This newsletter provides updates on healthcare reform and its costs, workplace wellness programs, and medical clinics. It discusses how the Affordable Care Act will pay for expanding coverage, including new taxes starting in 2011-2018 on drug companies, insurers, and high-cost plans. It also links obesity to higher workers compensation costs and recommends integrating workplace safety with wellness efforts. Finally, it notes the growth of retail medical clinics and their lower costs compared to doctors' offices and emergency rooms.

1. This year is off to a fast start. By the looks of things, healthcare reform will continue to take center stage along
with global economy setbacks, recession residuals and the presidential election. But for the most part I sense
business is ready to get back to business; it reminds me of Robert Frost's quote about life: "it goes on". With that
spirit, I wish you a healthy and prosperous 2012!
I hope you find this month's newsletter timely and of interest.
Warm regards,
Mike
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Legislative Updates and Impacts
Wonder How We Will Pay For PPACA?
Besides providing volumes of definitions (guidance) explaining how the Patient Protection and Affordable Care
Act (PPACA) will expand access and affordability of healthcare, the law also defined how we will ultimately pay for
this expansion which will include at least 30 million new subscribers.
Up to this point the benefits have been well received, they include:
Lifetime dollar limits prohibited
Restrictions on annual dollar limits
Children coverage expanded to age 26 (even if eligible for other coverage)
Tax exclusion of health benefits for children under age 27
Pre-existing condition exclusions prohibited for dependents under age 19 (no age limit in 2014)
No rescission of coverage (except for fraud)
100% preventive care coverage with expanded coverage (non-grandfathered plans)
Expanded internal and external appeals (non-grandfathered plans)
Non-discrimination requirements for insured plans (non-grandfathered plans)
Marketplace reforms: access to OB/GYN, Pediatrician and ER (non-grandfathered plans)
Cost reporting and MLR rebates
Phase out of "Part D" donut hole begins
Early Retirees Reinsurance Program (ERRP)
ph: (708) 845-3126 • mike.wojcik@thehortongroup.com

2. However the benefits also come with takeaways:
Over The Counter drugs ineligible for FSA, HSA, HRA (without a doctor's script)
Medicare Advantage funding reductions
10% tax on indoor tanning services
To this point we have heard little on cost-shifting to the employer. Other than in 2010 when insurance carriers
initially went off the deep edge because of the unknown, medical trend has been fairly stable. With lower health
care utilization the past two years due to recession, it is anticipated many fully insured groups will receive rebates
in late 2012 due to new reporting requirements and the medical loss ratio.
Other than anxiety caused by the unknown, most features of PPACA have been well received. But now it's time
to start paying the bill forward and incorporate 30 million newly insured. Pending a change from a supreme court
decision or possibly a presidential election, turning back completely seems unlikely now. As a result, we will see
the following tax provisions introduced that will ultimately be cost shifted to individuals and employers in the
process. These include:
2011
Pharmacy Manufacturer Tax:
$2.5B in 2011 increasing to $4.2B in 2018; $2.8B in 2019+
2012 (plan year starting 10-1-12):
Comparative Effectiveness Research Tax: Tax on insured and self-funded plans of $1 per participant per
year - 1st year; $2 second year; indexed thereafter.
2013
Income Tax Provision: Itemized medical deduction threshold increased from 7.5% to 10%
Medicare Hospital Insurance Tax: Tax rate increased from 1.45% to 2.35% for high income. 3.8% tax on
net investment income (income in excess of $250K joint filers: $200K others)
Medical Device Excise Tax: 2.3% excise tax
2014
Health Insurance Industry Tax: $8B in 2014 increasing to $14.3B in 2018: trended after 2018
Exchange Reinsurance Program: $25B tax on insurers and TPAs from 2014 to 2016
2018
Cadillac Plan Excise Tax: Plans will receive a 40% tax on value above $10,200 individual and $27,500
family (adjusted slightly for high risk businesses and pre 65 retirees; indexed at CPI-U + 1% in 2019 and
CPI-U only in 2020+). It is unclear how this cost will be distributed.
The timeline for PPACA from this point continues with more giveaways and takeaways (reform) which will cover
all facets of healthcare including providers. The goal of having health insurance for all Americans is certainly
noble and should be pursued. Health Care Reform will test our fortitude as never before.
Will the law survive? Will the market turn into a two tiered system, one for those with means and the other
subsidized? We should gain full direction by end of 2012. In the interim, we will need to abide by the current
provisions, educate our legislators to help them make the best decisions and trust market innovation will continue
to find new methods to deliver healthcare at affordable costs.
ph: (708) 845-3126 • mike.wojcik@thehortongroup.com

