Health Care Reform
Welcome to the health insurance information center. We’re doing our best to make sure that you’re informed of all changes that effect your finances and bottom line. I have decided to place the most recent news at the beginning and the oldest news at the end of the segment.
Update 4/21/2010
***Physician Shortages*** are the talk of the land. Who will serve these new 32 million that will be insured under the new law? Now would be a good time to complete ine’s education to be a Doctor.
***Small Business Tax Credits***
Federal
Congress returned last week from recess to the same impasse over extending COBRA and fixing Medicare physician reimbursements that has plagued it through all of 2010 so far. Both Republicans and Democrats profess strong support for extending the 65 percent subsidy for COBRA coverage and extending the suspension of the 2010 cuts in Medicare reimbursements. The impasse is over whether Congress should actually pay for it (Republicans favor) or merely dump it into the deficit for a future Congress to address (Democrats favor). There was just enough agreement along the way last week for Congress to pass a law, which the President has signed, to extend both items through May 31 on a retroactive basis to cover the fact that the last temporary extension for both items ran out March 31. Whether Congress continues with temporary extensions for the rest of 2010 or resolves the matter once and for all remains unclear.
Under the Medicare drug law of 2003, employers maintaining drug coverage for retirees receive a non-taxable 28 percent subsidy for drug expenses. But the new health care reform law makes the once deductible subsidy taxable income to corporate America. Immediately after the passage of reform, several major employers (e.g., John Deere, Caterpillar) announced that they would be adjusting their books to recognize the taxability of the subsidy. In response, Democratic members announced a hearing for last week at which members planned to haul several CEOs to Washington and grill them over this issue. Congress clearly looked past the fact that such a charge “to the books” and the attendant disclosure were required by accounting practices and laws surrounding corporate governance. House members’ outrage dramatically declined once House lawyers researched the issue and informed the House members that the CEOs were just following the law of the land; consequently, and with little fanfare, the hearing has been cancelled.
States
ARIZONA: The oral chemotherapy parity bill has been revived with a floor amendment that limits cost-sharing to no more than 400 percent of the applicable prescription benefit’s tier III co-payment. The mandate would only apply when coverage is provided for both orally administered and intravenous chemotherapy. In other matters, budget issues continue to consume both the governor and the legislature. Last week the Senate Finance Committee voted along party lines to approve a package of tax cuts, including the corporate income tax, that would decrease state revenue by $60 million. Democrats responded by calling the measure corporate welfare, a veiled reference to the recent elimination of the KidsCare program (SCHIP) affecting 37,000 children.
CALIFORNIA: The Assembly Health Committee last week passed a bill that would require health care plans and health insurers to obtain regulator approval prior to implementing any network modification affecting more than 2,000 enrollees. The committee also passed, on a partisan vote, a bill that would prohibit any adjustments to individual market rates more than once in a calendar year. This would impact premiums, co-pays and any other out of pocket costs. These bills are likely to mean increased costs to state departments and may not survive scrutiny by the Appropriations Committee, given the state’s fiscal climate. Aetna is opposed to these bills, which were sponsored by the California Medical Association.
COLORADO: Initial discussions were held recently with the sponsors of several health reform bills to point out their overlap with provisions in the federal health reform law. Governor Ritter, a strong supporter of health care reform, has proposed standardized policy forms and EOBs, “plain language” content for contracts, uniform individual application, wellness incentives, a maternity coverage mandate in individual policies and the creation of a task force to develop standard coding and edits for claims. A major concern is that these state bills have earlier effective dates than the federal law and might result in unnecessary duplication of efforts and expense.
DELAWARE: Last week Insurance Commissioner Karin Weldin Stewart held a meeting to review the pre-authorization procedures used by health plans in response to provider claims that medically necessary diagnostic tests were being denied. During a separate joint Senate-House committee hearing on the subject, legislators determined this was not a widespread problem. Their conclusion was based on the fact that only 20 complaints of claim denials were submitted last year to the Department of Insurance, and only seven have been recently received. Aetna will monitor any future legislative response to the situation.
ILLINOIS: The Illinois Comprehensive Health Insurance Plan (CHIP) Board has opted not to participate in the federal government’s temporary high-risk pool program but to establish a new state pool for designated individuals, as specified under the new federal health care reform law. The board’s action comes in response to Secretary Kathleen Sebelius’ inquiry to all states on how each intends to cover those persons who have not previously had insurance coverage for six months and have a pre-existing condition. This new risk pool will complement two other pools already operating in Illinois: 1) the current Section 7 high-risk pool for individuals with specified conditions that is funded by premiums paid by enrollees and deficit covered by the state; and 2) the current Section 15 HIPAA-CHIP eligible pool that is funded by premiums paid by enrollees and the deficit covered by an assessment on health insurers. To this end, the CHIP Board is discussing lowering the percentage that would be charged to currently eligible Section 7 high-risk enrollees to align with the premium for the new federal pool, where the standard rate is not to exceed 100 percent of the standard non-group rate. According to federal law, the pool must be operational 90 days from the signing of the federal health care reform law. Illinois’ share of $5 billion to cover designated individuals in the temporary risk pool is expected to total $210 million for three and a half years until the guaranteed issue requirements in the individual market begin.
MAINE: The legislature adjourned on April 12, 2010 after passing a number of health care-related bills that have been signed by the governor. The general effective date for laws enacted during the Second Regular Session is July 12, 2010. These bills include: mandated coverage of prosthetics containing a microprocessor; mandated coverage for children’s early intervention services, though coverage may be limited to $3,200 per year for each child not to exceed $9,600 by the child’s 3rd birthday; a mandate requiring individual and group health insurers to cover autism spectrum disorders for those five years of age or under in accordance with certain guidelines and limitations; creation of the Universal Childhood Immunization Program, administered by a board, to provide immunizations and cover the costs of recommended vaccines for children in the State not covered by the federal Vaccines for Children Program; a requirement that carriers offer mail order benefits to qualified retail pharmacy providers willing to meet the terms and conditions for mail order, and a requirement that carriers pay all clean pharmacy electronic claims within 21 days of receipt and all clean pharmacy paper claims 30 days after receipt; a prohibition on policy maximums and lifetime limits, subject to certain exceptions; an expansion of eligibility under Maine’s mini-COBRA law to include individuals who were permanently laid off on or after the effective date of this law and are eligible for premium assistance; a notice requirement for continuation of coverage; and a requirement that dental policies and contracts that offer dependent coverage to offer the opportunity to enroll a dependent child at appropriate rates from birth to 30 days of age.
Legislation that did not pass includes a health reform bill that would have established the Maine Health Care Plan to provide affordable health care for Maine residents. It also would have required health plans not to exceed administrative costs of 10 percent, and it would have established a 7.5 percent tax on wages and earnings to finance the Maine Health Care Plan.
MARYLAND: The Legislature passed an assignment of benefits/balance billing bill that is applicable to PPOs. It adds hospital-based physicians to the assignment of benefits provisions for on-call physicians, as applicable to PPO policies. The bill prohibits on-call and hospital-based physicians from collecting from an insured money owed by the insurer or maintaining any action against an insured to collect money for covered services rendered. Non-preferred on-call physicians with an AOB agreement are to be paid for covered services within 30 days of the receipt of claims, and paid the greater of 140 percent of the average rate paid for the previous calendar year in the same geographic area for similarly licensed contracted providers, or the average rate paid for the insurers in the previous calendar year in the same geographic area for similarly licensed, non-contracted provider, inflated by changes in the Medicare Economic Index from 2010 to current year. Non-preferred hospital-based physicians with an AOB agreement are required to be paid similarly. The bill is on the Governor’s desk and is expected to be signed into law.
MASSACHUSETTS: Insurance Commissioner Joseph Murphy has sent a letter to six insurance companies (not Aetna) demanding that they submit revised April 1 premium rates for individuals and small businesses by April 15 or face fines. The fines could run as much as $5,000 a day per carrier, plus $1,000 for each consumer who is unable to buy coverage. This letter was sent to insurers a day after a Massachusetts court denied the insurers’ request for a temporary injunction to allow already established April rates to be collected because the plaintiffs have not exhausted their administrative remedies.
Senate President Therese Murray plans to propose legislation containing an efficiency guarantee that would restrict the amount of premium dollars health insurers can use for administrative operations and would end the state’s current health care financing model, under which care providers are reimbursed regardless of service quality. This proposal would also require insurers to prove they have a 90 percent medical cost ratio (MCR) or provide rebates to small businesses to cover the difference. Carriers who opt out of the efficiency guarantee would be subject to Division of Insurance reviews with approval authority for premium increases that exceed medical inflation rates. This bill would also require small group carriers to provide at least one product within a reduced-provider network featuring premiums at least 10 percent lower than those for the full-network plan.
