US Health Care Reform and Your Club

The following is IHRSA’s preliminary analysis of the limited details currently available. As more information emerges in the coming weeks, IHRSA will continue to update members on issues of importance to the industry.

Issues Impacting Health Clubs

The legislation passed by the House includes four provisions that impact the health club industry and previously appeared in the Senate version.

Increase in Premium Discounts for Employees Who Participate In Workplace Wellness

The law provides for an increase in premium discounts for employees who participate in workplace wellness programs that require participants satisfy certain conditions, such as body mass index (BMI), cholesterol, or blood pressure. The bill allows up to a 30 percent discount and gives HHS the option to increase the discount to 50 percent. This could increase employer and employee interest in wellness programs that have assessments and health tracking; it could also increase frequency of visits to health clubs since people will have to satisfy certain health requirements.

Unlimited Insurance Reimbursement for Memberships

It codifies a Bush administration regulation that allows insurance companies to offer unlimited reimbursement amounts for fitness center memberships.

Freezes Medicare Advantage

It freezes Medicare Advantage funding increases by 2011 and decreases funding in subsequent years. While each Medicare Advantage program will decide how to handle the cuts within their own budgets, it is likely that insurance companies will decrease the availability of programs like Silver Sneakers.  (To read previous reporting on this issue, click here.)

Tax on Tanning Services

A ten percent tax on tanning services is proposed to take effect on July 1, 2010. The tax is estimated to raise $2.7 billion by 2019. This measure was a last minute inclusion in December just before it was passed by the Senate. According to media reports at the time, the tax was a compromise between Democratic negotiators, the American Medical Association, and the American Academy of Dermatology Association. The groups withheld their support for the legislation, in part, due to a proposed 5 percent tax on cosmetic services, in lieu of what become known as the “Botox Tax”, the groups proposed the ten percent tax on tanning services.

The bill directs the Secretary of the Treasury to develop the regulations associated with the collection and remittance of the tax. IHRSA will monitor this and update clubs once details become available.

Issues Impacting Businesses

IHRSA’s federal lobbying objective is to support health promotion legislation and regulations that encourage Americans to exercise and consequently increase the percentage of Americans who belong to health clubs. IHRSA did not taken a position on the health care reform bill in its entirety. There are however provisions in the legislation that was passed and in the pending reconcilation bill that could potentially impact your operations from a purely business perspective.

Insurance Exchanges

Small businesses with fewer than 100 employees will be able to pool together to purchase insurance in state-based insurance exchanges by no later than 2014.

Tax Credits

Until the insurance exchanges are set up, businesses with fewer than ten employees or equivalents earning on average less than $25,000 annually, will be eligible for a tax credit of 35 percent of health insurance costs.

Employers Who Do Not Offer Coverage

Starting in 2014, employers that have more than 50 full time equivalent employees, do not offer health insurance, and have at least one full-time employee who receives a premium tax credit will have to pay a penalty of $750 per employee. The reconciliation bill raises the penalty to $2,000, but for the purposes of calculating the penalty, 30 employees can be deducted. The coverage offered to employees will have to meet minimum benefits requirements, covering a specific set of services and 60 percent of the employees overall health care costs.

Employers Who Do Offer Coverage

The reconciliation requires employers that offer coverage to their employees to provide a free choice voucher to employees with incomes less than 400% federal poverty limit whose share of the premium exceeds 8% but is less than 9.8% of their income and who choose to enroll in a plan in the exchange. The voucher amount is equal to what the employer would have paid to provide coverage to the employee under the employer’s plan and will be used to offset the premium costs for the plan in which the employee is enrolled. Employers providing free choice vouchers will not be subject to penalties for employees that receive premium credits in the exchange. This takes effect in 2014.

Health Promotion     

As reported in December, the Senate bill did not contain IHRSA’s signature legislation, the Workforce Health Improvement Program (WHIP) Act and Personal Health Investment Today (PHIT) Act; though the bills were well received by Congress.

The bill passed by the House includes the prevention and wellness measures set out by the Senate. The following is a partial overview of the provisions.

• Community transformation grants through the CDC will be available for the development of evidence-based development of worksite wellness programs.
• The CDC will provide employers with consultation and tools in evaluating worksite wellness programs and build evaluation capacity among workplace staff. The legislation directs the CDC to study and evaluate employer-based wellness practices.
• Grants for small businesses to provide comprehensive workplace wellness programs will be available from HHS to help small businesses to provide employees with access to comprehensive workplace wellness programs.
• $500 million is provided to the Center for Disease Control and Prevention (CDC) for the development and implementation of a national public-private partnership for a prevention and health promotion outreach and education campaign to raise public awareness through a science-based media campaign of health improvement across the lifespan. Obesity screening and counseling are specifically cited.
• The legislation establishes a Prevention and Public Health Fund to be administered through HHS that would expand and sustain a national investment in prevention and public health programs. The fund will support programs authorized by the Public Health Service Act, for prevention, wellness and public health activities, including prevention research and health screenings. 
• A National Prevention, Health Promotion & Public Health Council will be created within HHS to provide coordination and leadership at the federal level, and among federal departments and agencies, with respect to prevention, wellness and health promotion practices, the public health system and integrative health care. In addition, the council will develop the National Prevention Strategy. 
• The U.S. Department of Health and Human Services (HHS) will award grants to states to carryout initiatives to provide incentives to Medicaid recipients that successfully participate in healthy lifestyle programs and demonstrate changes in health risks and outcomes, including controlling or reducing weight.
• Health insurers will now be required to fully cover certain preventative services as outlined by the U.S. Preventive Services Task Force (USPSTF). This includes clinical obesity screening for all adult patients and offering intensive counseling and behavioral interventions to promote sustained weight loss for obese adults.
• Medicare Part B coverage will now fully cover personalized prevention plan services. This includes health risk assessments, BMI measurements, and referral to community-based lifestyle interventions to reduce health risks and promote self-management and wellness.

What Happens Next     

IHRSA is continuing our efforts to lobby for health promotion legislation, encourage grassroots advocacy, and report to you on major developments that could impact your business.

If you have any questions or concerns, please do not hesitate to contact us at gr@ihrsa.org.