people to leave the workforce. Disability benefits are modest and generally not enough to lure people away from employment. In December, 2011 slightly more than half of all beneficiaries received less than $1,050 per month.[20] Most SSDI beneficiaries live at or below the poverty level.[21] 
The SSDI program does not substantially affect an individual's desire to work.  Individuals with and without disabilities reported no difference in their desire for paid work.[22] However, people with disabilities feel that they are less likely to find work when compared to their non-disabled counterparts.[23] The variation in employment outlook may be due to fewer suitable jobs available to people with disabilities, especially if one has low education and training levels.[24] This similar desire to work suggests that the SSDI program does not encourage people to leave the workforce, but that few suitable jobs are available.
Indeed, many beneficiaries try to work, but find they are unable.  A 2009 study found that 40% of disability beneficiaries were "work-oriented" but that only a small percentage – 9.7 % – was able to successfully complete a trial work period. [25]
  • How will health care reform (the Affordable Care Act) affect the Social Security Disability Insurance Program?
Increased access to Medicaid and private insurance through the Affordable Care Act (ACA) may relieve some of the pressure on the SSDI program. A person found disabled under the SSDI program becomes eligible for Medicare after receiving SSDI benefits for 24 months.  Indeed, access to health insurance is a significant consideration for many deciding to apply for SSDI.  Correspondingly, $80 billion of the $260 billion that the federal government spends on the disability program is for health care.[26]  After implementation of ACA, many individuals who may have looked to the SSDI program for health insurance will have access to private insurance through the Marketplaces or Medicaid under ACA expansions.
  •  Is federal spending on the SSDI program "out of control?"
The SSDI trust fund is projected to expire in 2016.[27] This expiration was predicted by the Social Security actuaries in 1994 and now comes as no surprise as SSDI spending over the past twenty years has grown exactly as predicted.[28] However, if the SSDI trust fund is depleted and policymakers take no action, SSDI benefits will be cut by 20% -- a crushing blow to the individuals and families who rely on the benefit.[29]
Conclusion: Consider Solutions to Address Growth and Improve the SSDI Program without Hurting Beneficiaries
Several policy proposals to improve the efficiency of the Social Security Disability program have been offered recently.[30] The SSDI program can and should be improved to ensure long term solvency, but not at the expense of millions of severely disabled beneficiaries who rely on the benefit. Attempts to undertake sweeping restructuring of the SSDI system  should be undertaken only with caution and due diligence and within the context of the entire Social Security program—both Old Age and Survivor Insurance and Disability Insurance.
For more information, contact attorney Andrea Callow (acallow@medicareadvocacy.org) in the Center for Medicare Advocacy's Washington, DC office at (202) 293-5760.
 