MINNESOTA: In response to passage of federal health care reform, the state legislature wasted no time in developing a “conformity” bill to enable the state to, among other things, take advantage of the early Medicaid expansion. The bill amends Minnesota statutes to reflect federal reforms relating to premium subsidies, accountable care organizations, medical assistance, an insurance exchange, sale of insurance across state lines, a mandate to purchase insurance, guaranteed issue with no pre-existing condition exclusions, and others. It also departs from federal reform in that it would establish a public option to be offered through the state insurance exchange and would, on January 1, 2012, automatically shift enrollees in the state’s high-risk pool into individual coverage offered through the exchange. The bill would also require community rating for all coverage offered, issued, sold, or renewed in the state. No hearings have been scheduled.
In a related development, Governor Tim Pawlenty announced that he plans to join or file a lawsuit objecting to the new federal individual health insurance requirement. Recently, Attorney General Lori Swanson opined that a lawsuit against the federal government is “not warranted” but that she would leave it to Pawlenty’s discretion as to whether he should file his own brief opposing the law. Swanson also stated that she intends to file an amicus brief in support of the federal government’s case.
OKLAHOMA: Legislation directing the Oklahoma attorney general to file suit against the federal government over health care reform was unanimously approved Wednesday by members of the House Rules Committee. The Speaker of the House is strongly supporting the bill after Attorney General Edmondson decided not to join the other 19 states that have filed lawsuits against the federal government. In response, House Speaker Chris Benge stated that ”Today we have taken a giant step backwards. By filing this lawsuit, we could thwart the liberal left’s push to encroach on the liberties of all Oklahomans.” Aetna will continue to monitor the bill’s progress as it moves through the legislature, which will remain in session until the end of May.
PENNSYLVANIA: The Senate will hold a hearing this week on a bill that would create a high-risk pool as an affordable health insurance alternative for individuals with severe health conditions. The bill would establish a governing board to be appointed by the Governor and General Assembly and would include insurers, health care experts, the business community, and members of the public. It would require the Pennsylvania Health Insurance Pool (PHIP) Board to hire an administering insurer to manage the pool; it would allow an individual (and their dependents) who are not otherwise eligible for Medicaid or other government programs to participate in the PHIP if they have been refused coverage from at least two health insurers or have been offered coverage from at least two health insurers at rates higher than that offered by PHIP; it would direct the Insurance Department to annually determine an individual standard rate for health insurance premiums in the Commonwealth; and it would cap individual premiums at a maximum of 150 percent of the individual standard rate.
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Update 3/31/2010
This is the scedule for health insurance reform as far as we are aware right now. We’ll kep you informed of any changes that come along as we are confident that there will be some modifications and alterations along the way.
2010
New Programs:
* Temporary retiree reinsurance program is established
* National risk pool is created, small business tax credit is established
* $250 rebate for Medicare members who reach the ”doughnut hole”
Insurance Reforms:
* Prohibits lifetime benefit limits – based on dollar amounts
* Allows restricted annual limits on the dollar value of certain benefits
* Coverage rescissions/cancellations are prohibited (except for fraud or intentional misrepresentation)
* Cost-sharing obligations for preventive services are prohibited
* Dependent coverage up to age 26 is mandated
* Internal and external appeal processes must be established
* Pre-existing condition exclusions for dependent children (under 19 years of age) are prohibited
* New health plan disclosure and transparency requirements are created
2011
Insurance Reforms:
* Uniform coverage documents and standard definitions are developed
* Minimum medical loss ratios are mandated
Medicare Reforms:
* Medicare Advantage cost sharing limits effective
* Medicare beneficiaries who reach the doughnut hole will receive a 50% discount on brand name drugs
* A 10% Medicare bonus will be provided to primary care physicians and general surgeons practicing in underserved areas, such as inner cities and rural communities.
* Medicare Advantage plans would begin to have their payments frozen.
Other:
* Employers are required to report the value of health care benefits on employees’ W2 tax statements.
* Annual industry fee for pharmaceutical manufacturers of brand name drugs.
* Voluntary long term care insurance program would be made available to provide cash benefit for assisting disabled individuals to stay in their homes or cover nursing home costs. Benefits would start five years after people begin paying a fee for coverage.
* Funding for community health centers would be increased to provide care for many low income and uninsured people.
2012
* Hospitals, physicians, and payers would be encouraged to band together in “accountable care organizations.”
* Hospitals with high rates of preventable readmissions would face reduced Medicare payments.
2013
* Individuals making $200,000 a year or couples making $250,000 would have a higher Medicare payroll tax of 2.35% on earned income —up from the current 1.45%. A new tax of 3.8% on unearned income, such as dividends and interest, is also added.
* Medical expense contributions to flexible spending accounts (FSAs) limited to $2,500 a year—indexed for inflation. In addition, the thresholds for claiming itemized tax deduction for medical expenses rise from 7.5% to 10% of income.
* Medical device manufacturers would have a 2.9% sales tax on medical devices; devices such as eyeglasses, contact lenses, and hearing aids would be exempt.
* Eliminates deduction for expenses allocable to Medicare Part D subsidy for employers who maintain prescription drug plans for their Medicare Part D eligible retirees.
2014
Coverage Mandates & Subsidies:
* Individual and employer coverage responsibilities are effective.
* Individual affordability tax credits are created and small business tax credits are expanded.
Health Insurance Exchange & Insurance Reforms:
* State individual and small group health insurance exchanges operational.
* Guaranteed issue, guaranteed renewability, modified community rating and minimum benefit standards (“essential benefits” plan) effective.
* Lifetime and annual dollar limits are prohibited for essential benefits.
* Pre-existing condition exclusions are prohibited.
Taxes & Fees:
* Addition of new taxes on health insurers
Medicaid and Medicare Reform:
* Medicaid expanded to cover low income individuals under age 65 up to 133% of the federal poverty level—about $28,300 for a family of four.
* Minimum medical loss ratio of 85% required for Medicare Advantage plans
2018
Taxes & Fees:
* Tax (“Cadillac tax”) imposed on employer sponsored health insurance plans that offer policies with generous levels of coverage.
2020
Medicare Reform:
* Doughnut hole coverage gap in Medicare prescription benefit is fully phased out. Seniors continue to pay the standard 25% of their drug costs until they reach the threshold for Medicare catastrophic coverage.
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Update 3/23/2010
We have been REFORMED! In a landmark congressional vote of 219 to 212, Health Care Reform has been passed. Please stay tuned for an update on some of the pros and cons and details of the new legislation. What is seen initially is that many of the provisions of the bill do not kick in until 2014. Some of the more consumer friendly portions kick in right away, such as the repeal of exclusions for preexisting conditions, annual and lifetime benefit maximums and coverage cancellations for children which has been expanded to age 26.
So far we see that insurance will be mandatory for all US Citizens. The constitutionality of the mandatory portion of the law is being challenged in courts across the land. Tuesday March 23rd, 14 states sued the US Government on the grounds that compulsory purchase of health insurance under the threat of penalty is a violation of personal, individual and states rights. The case is compelling and I believe will be upheld (but I’m not a lawyer-If I were I’d take the case!) unlike mandatory auto insurance which is only mandatory if one chooses to drive, if health insurance is mandatory it would be mandatory on the basis of being a person or citizen of the US. This is dramatically different than anything previously and is arguably an overreach of federal government.
Stay tuned, I’ll let you know what’s happening with more clarity shortly!
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Update 3/10/2010
President Obama met with 5 of the nations top health insurance company CEO’s on Thursday March 4th 2010. The discussion was lee politically centered than has been recently reported in the news and that has been delivered by certain sound bites which claim that insurance company profits are the reason for the health care crisis. The facts are that a clear message has been sent to this administration outling the need for true reform not only at an insurance level, but also at the provider level, which is what I have personally called for almost since health care reform because a major economic issue. Enclosed is a letter from Aetna Chairman & CEO Ronald Williams:
Industry Spokesman at White House Meeting with Secretary of Health and Human Services Kathleen Sebelius
Thursday, March 4, 2010
Mr. President, Secretary Sebelius:
We are pleased to be with you today. We share a common purpose: to ensure that all Americans have access to affordable health insurance, regardless of their medical conditions. Our companies are successful only when they return to the families and employers we serve the maximum value for their hard-earned health care dollars.
Our industry supports—and in fact proposed—many of the insurance reforms that both parties have suggested, and we support taking the bureaucracy out of health care. For example, our company has invested more than $2 billion dollars to ensure that every one of our members has a secure personal health record. I know that other companies at this table also have made significant investments, We want the insurance market to work for everyone and it can if we get at the soaring medical costs that are making insurance ever more expensive.