3. Market Trends and Strategies
Integrating Safety and Workplace Wellness Efforts
Most employers have engaged in workplace safety efforts for years. Resources are allocated to create training
and education to minimize workers compensation claims, liability exposures & maintain compliance with OSHA
laws. The consequences of ignoring risk management can be costly. But did you know that many workers
compensation claims actually have a root cause linked to an individual's health? As we continue to engage in
workplace safety efforts and now wellness efforts, we might consider collaborative efforts between them. The
next article reviews a Duke University Medical Center study linking the two.
The Obesity Epidemic and WC Cost - What is Their Connection
According to a recent Duke University Medical Center study, obese workers file twice as many workers'
compensation claims, were absent from work 13 more days from a work-related injury and had seven times
higher medical costs for claims than the average non-obese employee. Obesity is bad not only for the individual
and his/her health, but also to the employer because of the financial burden that obesity has on workers'
compensation claims. Obesity also drives up the severity of claims, increases the time that workers must be away
from work, decreases productivity and increases absenteeism.
The Research
The Duke University study conducted health risk appraisals of almost 12,000 individuals from groundskeepers to
professors to nurses over a seven-year period. Researchers studied the relationship between body mass index
(BMI) and workers' compensation claims for study participants. For the full article including strategies you can
easily implement into your workplace, click here.
Public Sector News
Next Month - Health Benefits for Local Government - 2011 ICMA Study
Insurance Carriers and Healthcare Providers In The News
Retail Medical Clinics Surge 10-fold between 2007 and 2009.
Why the growth in retail medical clinics? "Proximity" is the main finding of a Rand Study published in the American
Journal of Managed Care. Look for more growth in this convenience healthcare market as major health systems
like Cleveland Clinic and Henry Ford Health System, Mayo Clinic and regional providers look to partner with
groups like CVS "minute clinic" and other retail outlets.
ph: (708) 845-3126 • mike.wojcik@thehortongroup.com

4. The study found females were more likely to visit these clinics than males. Age attraction was between 18 and
44, higher income levels (those with median incomes of more than $59,000) and generally in good health. The
study identified 11 simple acute conditions that could be easily managed at a retail clinic which included upper
respiratory infection, bronchitis, ear infection, flu and conjunctivitis.
The researchers found no correlation between retail clinic use and the number of primary care physicians in the
community. Care initiated at retail clinics was found to be 30 to 40 percent less expensive than similar care
provided at a physician's office, and 80 percent less expensive than such care provided in an emergency
room. For additional information click here.
Human Resource Center
Still Confused on Form W-2 Reporting?
I must admit guidance on the W-2 reporting requirement of the Patient Protection and Affordable Care Act has
bounced around a bit. The most recent IRS interim technical guidance was released on January 3rd. Small
employers, filing less than 250 Forms W-2 for 2011, are still not subject to report in 2012, everyone else is. Hope
you find the linked 40 question Q & A Guidance on Form W-2 reporting helpful. (click here).
Next Month - How to Handle Medical Loss Ratio Refunds
Wellness Initiatives
How Healthy Are Your Employees?
Not very....according to a recent Forbes feature article. In a study conducted by Quest Diagnostics it was
discovered that one in three employees who took employer-sponsored lab-based wellness test were found to be
at risk for high cholesterol, kidney disease or diabetes, regardless of educational level or gender. In most cases
the conditions were newly discovered.
The study covered 52,270 first-time participants in wellness tests at 15 companies from 2003 - 2010. It looked at
employees between the ages of 20 and 64 that had insurance.
It isn't just older workers getting the bad news, although newly identified diseases did progress with age. They
range from 24.4% among 20 - 29 year olds and 41.7% among 50 to 60 year olds. Men had higher risks overall at
39% versus women at 33%, however women ages 50 - 64 have a higher rate of newly identified risks than men.
"The good news is that armed with this new information, employees can face their health risks, change their
behaviors and improve their health", says Harvey W. Kaufman, Senior Corporate Medical Director at Quest
Diagnostics and co-author of the study. Click here to view the full study.
ph: (708) 845-3126 • mike.wojcik@thehortongroup.com

5. Horton Webinars & Seminars
Train the Trainer
Horton workshops are designed to keep busy professionals current on a range of insurance related topics. The
Horton Group engages some of the brightest minds in the country to help you fine-tune your professional skills
and assist in achieving your organizational goals. Our workshops are offered at several convenient locations
throughout the year. In addition, we can present these workshops at your company location or for your
association or trade group.
As always - if you would like to register for a webinar or workshop, please do so via the following link:
http://www.thehortongroup.com/Insurance_Workshops/
ph: (708) 845-3126 • mike.wojcik@thehortongroup.com