[1] Both SSDI and Supplemental Security Income (SSI) are available to people who are disabled.  However, unlike SSDI, SSI is available only to people with limited income and resources.  SSDI is not asset-dependent as long as the person has worked long enough to earn Social Security benefits.
[2]
Nearly half of all SSDI beneficiaries rely on the program for at least half of their family income, while benefits account for virtually all of the income received by 20% of beneficiaries. Favreault, Johnson & Smith, How Important is Social Security Disability to U.S. Workers? The Urban Institute (June 2013) http://www.urban.org/url.cfm?ID=412847&renderforprint=1
[3]
Kathy A. Ruffing, Social Security Disability Insurance Is Vital to Workers With Severe Impairments, The Center on Budget and Policy Priorities (Aug., 2012) 9, http://www.cbpp.org/cms/?fa=view&id=3818
[4]
Id.
[5]
42 U.S.C. §414. For a detailed explanation of the insurance requirements, see “Disability Planner—How Many Credits You Need,” at http://www.ssa.gov/dibplan/dqualify3.htm.
[6]
Id.
[7] "Unfit" for NPR Let's Get the Facts Straight on Disability: Social Security Disability Programs Are a Vital Lifeline for People with Severe Disabilities, Consortium for Citizens with Disabilities (April, 2013): http://www.c-c-d.org/task_forces/social_sec/Unfit_for_NPR_CCD_Statement_with_sign-ons3-27-13.pdf
[8]
20 CFR 404.1502 See also, SSA.GOV, Substantial Gainful Activity http://www.socialsecurity.gov/OACT/COLA/sga.html
[9]
The Congressional Research Service, Social Security Disability Insurance (SSDI): The Five-Month Waiting Period for Benefits  (January 24, 2013)  http://www.fas.org/sgp/crs/misc/RS22220.pdf
[10]
Supra at Note 2
[11]
Supra at Note 2
[12]
It has increased by 40%since 1980 and by less than 20% since 1995. Supra at Note 2
[13]
Paola Scommegna, Aging Baby Boomers Face More Disability, Population Reference Bureau (March, 2013) http://www.prb.org/Articles/2013/us-baby-boomers.aspx
[14]
Favreault, Johnson & Smith, How Important is Social Security Disability to U.S. Workers? The Urban Institute (June 2013) http://www.urban.org/url.cfm?ID=412847&renderforprint=1
[15]
Supra at Note 2
[16]
Supra at Note 2
[17]
Supra at Note 2
[18]
Supra at Note 2
[19]
Supra at Note 2
[20]
Favreault, Johnson & Smith, How Important is Social Security Disability to U.S. Workers? The Urban Institute (June 2013) http://www.urban.org/url.cfm?ID=412847&renderforprint=1
[21]
Supra at Note 13
[22]
Ali, Schur & Blanck, What Types of Jobs Do People with Disabilities Want, J Occup. Rehabil. (2011) 21:199–210 (Oct. 6, 2010) http://bbi.syr.edu/publications/blanck_docs/2011/ali_schur_blanck_jobs_pwd_want.pdf
[23]
Id.
[24]
Id.
[25]
Gina A. Livermore, Work-Oriented Social Security Disability Beneficiaries: Characteristics and Employment-Related Activities, Center for Studying Disability Policy (Dec., 2009) http://www.ssa.gov/disabilityresearch/documents/TTW5_Brief_1_WOB.pdf
[26]
Brand Plumer, What This American Life Missed on Disability, The Washington Post (March 28, 2013) http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/28/harold-pollack-what-this-american-life-missed-on-disability-insurance/
[27]
Statement of Stephen C. Goss, Chief Actuary, Social Security Administration before the House Committee on Ways and Means, Subcommittee on Social Security (March 14, 2013) http://www.ssa.gov/legislation/testimony_031413a.html
[28]
Statement of Stephen C. Goss, Chief Actuary, Social Security Administration before the House Committee on Ways and Means, Subcommittee on Social Security (March 14, 2013) http://www.ssa.gov/legislation/testimony_031413a.html
[29]
Supra at Note 6
[30]
Policy Options for the Social Security Disability Insurance Program, The Congressional Budget Office (July 2012) http://cbo.gov/sites/default/files/cbofiles/attachments/43421-DisabilityInsurance_print.pdf; Proposals Addressing Trust Fund Solvency, www.ssa.gov, http://www.ssa.gov/OACT/solvency/; Summary of Provisions That Would Change the Social Security Program, www.ssa.govhttp://www.ssa.gov/OACT/solvency/provisions/summary.html;   See also Kathy A. Ruffing, Social Security Disability Insurance Is Vital to Workers With Severe Impairments, The Center on Budget and Policy Priorities (Aug., 2012) 9, http://www.cbpp.org/cms/?fa=view&id=3818

Can Aetna beat on second quarter?

July 26, 2013

Investors want to see whether Aetna Inc. can turn in a strong second-quarter performance of its own Tuesday following good results from the country's other biggest health insurers.
WHAT TO WATCH FOR: The Hartford, Conn., company is the third-largest health insurer based on enrollment. The two companies ahead of it — UnitedHealth Group Inc. and WellPoint Inc. — have already reported second-quarter earnings that trounced expectations. Their recent performances gave a boost to other health insurance stocks, but Aetna shares already had a lot of momentum — it's up about 42 percent in 2013.
Investors have gobbled up health insurance shares this year. Analysts say they're growing more comfortable with the health care overhaul's impact on the sector.
The federal law aims to expand insurance coverage to millions of people over the next few years. Much of that growth starts next year, when the state and federally funded Medicaid program for the poor and disabled people expands and customers start using income-based subsidies to buy individual coverage through insurance exchanges.
That represents a wave of new business for health insurers, but investors have been wary of how fees and coverage restrictions imposed by the massive law will affect the sector.
However, WellPoint CEO Joseph Swedish told analysts on Wednesday that the exchanges and the Medicaid expansion could help the insurer grow. He said WellPoint's annual revenue could reach $90 billion by 2016 from the $71 billion it expects this year.
Aetna closed on a growth opportunity of its own in May, when it bought fellow health insurer Coventry Health Care Inc. for $6.9 billion. After completing the deal, it raised its forecast for full-year adjusted earnings to $5.70 to $5.85 per share from $5.50 to $5.60 per share.
Analysts will be looking for more insight into how that deal is affecting the company. The acquisition will help Aetna build its presence in Medicaid and the federally backed Medicare program.
Analysts also will want more insight into how the cost of providing coverage is changing for the insurer. Aetna and other health insurers have said the amount they pay in medical claims continues to climb mostly due to price increases, not from more people using health care. Medical costs are a health insurer's largest expense.
WHY IT MATTERS: Aetna provides health insurance for more than 18 million people. It also sells dental, group life and disability coverage.
WHAT'S EXPECTED: Analysts expect, on average, earnings of $1.40 per share on $11.9 billion in revenue, according to FactSet.
LAST YEAR'S QUARTER: Aetna's net income fell nearly 15 percent, largely because the insurer recorded a big gain from lower-than-expected leftover claims in the previous year's quarter. Profit came to $457.6 million, or $1.32 per share, as revenue climbed 6 percent to $8.84 billion.
http://www.benefitspro.com/2013/07/26/can-aetna-beat-on-second-quarter