Many experts in health care agree that the leading legislative proposals do not bend the health care cost curve in the right direction. Just last week Warren Buffett said, let me quote: “Insurance isn’t the problem, the problem is at the point of care” … That [insurance] isn’t the reason that health care is at 17 percent of GDP.” … “The reason is that we’re doing an awful lot of things we don’t need to do… we have payment for procedures and not payments for results.” We agree with Warren and hope that reform will do more to address these issues. Insurance rates are too high for too many, but that’s because the underlying costs are rising at double-digit rates that are unsustainable.
We have a lot to offer to make the system work better. We have a long relationship with the National Association of Insurance Commissioners. We have worked collaboratively to try to make markets work better and be more transparent. We want to work with all parties involved in this reform effort and hope you will assume our positive intent. We are as concerned as you are about premium rate increases. But if you want to control our prices, then you have to control those prices being charged by suppliers, hospitals, pharmaceutical companies, doctors and others as well.
Thank you and we look forward to a constructive discussion.
[Aetna is one of the fine companies that Dunamis proudly represents. they have taken the lead in working with the current administration on the issue of health care reform and stabilization of the health care industry.]
A second letter was delivered from the President and CEO of America’s Health Plans Ms. Karen Ignagni. This certainly gores into much greater detail as to the actual reason for health insurance costs, none of which has adequately been exposed within news reports:
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Update 2/25/2010
An historic Health Care Summit convened on Thursday Feb. 25th 2010. Called by President Obama, this summit allowed the general public to view many issues within the health care industry that effect every American needing or using health care coverage.
According to Rep. John Dingell (D) there is general consensus in at least 14 major points of the bill itself. It seems that everyone is united for reform in many of the following items:
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Lowering the high pricing of individual health insurance policies
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Removing restrictions for preexisting conditions for health care
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Redesigning language regarding health insurance pools which could facilitate higher costs
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Implementation of possible insurance mandates (compulsory insurance participation)
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Elimination of lifetime maximum coverages
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Eliminating policy cancellations because of sickness and illness
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Finding a way to provide access to affordable health insurance coverages across state lines
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Minimizing the effect of health care upon medicare and senior health care plans
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Lowering and restricting governmental costs and adding savings associated with health care reform
The problems of health care were explored and put on the table:
A particular democratic representative from Iowa read a letter from a constituent that demonstrated the increasing cost of health care. The letter from a farmer claimed that 10 years ago his health care had a lower deductible, and better coverage costing $300 per month, while now the policy is a high deductible plan that increases 14% annually that currently costs over $1000 per month.
Another representative demonstrated how a constituent lost their coverage due to lifetime maximums and shortly thereafter died. Another representative outlined how in a conversation with an executive from Wellpoint, one of the largest health care networks in the country, he was told that company profitability is trumped by patient care.
At one point Rep. Paul Ryan(R) stated that medicare is a $38 Trillion unfunded liability and expressed the concern that the current health care bill “does not reduce budget costs” and reaffirmed the sentiment that the current plan for reform is, “A ponzi scheme that would make Bernie Madoff proud.” Rep. Xavier Becerra(D) later questioned Rep. Ryan’s analysis of the CBO’s finding (which state that there will be budged and deficit reductions after health care reform is instituted) to which Rep. Ryan stated that he simply doubted the “reality” of the CBO projections. Sen. Chuck Grassley(R) declared that 100% of medicare funds go elsewhere other than insurance companies. This was new news to President Obama and most legislators present.
As expected there was some poignant conversation and some important differences noted. The part that I find interesting is that the conversation is exclusively health insurance reform and not health care reform. There is a difference:
1- Health insurance reform is based on changing insurance company policies and procedures. This is said to make health care more affordable for all.
2- Health care provider reform deals more accessibility of health care. this is where the cost side of the conversation should begin as insurance companies don’t set the price for services, they only set the price for access to those services.
Who’s The Culprit?
There is enough blame to go around. Insurance company procedures, pricing and social regulations make getting a good coverage difficult and makes managing cost risk nearly impossible. However, this assumes that the pricing for health care services, which is left untouched by this reform, unchecked. This assumes that the prices that hospitals and doctors charge is automatically right and acceptable. To my surprise there has been no or very little talk of reform along those lines. In other words the Government is approaching the medical care providers such as hospitals and doctors in a Laissez faire manner while seeking to manage the companies that buy bulk services at the price that the PROVIDER determines without regulation.
In my opinion, this is why health care reform is such a difficult issue. If there is going to be true reform, the whole system should be adjusted from the provider to the insurance company. The insurance company must remain profitable in order to serve its members, however that profitability can be better managed. The service provider should also be managed, partially because they receive a bulk of clients and great potential earnings capacity which should make up any difference for the loss of retail pricing.
Is this governmental socialism? I don’t think so, but I do think it is dangerously close when earnings potential from capitalism is regulated, however given the scope of the problems that have existed for so long, there must be some readjustment and realignment to avoid the catastrophe that all agree that is on the horizon. In all this is a very difficult discussion one in which I believe will take much more work and ultimately a leap of faith to complete.
President Obama does not think that there will be another summit, but asked that therebe a best effort at coming together to resolve all issues. Who knows what Washington will do?
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Update 2/10/2010
In an effort to resuscitate health reform, President Obama has invited Republicans and Democrats to the White House for a February 25 summit. Whether this is just a way to postpone the inevitable, as some believe, announcement that health reform is dead for 2010 or whether the President truly believes he can get the patient up and moving again, remains as unclear as everything else surrounding reform.
Late last week, the House joined the Senate in passing a resolution that will re-establish by law a “pay go” rule that will require Congress to pay for future legislation with revenue increases or program cuts. There are exceptions to this checkbook balancing action, one of which relates to the physician reimbursement rules for Medicare — the so-called “doc fix.” Current law requires Medicare to reduce doctor payments by 21 percent for 2010, but Congress suspended this reduction until March 2010. Between now and then, Congress is likely to suspend the cuts for five years or even longer. The exception to the new rule, which the President is expected to sign, would allow Congress to enact doc fix legislation (possibly as early as this week) without having to pay for it and thereby add the cost to the deficit. A permanent fix, favored by the AMA and the Democratic leadership, could cost $371 billion; a 5-year fix would cost $82 billion. Adding billions of dollars to the deficit at this time may be a bit much for even this Congress to pass in an election year.
Whether Congress can enact a “jobs” bill before leaving town on February 12 for a nine-day President’s Day recess is unclear. But the Senate will try, as it likely will consider a bill to fund infrastructure projects, provide tax incentives for job growth and extend unemployment benefits, including COBRA benefits. The COBRA changes are expected to continue eligibility for the government’s 65 percent subsidy beyond the current February 28 deadline. This bill could also serve as a vehicle for the doc fix.
Frustrated by its inability to figure out just how to proceed with health care reform within its own party, the House Democratic leadership is expected to push individual health-related measures starting this week. First up is the latest version of a bill that would weaken the protections of the McCarran-Ferguson Act, as a way of saying to the public that the House is doing something productive about health care by going after health insurance companies. At best this is a hollow “message” bill, in that it won’t truly repeal the McCarran-Ferguson Act; it will remove only a smidgen of the Act’s protection (with little impact on Aetna); and it will never pass the Senate. At worst it continues the anti-insurer rhetoric, holds out the false promise that it would improve competition, misleads the public into falsely believing that the antitrust exemption is a blanket exemption for insurers, and could disrupt quality and patient safety initiatives. Farther down the road are likely proposals to ban rescissions and impose medical cost ratio restrictions. A possible “sleeper” bill would grant a waiver from ERISA to states, allowing them to legislate health reforms applicable to employers, which ERISA currently prohibits. If such a bill surfaces for consideration, it would be a strong sign that Congress is giving up on health reform for the short term and is forfeiting the matter to the states.
States
ARIZONA: Governor Jan Brewer recently convened the 9th special session on the budget to try to find ways of increasing the state’s revenues. Leadership in both the House and Senate publicly voiced support of the one-cent sales tax increase early in the week, and the full legislature subsequently approved placing the measure on the ballot on May 19. The sales tax is projected to raise approximately $1 billion in additional revenue annually. Two-thirds of the revenue would be dedicated to education and the remainder to health, human services and public safety.
CALIFORNIA: The California Medical Association and the California Society of Anesthesiologists filed a lawsuit alleging that Governor Arnold Schwarzenegger skirted federal regulations by sending a letter to CMS to allow nurse anesthetists to administer anesthesia without physician supervision. Federal regulations generally require the presence of a supervising doctor, but Medicare rules exempt hospitals from the requirement if CMS receives a letter from the state’s governor indicating there is a shortage of anesthetists.
COLORADO: A bill that would have prohibited insurers from negotiating a discount rate for dental treatment that is not a “covered service” under a member’s plan was defeated after a hard fought battle. Aetna was at the forefront of a coalition of dental and health plans and business groups that succeeded in demonstrating that the measure was actually anti-consumer because it would have removed transparency and increased costs. In other matters, the mandate requiring maternity coverage in individual policies was amended to a mandatory option. The trial lawyer-backed subrogation bill that would prohibit recovery unless the injured party is made whole (restored to original condition) continues to present a challenge. Although broadly opposed by insurers across all lines, the measure has the support of Governor Ritter.
CONNECTICUT: The session officially got underway on February 3rd, with policymakers forced to deal with the state comptroller’s estimated budget deficit of approximately $515 million. A $3-$4 billion shortfall is projected for next year. The Democratic leaders who publicly defended the budget passed last fall, which is currently in the red, indicated that significant additional cuts to the budget would be difficult and that additional tax increases may be necessary. The Republican legislative leaders are advocating cuts to state spending and stressing that further tax increases would harm Connecticut’s economic recovery. In addition, legislators have re-introduced a bill prohibiting disability policy offsets for dependents. This is just one of the many failed 2009 mandates that Connecticut can expect to see re-introduced this year.
ILLINOIS: Last week, the Illinois Supreme Court once again struck down limits on jury awards in medical malpractice cases passed by the legislature four years ago amid accelerating liability costs for medical providers and a shortage of certain types of physicians. The court ruled that the caps on pain and suffering and other non-economic damages, $500,000 per case for physicians and $1 million for hospitals, are unconstitutional. This was the third time that the Supreme Court has quashed the limits. Also, now that the primaries are over, the Illinois General Assembly will begin meeting in earnest next week.
MICHIGAN: Governor Jennifer Granholm last week outlined several broad-based proposals to help transform state government to meet the challenges of the 21st century. The proposals would: reduce the state’s structural deficit; facilitate local government and school cost reductions, service sharing and consolidation; enhance accountability in state government and improve the management of state finances. To advance these goals, the Governor is proposing incentives to encourage 7,000 state employees and 39,000 public school employees to retire. She also is proposing a requirement that employees, as early as April 2010, contribute 20 percent of premium costs in a new state health plan pursuant to new agreements with state employee unions and state civil service rules, while reducing the cost to state government by 21 percent. Moreover, the Governor is proposing the elimination of lifetime health care for legislators, continued reform of Michigan prison policies to reduce costs, and the option for local government and other public employees to participate in the state’s new, cost-effective health care plan.
NEBRASKA: The Nebraska legislative session is underway and the deadline for submitting new legislation has passed, meaning that all health insurance-related bills are now on the table. Aetna is monitoring the following relevant bills: a proposed constitutional amendment to ban any type of mandatory universal health care system, a bill authorizing foreign insurers to offer health insurance in Nebraska, a prohibition of prepaid dental service plans from limiting fees for services not covered by the plan, proposed requirements on health carriers and pharmacy benefit managers relating to therapeutic alternatives, restrictions on prescription drug coverage (including prohibition on specialty tiers that require payment of a percentage of the cost of a drug and limits on copays), and prompt-pay requirements on payments under the medical assistance program. A transparency bill has been proposed that would require insurers for plans covering 51 or more eligible employees to provide extensive new information on an annual basis. Nebraska is also considering several coverage mandates, including for prosthetics, routine care costs during clinical trials, and cochlear implants. Aetna will continue to monitor these bills and report on their progress.
NEW YORK: Governor David Paterson’s latest revenue estimate adds another $750 million to the state budget deficit, bringing it to a whopping $8.2 billion total. Governor Paterson will now submit 21-day amendments to his initial proposal to address his most recent deficit projection. The first proposal included a $240 million expansion of the patient services assessment, or “sick tax,” on ambulatory surgery and radiology services, a cost shift for mental-health parity small-employer subsidies from the state to insurers ($30 million), cuts in reimbursements to Medicaid, and a new prior approval of rate increases requirement. It is likely that the 21-day amendments will add still more cost and greater administrative burden to health insurance. Although a bill requiring insurers to pay out-of-network labs directly was soundly defeated in the Senate last year, the legislature has re-introduced it. This bill would not be in consumers’ best interest, as plans have no jurisdiction over out-of-network labs either in terms of cost or quality.
PENNSYLVANIA: Aetna hosted the House Insurance Committee in the Blue Bell office for a committee hearing on insurance fraud. The meeting focused on pending legislation regarding fraud and the proposed expansion of a requirement to report suspected fraud for all lines of insurance, including health. The health insurance trade association testified that one difficulty lies in the definition of suspected fraud, which is less clear for health than for auto.
TEXAS: Lieutenant Governor David Dewhurst recently announced the Senate’s interim charges to be studiedthis year in preparation for the next legislative session in 2011. Charges relevant to Aetna include: study and monitor implementation of any federal health reform, review the timeliness and efficiency of the Health and Human Services Commission’s eligibility system, examine the efficiency of the current exchange of health care information, study current health care quality improvement initiatives in Texas, study current practices of the Texas Medical Board relating to disclosure of complaints, review Medicaid HCBS waivers (includes STAR+Plus), study the implementation of the new Healthy Texas program, examine best practices for increasing affordability and availability of health insurance in the individual and small group market (including medical underwriting practices, rescission of coverage, cancellation of coverage, rate regulation, and reporting of medical loss ratios), study out-of-pocket costs for medications and impact on patient compliance, study the transparency between underwriters/agents and policyholders, and study hospital billing and collection practices. Aetna will monitor and attend any and all interim hearings held on these topics and provide status reports.
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Update 1/21/2010
Didn’t happen by Christmas, now the question is will it ever happen?
Here’s the latest:
Federal The race is on. Can Democrats push health care reform through the Senate now that their filibuster-proof majority of 60 to 40 is set to expire when the new Republican Senator from Massachusetts takes his seat? Or, will cooler heads prevail? Massachusetts voters provided extra drama this week when the election to fill the rest of Ted Kennedy’s term resulted in an upset win for Republican Scott Brown. Trying to pass health reform before the State of Union address (now set for January 27) was always the President’s goal. Because of the Massachusetts election, it became a Democratic imperative in the minds of some leadership to pass health reform as soon as possible. But it is very unclear if this can be accomplished. Massachusetts election officials (all Democrats) could take all of the allowed time (roughly 15 days) to certify the election, but under Senate rules Senate Democrats could seat Senator-elect Brown right now and not wait for certification. While there is some talk about speeding health reform through in advance of the swearing-in via a very tortured legislative process, it is more likely that the vote in Massachusetts has made the rank and file Democrats in Congress even more nervous about voting for a bill supported by just 37 percent of the country, according to a Gallup Poll.
In the last week, the President took White House involvement in health reform up several notches both by more publicly stating his preferences on key issues and, more importantly, by hosting and participating in private talks with a handful of Democratic House and Senate leaders to find compromise on the handful of major differences between the House and Senate bills. One such item, the “Cadillac tax,” seemed to come off the table when union leaders and the White House agreed to a compromise. While the tax threshold was modestly increased (by $1,000 for family coverage; $400 for individuals) the big news from the deal is that collectively bargained union plans would get a five-year bye (until 2018) from the tax, which would be a big boon to the status of unions and to membership recruiting. If this deal holds, it would reduce the revenue from the tax from $150 billion to $90 billion, and that means Democrats would have to find the $60 billion elsewhere.
There are numerous other items still requiring compromise, and some appear to be shaping up. For one, the Senate’s state-based insurance exchanges, which Aetna prefers, appear to be winning out over the House’s national exchange with some added “federal wrinkles,” e.g., HHS gets to set up an exchange if a state fails. For another, if the insurer tax in the Senate bill survives, a compromise seems to be developing around delaying the imposition of the tax (now set for 2011) to coincide better with the beginning of the core components of the bill (2013-2014). Finally, while both bills give the bio-pharmaceutical industry 12 years of marketplace exclusivity (before less-costly generics can come to market), it appears that there is a strong movement, led by the President, to cut that number down, which would add needed revenue to the package. Overshadowing all of the individual policy items to be settled is the issue of money — what will CBO conclude about the cost of the deal that’s being cobbled together by Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi. If it comes in costing appreciably more than the $848 billion Senate bill, the Democratic leadership may have to go back to the proverbial drawing board again.
States
ARIZONA: After convening the 2010 legislative session on January 11, Governor Jan Brewer highlighted the state’s priorities in her State of the State address. Without mentioning the word “tax,” the governor focused on the need to find ways to increase revenue as the state is facing a projected $4.5 billion budget deficit. The Medicaid program, which covers all Arizonans who are at or below the federal poverty level, accounts for $1 billion of the deficit. Two ideas discussed to supplement funding are a hospital bed tax and a 1 percent increase in the premium tax across all lines. The bed tax has significant support among the Governor’s office, legislative leadership and hospitals, with the exception of the Mayo Clinics. No formal proposals have been circulated as yet, but Aetna is supporting the broad-based provider tax. Other anticipated legislation includes preventive screening mandates, parity for mental health and oral chemotherapy, medical benefit ratios in the individual and small group markets, limits on the use of pregnancy status as a pre-existing condition and PBM regulation. Access proposals may include an increase in dependent age coverage to 25 and permitting insurers licensed in states other than Arizona to sell policies in the group and individual markets.
CALIFORNIA: The nonpartisan Legislative Analyst Office (LAO) last week deemed California to have an “almost nonexistent” chance of receiving $6.9 billion from the federal government to solve the state budget crisis. Governor Arnold Schwarzenegger’s budget plan relies on federal funds to bridge more than a third of the state’s projected $19.9 billion budget gap. The LAO estimates that California will receive only $3 billion in new aid for 2010-11, less than half of what the governor assumes. California’s credit rating was also downgraded from an A to an A- last week.
COLORADO: Bill introductions began in earnest last week and included a prohibition on the use of gender in rating; a mandate for individual policies to include maternity coverage equal to group benefits and contraceptive coverage; and a requirement that the commissioner adopt rules establishing standard formats for policy forms and explanations of benefits. The commissioner is required to seek input from all stakeholders prior to promulgating the rules that would become effective July 1, 2011.
INDIANA: The legislature convened on January 5, and ethics reforms, taxes and state revenues are the main issues. On the insurance side, a large number of resolutions have been filed, including one to establish a committee to study the impact of national health insurance legislation on Indiana. Others call for constitutional amendments on federal reform issues, including one on the right of an individual to opt out of the health care system and not be subject to fines, as well as another to declare state sovereignty with respect to health care choice and specify requirements for health care providers and the attorney general to ensure sovereignty. In addition to the resolutions, a number of legislative proposals have been filed on benefit and contracting issues. Those include a requirement on insurers to make benefit payments directly to noncontracted providers; a prohibition on dental insurers from imposing fee schedules on non-covered services; and an expansion of a providers’ ability to decide the insurer networks or plans in which they will participate. Also, a bare bones insurance proposal has been introduced to allow the sale of individual insurance plans across state lines from out-of-state insurers that do not meet Indiana premium caps or benefit requirements.
IOWA: The General Assembly began its 83rd legislative session on January 11, and the state’s economy will be a top priority for lawmakers throughout the 80-day session. But health insurance issues, including several anticipated benefit mandate bills, will also garner attention. Also, the Iowa Legislative Health Care Coverage Commission, charged with developing an Iowa health care reform strategic plan by July 2011, has filed its Progress Report. It recommends that the legislature: pursue early opt-in opportunities presented by federal health care reform; develop a more seamless system for Iowans moving from public health care to private health care coverage, and moving from one public health insurance program to another; and begin the process of designing an Iowa exchange that will provide quality data on providers and plans, and data to consumers and funders on the cost of medical care. Going forward, the Commission will focus on fulfilling its statutory charge and monitoring progress on its recommendations to the legislature. The Commission will also monitor anticipated federal health care reform legislation to identify possible opportunities to increase coverage for low-income adults.
MARYLAND: The legislature convened on January 13 and is looking at a nearly $2 billion deficit for fiscal year 2011. Governor Martin O’Malley has ordered over $1 billion in spending reductions since the start of fiscal year 2010, including deep cuts to Medicaid provider and managed care organization reimbursement rates. With a “rainy day” reserve fund of only $615 million, further reductions to state programs are expected. The state’s weak economy will stall enactment of comprehensive reforms but will not stop the ongoing reform debate. Health care proposals that may be considered in 2010 include restrictions on the use of gender as a rating factor, an autism mandate, an oral chemotherapy parity requirement, and guidelines for the reimbursement of out-of-network providers based on health plan determinations of “usual, reasonable and customary” amounts. Also, Governor O’Malley has announced the appointment of Elizabeth Sammis as Interim Commissioner of the Maryland Insurance Administration. Last month, Commissioner Ralph S. Tyler announced his resignation to take a job in the Obama administration.
MISSOURI: The 2010 legislative session kicked off in Jefferson City on January 6 for five months of debate scheduled to end on May 14. Several bills of interest to the health insurance industry were pre-filed, including prompt-pay and any-willing-provider bills, but the show-stopper is predicted to be Missouri’s downward-spiraling budget. As revenues continue to decline, difficult decisions will have to be made by Missouri’s elected officials, including Governor Jay Nixon who will roll out his legislative agenda during the State of the State address scheduled for January 20. Other bills of note include: creation of a health information exchange, expansion of Medicaid eligibility, creation of a universal health insurance act and universal health assurance program, medical loss ratios for insurers covering 50,000 people or more and any-willing-provider legislation.
NEBRASKA: State senators returned to Lincoln on January 6 to begin the second session of the 101st Nebraska Legislature. While some new bills of interest have been introduced and several have been carried over from 2009, the state’s struggling economy is expected to dominate this year’s session,despite a budget-cutting special session in November when lawmakers closed a $336 million projected shortfall in the state’s two-year budget. Governor Dave Heineman discussed the state’s economy and his hopes for the legislative session during his January 14 State of the State address. The 2010 session will last 60 legislative days and is tentatively scheduled to adjourn April 14. New bills of note so far would allow the sale of insurance policies from foreign insurers and would eliminate some premium taxes.
NEW JERSEY: Governor Jon Corzine delivered his final State of the State Address prior to the expiration of his term this week. In his address, he highlighted the fact that the state has decreased spending during his tenure but will be forced to grapple with an $8 billion-dollar structural deficit going forward. The legislature has sent bills to the governor’s desk to expand the scope of practice for chiropractors, mandate the direct payment to out-of-network providers, and authorize the use of marijuana for medicinal purposes. The outgoing governor has until Tuesday at noon to take action on these pieces of legislation. Aetna, along with other health plans, is urging vetoes of the non-par provider payment legislation and the chiropractor legislation, which would impose a same-state chiropractic licensure requirement for purposes of utilization management.
OHIO: A bill concerning material amendments to health care contracts, which previously passed the House by an 85-14 vote, was heard last week by the Senate Insurance, Commerce and Labor Committee. After hearing testimony on the bill, Committee members agreed that the legislature should allow the current law to be in effect longer before making proposed changes. Under current health care contract law, a “material amendment” to a health care contract can occur only if the “contracting entity” provides to the “participating provider” the material amendment in writing and notice of the material amendment not later than 90 days prior to the effective date of the material amendment. If within 15 days after receiving that material amendment and notice, the participating provider objects in writing to the material amendment, and there is no resolution of the objection, either party may terminate the health care contract upon written notice of termination not later than 60 days prior to the effective date of the material amendment. If the participating provider does not object, the material amendment is effective. Under the new bill, the amendment would not become effective if the parties did reach a resolution.
TEXAS: Last week, Speaker Joe Straus (R-San Antonio) announced the formation of the House Select Committee on Federal Legislation. The committee will closely monitor significant federal legislation with specific emphasis on health care reform efforts. The committee also will work to improve the exchange of information between Texas and Washington, D.C., by communicating the impact of pending federal legislation to the state economy and citizens. Speaker Straus stated that he has serious concerns regarding the impact of federal legislation on the state and hopes the committee will help the House respond in a fiscally appropriate manner.
VIRGINIA: The 2010 legislature convened January 13 and will consider various health insurance-related bills in the weeks ahead. Governor-elect McDonnell’s health care proposal includes promoting health savings accounts (HSAs) by publishing a list of all insurers who offer HSAs and making available a toll-free telephone number from the Bureau of Insurance to access HSA information; increasing the refundable tax credit for the purchase of long-term care insurance; launching a health information technology initiative; and convening a Virginia Medicaid Payment Advisory Commission to identify provider payment rate changes that eliminate cost-shifting from Medicaid to private payers. However, the enactment of comprehensive reforms will be stalled by a state budget shortfall estimated at over $2 billion for the biennium.
WASHINGTON: The legislature reconvened its 2009-2010 session on January 11 and must deal with significant fiscal issues before recessing on March 15. Governor Chris Gregoire gave her State of the State address last week, highlighting the continuing state budget crisis. She outlined proposals on job creation, public safety, education, and government reform. In her proposals, she outlined the elimination of 78 state boards, closure or partial closure of 10 state institutions, and restructuring within the Department of Commerce.
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Holiday Health Care Poem ~ My Ode to Glenn Beck
It t’was the week before Christmas when all through the Senate, the deals were being made but THE PEOPLE weren’t in it!
Representatives were scurrying to make amends, I hope when they’re finished we don’t all need depends!
Wrapped up for Christmas would be the President’s deal.
I just wonder how a government for the people, of the people and by the people could seriously overlook… how THE PEOPLE really feel…
We’ll be reformed for the holidays, but we should look again, because most reforms don’t kick in until after 2010…
What the officials aren’t telling you is that costs and premiums aren’t one in the same, so the costs remain untamed while the insurance companies take the blame….
So for Christmas…we’ll all play this game…like a street hustler, your actions are sooo lame
Move those shells fast…and move them all around.
But remember, WE THE PEOPLE know your name when this thing goes down!
By Harvey Burnett12/22/2009
Here’s the latest:
By a 60 to 40 party-line vote, the U.S. Senate voted early Monday to limit debate on health care reform legislation, putting the bill on track for a final vote later this week. Late Friday night Majority Leader Harry Reid secured the 60th vote needed to move forward with health care when holdout Senator Ben Nelson (D-NE) was brought on board with some significant incentives, including 100 percent federal funding of Nebraska Medicaid, exemption for certain Nebraska insurers from a new insurer fee, and a compromise on abortion language. With Nelson’s vote, Reid finally felt politically comfortable to formally start the floor procedural process in order to pass the bill by Christmas. This process will be tested with three cloture votes (60 votes required to cut off debate) and a final vote on the bill later in the week. All signs indicate that the bill will be passed by the Senate by Christmas Eve, but there will be no more changes since Senator Reid has already used the rules to preclude any amendments.
Key new items in the bill include: the 10-year $6.7 billion-a-year insurance tax set to start in 2010 would now start in 2011, and it has been dramatically reduced in the early years; both the public plan option and the Medicare buy-in have been dropped and replaced with a multi-state plan option authority; some insurance rules (medical cost ratio and lifetime/annual limits) have been tightened; and the so-called repeal of McCarran-Ferguson provision has been dropped. If this bill passes the Senate as expected, there will have to be a conference with the House to resolve major differences between the two bills. Whether this conference amounts to much depends on many variables, but the chances are probably better than even that the President will get a bill to sign in the next month or two.
As a warm-up to the health care reform drama that would come later in the day, the Senate on Saturday morning agreed (88 to 10) with the House to pass the Defense Appropriations funding bill. It contains two health measures of some importance. First, the bill extends until February 28 the federal subsidy of 65 percent to pay for COBRA coverage for certain individuals who have lost their jobs. A longer extension of the subsidy (until June 30) will be debated in January. Second, the bill staves off (until February 28) the 21 percent reimbursement cut that doctors in Medicare would have faced on January 1. Doctors continue to bargain for a permanent fix to eliminate the year-to-year game of dropping scheduled cuts at the last minute.
States
ARIZONA: Governor Jan Brewer called a fifth special session of the legislature in her quest to address the state’s $1.65 billion budget deficit through the generation of additional revenue rather than continuing to cut services and government staffing. She has revived the idea that increasing taxes is the best option, although legislative support is weak. The focus remains on the state sales tax as the most viable vehicle. The proposed one-cent increase would have to be approved by voters in a statewide referendum.
CALIFORNIA: In November, CMS officials took issue with recent legislation designed to restore funding for the state’s Healthy Families Program and keep nearly 700,000 children enrolled in the program. They have suggested the plan may fail to meet certain regulatory requirements and are questioning the taxing of insurers that administer benefits for Medi-Cal, California’s Medicaid program. Rejection of this Medicaid tax could cause the legislature to seek a broader insurance-based tax to fund Healthy Families. However, CMS informed the state last week that it will not be formally reviewing the gross premiums tax. Instead, the tax arrangement can stay in place until the federal government promulgates regulations on the issue, which won’t occur until June 2011 at the earliest. With this news, the gross premiums tax on Medicaid plans can continue to draw down federal funding and support the Healthy Families Program through the next year.
COLORADO: The Division of Insurance is backing a “plain language” bill applicable to health, dental, long-term care and auto insurance policies that would become part of the unfair competition or deceptive acts statute. The bill would require carriers to report the readability scores prior to the issuance or renewal of a policy. The requirements would include a readability score not to exceed a 10th-grade level, as measured by the Flesch-Kincaid scale; a minimum font size of 12-point type for written policies; and an index or table of contents if the policy is more than three pages in length or greater than 3,000 words.
MARYLAND: Maryland Insurance Commissioner Ralph S. Tyler has announced that he will be resigning effective January 8, 2010, to accept an appointment as Chief Counsel to the Food and Drug Administration. It is not yet known who will replace Tyler, who has served as the Commissioner since 2007.
OHIO: Governor Ted Strickland last week unveiled his strategic growth plan for Ohio’s insurance industry. The plan was developed under the direction of the Ohio Department of Development’s Office of Insurance and Financial Development. Key initiatives include strengthening collaboration between the state, insurance businesses, and the university system; and creating a one-stop shop approach for workforce development issues, site selection as well as a link to state resources. The plan notes that Ohio is home to more than 250 insurance companies and 81,000 agents, and ranks seventh in the nation in insurance industry employment with 15,000 health insurance industry jobs and an additional 35,888 supporting jobs. In addition, Ohio’s health insurance plans also pay more than $200 million in taxes.
OKLAHOMA: The legislature’s State Employee Health Insurance Review Working Group has unanimously adopted recommendations from Milliman, Inc. that call for combining two state agencies into one. The recently published study recommends: combining the two current agencies (Employee Benefits Council and Oklahoma State and Education Employees Group Insurance Board) into one agency with common oversight, confidential rate information, lower overhead, and an expanded wellness program with medical management; maximizing the benefits of competitive bidding by HMOs by using a “winner takes all” approach, limiting the number of HMOs being offered (currently four), expanding coverage, requiring actuarial certifications of premiums, DOI review of all plan premiums, and a definition/clarification of ”excessive” HMO pricing; modifying the current benefit allowance to match the expected impact of HMO bidding process changes; and establishing a minimum benefit allowance of HealthChoice premium plus other core benefit premiums for state employees. This approach represents a significant change over the two-agency system, in which one agency offers a choice of multiple HMO plans that compete against the other agency’s home-grown state plan. Legislation is expected to be filed to implement these recommendations, some of which Aetna supports and some of which it does not.
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Batton down the hatches Santa may be coming to town but this one doesn’t bring gifts he seems to bring burdens:
MASSACHUSETTS: The Massachusetts Joint Health Care Financing Committee held a hearing on legislation requiring every full-and part-time college student in Massachusetts to have at least the basic level of health insurance required under the state’s 2006 health reform law. If enacted, the new law would require students to carry the minimum credible coverage to be considered insured. Universities and colleges that fail to carry out their “responsibilities” to ensure student compliance would be fined a penalty of $1 per student for every day their “failure” continues. The bill also would require the Division of Insurance to issue regulations establishing procedures for implementation and monitoring of compliance. Massachusetts’ existing individual mandate applies to students age 18 or older who pay in-state tuition rates for themselves at a Massachusetts community college, state college, or university.
MISSOURI: The pre-filing of bills for the second regular session of the Missouri 95th General Assembly began on December 1, and several new bills concern federal health care reform. Several pre-filed bills that failed to pass in the first regular session included an autism spectrum disorder mandate as well as a bill to amend the current prompt-pay statute. Both are expected to continue to be debated again in 2010. New to the Assembly are bills to pursue a constitutional amendment to prohibit compelling a patient, employer or health care provider to participate in any government- or privately run health system and to prohibit banning a person or employer from paying directly for legal health care services. Another new bill would pursue a constitutional amendment to penalize a political subdivision for participating in a health insurance option sponsored by the federal government. New also is a bill to provide premium refunds for consumers with cancelled long-term care and/or Medicare supplement policies and to make it an unfair trade practice to engage in certain practices when selling Medicare products. Aetna will continue to monitor the pre-filing of bills through the start of the next legislative session in January 2010.
NEW YORK: In a press release issued last week, Governor David Paterson is calling for the reinstatement of prior approval of insurance premium rates. The Governor introduced a bill during 2009 that would have given the Superintendent of Insurance sole authority to approve rates at his or her discretion, but that bill failed to pass. Given this latest press statement, it is expected that the Governor will ask the legislature to re-introduce his program bill for 2010. The Governor tied his support for the prior approval of rates to plans’ dividend requests. The dividend requests were $800 million from Oxford (18.7 percent of 2008 New York premiums), $200 million from Empire (2.5 percent) and $134 million from Aetna (16 percent). The state’s insurance lobby, the HPA, responded that the dividends reflect multiple years’ earnings, and the plans’ margins are in the 2 percent to 3 percent range.
OHIO: Resolutions continue to be introduced in Ohio with respect to implementation of anticipated federal health care reform. Specifically, a new resolution was recently introduced requesting all members of the General Assembly to support the public plan option as part of national health care reform. This resolution adds to other pending resolutions on health care reform, such as one supporting rights for people to enter into private contracts with health care providers for health care services and to purchase private health care coverage; and another to amend Ohio’s Constitution to prohibit a law or rule from compelling a person, employer, or health care provider to participate in a health care system. They are not expected to pass, as the legislature continues to focus mainly on budgetary matters.
OKLAHOMA: While testifying at a hearing before the House Appropriations and Budget Subcommittee, the Oklahoma State Auditor and Inspector suggested eliminating all health insurance options except for “HealthChoice” to cut $100 million in state employee benefits costs. Currently state employees can enroll in one of eight health insurance plans offered by four HMOs through the Employees Benefits Council or one of the HealthChoice plans offered by the Oklahoma State and Education Employees Group Insurance Board. Employees receive an allowance to offset the costs of the plans. According to state law, the allowance is calculated based on the average cost of the high-option health insurance plans, plus the average of the dental plan costs, plus the cost of life insurance, plus the cost of disability insurance, plus 75 percent of the dependent health costs, if applicable. Steve Burrage said the current arrangement creates a situation of “adverse selection” where healthy, younger employees purchase the less expensive health insurance policies offered by the HMOs, and less healthy, older employees buy the more expensive HealthChoice policies. However, both employees receive the same benefit allowance. In his FY2009 executive budget, Governor Brad Henry proposed adjusting the benefit allowance formula by giving the HealthChoice high-option plan a 40 percent weight. The proposed adjustment did not make it into the final budget.
WISCONSIN: Proposed legislation is circulating in the Senate that would create explicit statutory authority for the Wisconsin Office of the Commissioner of Insurance (OCI) to oversee operation of self-funded plans serving public-sector employees, resolve consumer complaints, and monitor reserve and reinsurance levels. Additionally, the bill would apply state minimum coverage requirements, such as mammograms, chiropractic care, diabetes education and care, and require a governmental body that provides a self-funded health plan to provide reports and replies to requests for information to the OCI as they relate to the plan. This bill is aimed at self-funded plans offered by cities, towns, villages, counties and school districts.
The week of December 7th 2009,
At the White House:
President Obama spoke to Democratic Senators yesterday (12/6/2009) urging them to pass health care legislation before the end of the year. Reports indicate that the President did not discuss specifics, but worked to rally support. At this time, President Obama does not have any public events related to health care this week before he departs to accept the Nobel Peace Prize in Olso, Norway.
Senate:
The Senate worked over the weekend debating and voting on amendments. Amendments required a three-fifths majority to prevail. By a vote of 56 to 42, the Senate rejected an amendment offered by Senator Blanche Lincoln (D-AR) to limit the tax deductibility of executive salaries for health insurance companies. The Senate also defeated an amendment offered by Senator John Ensign (R-NV) by a vote of 32 to 66 to limit attorney contingency fees in medical malpractice suits. The chamber will consider two pending amendments today. The first amendment, offered by Senator Mark Pryor (D-AR), requires the government to conduct a satisfaction survey on health plans offered through the exchange. The second amendment, offered by Senator Judd Gregg (R-NH), deals with the use of Medicare funds. Later today, the Senate also could take up an amendment offered by Senator Ben Nelson (D-NE) restricting funding to abortion similar to the provision in the House bill.
Moderate and liberal Democratic Senators also continued negotiations on the public option and have suggested that a deal could be reached this week. The newest public option proposal would be modeled after the Federal Employee Health Benefits Program, operated by the Office of Personnel Management, and include several not-for-profit private plans offered by private companies. While nothing has been decided, the idea has received positive feedback from Senators participating in the talks as well as key centrists such as Senator Olympia Snowe (R-ME).
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Week of November 23, 2009: Happy Thanksgiving!
Senate Majority Leader Harry Reid was able to overcome, at least for now, some significant obstacles and move a newly merged health care reform bill forward last week toward debate on the floor (see below). The merged bill, the Patient Protection and Affordable Care Act, contains some troubling provisions — such as a weak individual coverage requirement and significant new health care taxes and fees — that would likely drive up costs for those with private health care coverage. For example, health plans would be required to pay a $6.7 billion tax, beginning next year, for the next 10 years that would adversely impact premiums.
Federal
The process to begin debate of the merged health care reform bill in the Senate began when Majority Leader Reid moved to proceed to a “shell” bill and then scheduled a cloture vote for Saturday night to cut off debate on the motion. The Democratic leadership needed 60 votes on this issue, and they got just that as the Senate voted 60 to 39 on Saturday night to move forward with all four hold-outs (Lincoln (AR), Landrieu (LA), Nelson (NE) and Lieberman (CT)) voting yes. The Senate will go home for Thanksgiving and return on the 30th to start the debate in earnest. While Senator Reid and the rest of the Democrats are thrilled with the vote, they know well that the road to passage is paved with chards and potholes. This vote was the first of dozens of votes on health reform, many of which will be of the 60-vote variety, and the debate itself is expected to consume all of December and could even run into 2010. And when the Senate is done, the House and Senate have to sort out just how to get together and pass the identical bill in order to send it to the President. It must be remembered that the Senate bill to be debated after Thanksgiving is at odds with the House on several key fronts: the public plan option, and individual and employer requirements on coverage, abortion, funding sources, taxes and immigration.
Late last week the House passed (243 to 183) a bill to eliminate the year-to-year cut in Medicare payments to physicians, including elimination of the pending 2010 cut of 21 percent. The bad news is that the bill does not have a funding source, which means the cost ($210 billion over 10 years) would be added to the deficit. The Senate has already rejected this approach, and that means House Democrats will have to bargain hard to either persuade the Senate to address the House bill or to include the issue in health care reform.
States
CALIFORNIA: Insurance Commissioner Steve Poizner officially released the CA Department of Insurance’s first PPO Report Card. The Report Card will allow consumers to compare PPOs in a number of key areas such as diabetes, treating conditions in children, heart disease and others. Each PPO insurer has been given an overall grade. Aetna’s PPO plans received a 3 out of 4 star rating on the report card. In other news, California’s nonpartisan Legislative Analyst’s Office released a report projecting that California faces a $20.7 billion deficit through June 2010. This includes a $6.3 billion problem in the current fiscal year, largely because the budget approved by lawmakers and the governor contained risky assumptions that are unlikely to come to pass.
GEORGIA: Commissioner Oxendine held a meeting with representatives from the Georgia Health Plan Association, including Aetna, to discuss his 2010 legislative agenda. The Commissioner is focused on availability and affordability in the individual market and is interested in creating guaranteed-issue products for individuals that would be available to the uninsured. The GAHP agreed to form a workgroup to give input to the Commissioner.
MARYLAND: The Maryland Health Care Commission (MHCC) has adopted amendments to the eligibility requirements for small employers and their employees under the state’s Health Insurance Partnership (HIP) program. Effective October 19 under the HIP program, small businesses with 2 to 9 full-time employees that have not offered health insurance to their employees during the previous 12 months and who meet wage and salary requirements are eligible for subsidies of up to 50 percent of the cost of employee health premiums. Also, the Maryland Health Care Commission (MHCC) and the Maryland Insurance Administration adopted amendments to the state’s small employer wellness benefit regulations to require “prominent” carriers to offer a wellness benefit to a small employer for a health benefit plan offered in Maryland. The amendments also redefine “wellness benefit” to mean “a benefit that includes a bona fide wellness program and complies with regulations adopted by the Commission.”
MISSOURI: The proponents of an “any willing provider” ballot initiative have hit a stumbling block. The process has been at least temporarily delayed by the filing of a lawsuit challenging the publication of a financial impact estimate that was approved by the Secretary of the State for circulation. The suit halts the proponents’ ability to move forward until a ruling is issued regarding whether the financial estimate is accurate. The proponents have not filed or reported any funds collected or expenditures made as of the last reported deadline with the Missouri Ethics Commission. Aetna will continue to monitor the petition effort.
OHIO: On behalf of the Healthy Choices for Healthy Children Coalition, of which Aetna is a member, Senators Kevin Coughlin and Eric Kearney have introduced legislation that focuses on school-based solutions to combat childhood obesity in Ohio. The legislation would establish nutritional standards for certain foods and beverages sold in public and chartered non-public schools; require students to have periodic body mass index measurements; require daily physical activity for students and make other physical education changes; and establish the Healthy Choices for Healthy Children Council. The Healthy Choices for Healthy Children Coalition includes Ohio providers, associations and other businesses that are proponents of efforts to curb childhood obesity in the state.
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Special Update 11/19/2009
- Imposes Excise Tax on High-Cost Plans: Beginning in 2013, imposes a 40 percent excise tax on plans that exceed $23,000 for families and $8,500 for individuals [Note: The previous version set the excise tax threshold at $21,000 and $8,000, respectively.] Contributions to FSAs, HSAs, and MSAs would be included in determining the threshold for the excise tax.
- Caps Flexible Spending Accounts (FSAs): Beginning January 1, 2011, caps contributions to FSAs at $2,500 with no indexing for future inflation.
- Requires Prescription to Receive Reimbursement for Drugs Under Account-Based Plans: Beginning January 1, 2011, requires individuals to obtain a prescription for drugs, including over the counter medicines, as a requirement for reimbursement. [Note: The previous version made this provision effective on January 1, 2010.]
- Establishes Small Business Cafeteria Plans: Beginning January 1, 2011, establishes simple cafeteria plans [Note: At first read, the language appears to mirror the language in the previous version of the bill and discussed in yesterday's conference call. We will send an update should we identify any changes from the Finance Committee-approved version].
Week of November 16, 2009
The Business Roundtable released a report late last week that found key components of existing health care reform legislation could slow the growth of health care costs and offer real savings for companies and their employees. The results were immediately welcomed by the White House. Yet, the report goes on to warn that certain provisions within the legislation could actually accelerate costs. ”The report also shows that reform done wrong won’t work and could make a bad situation much worse,” said Antonio M. Perez, Chair of Business Roundtable’s Consumer Health and Retirement Initiative. Aetna, a supporter of bipartisan health care reform, has expressed similar concerns. Specifically, the report notes changes that threaten to increase health care spending include failure to implement a strong individual mandate, increases in the cost of health care to individuals from changes to consumer spending accounts, and increased cost shifting to the private sector from reduced reimbursements to providers and the public plan option.
Federal
The Democratic leadership continues to play an “inch-by-inch” game on health care reform. In the House, Speaker Pelosi is fully aware of the fact that the very bill she managed through the House would very likely not pass a second time because of the abortion issue. But she succeeded in inching the bill forward, which was the plan all along. In the Senate, Majority Leader Harry Reid continues weaving policy substance with political reality in order to create a mosaic that can inch forward to the next milestone, which is getting the 60 votes needed to allow the Senate to proceed to debate. He has yet to release the final “merged” bill; Senator Reid is going one-on-one with the Senate to sort out the combination of provisions that will allow him to get past the next hurdle. The abortion issue is the latest stumbling block, as at least one Senator is saying ”no” to proceeding without this very provision. To jump start the process, Senator Reid is using the first of myriad procedural tactics to get the bill to the Senate floor. But if Republicans stand their ground, Senator Reid probably can’t get to that next step (the “motion to proceed”) until Friday. That would leave only enough time to make a few introductory speeches and go home for Thanksgiving.
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On Thursday, the House is expected to proceed to debate and possibly pass a permanent “fix” to the perennial problem of what to do about scheduled cuts to physician reimbursement in Medicare. The House leadership wants to spend $210 billion (with no good funding source) to eliminate the upcoming 21 percent cut in 2010, along with all future cuts. The Speaker needs to make the gesture, given the AMA’s support for her health care reform bill. It is unclear whether this measure will pass in the House; however, it is clear that such a measure will have a more difficult time in the Senate. For one, the Finance Committee reform bill already contains a one-year “fix” costing $10.9 billion, which is the best Chairman Max Baucus thinks is currently possible. The Senate already tried two weeks ago to pass a permanent fix, and Senator Reid was soundly rebuffed in the effort.
States
ILLINOIS: A leader in the Senate has prefiled a bill to amend Illinois’ HIPAA law with a proposal that group and individual health insurance carriers be prohibited from imposing any pre-existing condition exclusions. Current limitations imposed by state law would be deleted. While the issue is being discussed on the federal level, this issue has had a lot of traction with both House and Senate Insurance Committee members for the past six months. As amended, the current proposal may not meet current federal HIPAA requirements. The bill will not be considered until January 2010.
MICHIGAN: The Office of Financial and Insurance Regulation (OFIR) has scheduled a hearing on November 23 to review Blue Care Network’s proposal to buy Physicians Health Plan. In late September, Blue Care Network, a Michigan nonprofit HMO, filed a statement with OFIR regarding its intention to acquire control or merge with Physicians Health Plan of Mid-Michigan-Family Care and PHPMM Insurance Company. OFIR has 90 days to review the statement. Various parties have requested that OFIR conduct public hearings before making a decision on the sale, due to concerns raised regarding the size of the Blue Cross Blue Shield of Michigan.
NEW JERSEY: The governor has directed state departments and agencies to collectively cut $400 million from the state budget due to state revenue collection falling well short of budget projections. Furthermore, the Governor requested that the legislature not pass any spending bills during the upcoming “lame duck” session. This nearly half-a-billion dollar shortfall, coupled with a projected $8 billion budget deficit for next fiscal year, puts the state in dire fiscal straits. With options limited for making up the lost revenue, businesses operating in the state will be closely monitoring this developing situation.
NEW YORK: The legislature has passed a bill that prohibits all subrogation (collateral source or third party) recoveries by an insurer for medical expenses. The former collateral source rule eliminated the potential windfall of double recoveries by plaintiffs who receive medical benefits and win recoveries from defendant payments. The old rule of law allowed insurance companies to offset potential premium increases to consumers by authorizing them to recover medical costs from payments made to an injured plaintiff from a jury award or settlement. With that option no longer available, insurance premiums in New York will be further stressed. In addition, Governor Paterson and the hospital sector are proposing that the current Patient Services Assessment (PSA) of 9.63 percent be increased by 0.25 percent to generate an additional $54 million as part of the Governor’s second Deficit Reduction plan (DRP) for 2009. The hospitals are advocating for this insurance tax increase to offset some of the governor’s proposed Medicaid cuts on hospitals. The $800 in insurance taxes adopted this year already includes an increase in the PSA, and the new proposal would make the latest increase retroactive to November 1, clearly not included in premium increases for 2010. The legislature is set to return to the Capitol for two more special session days to address the DRP.
OKLAHOMA: Two Republican State Senators are sounding the alarm bell regarding both U.S. House and Senate versions of health care reform, charging that either would devastate at least one new health care facility in Oklahoma City and cost Oklahoma County and surrounding environs more than 500 jobs. State Sen. Jim Reynolds and Sen. Harry Coates say both bills would financially devastate many top-quality health care facilities, including Oklahoma Heart Hospital’s $98 million South Campus, which is set to open soon. The bills would financially undermine the facility by denying the facility federal reimbursement for services such as Medicare and Medicaid. A joint venture of Mercy Hospital, Midwest City Regional and a group of local physicians, the facility will serve much of southeast Oklahoma County along with hundreds of active-duty military and veterans. Both Sen. Coates and Sen. Reynolds say they will ask Gov. Brad Henry to intercede quickly to remove the onerous provisions.
UTAH: The Department of Insurance is circulating a draft bill to amend the state’s uniform electronic standards law to require insurers to provide coverage eligibility and detailed coordination of benefits information to physicians. Aetna will be submitting comments, including the fact that an insurer is not the repository of each member’s applicable insurance coverage information and that a July 1, 2010, effective date does not allow sufficient time for implementation.
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House approves its version of health reform bill
Late Saturday night (11/7/09) the House of Representatives approved its version of health care reform by the slim margin of 220 to 215 (218 was the minimum needed). The core of the approved House bill remained unchanged from the version the Speaker introduced a few weeks ago and includes: an employer mandate to provide and pay for coverage; a fairly strong individual coverage requirement; a public plan option set up by government that would pay ”negotiated” rates to providers; and insurance reforms, including guaranteed issue and modified community rating. It does not include the ”Cadillac” plan tax or the insurer tax provisions currently in the Senate bill. The House bill would be paid for in part with cuts to Medicare Advantage, Medicare overall and a surcharge on the “wealthy.”
Some highlights from the bill include:
- By a vote of 240 to 194, the House approved an amendment by Reps. Bart Stupak (D-MI) and Joseph Pitts (R-PA) addressing coverage of abortion services. This amendment would prohibit federal funds from being used to pay for abortion services under the government-run plan, and it would prohibit the affordability credits from being used to pay for plans that cover abortion services. Individuals would be permitted to use their own funds to purchase supplemental coverage for abortion services.
- By a vote of 258 to 176, the House defeated the Republican substitute amendment, which included provisions addressing the following topics: federal funding for state high risk pools and reinsurance programs to cover persons with pre-existing conditions; a nationwide marketplace for individual health insurance; improvements to HSAs; association health plans; independent review and new restrictions on health plan rescissions; administrative simplifications; medical liability reforms; FDA approval of generic biologics; and repeal of the Federal Coordinating Council for Comparative Effectiveness Research.
- By a vote of 247 to 187, the House defeated a motion to recommit the bill to the committees of jurisdiction with instructions to amend the bill to include medical liability reforms and to protect seniors from Medicare Advantage funding cuts. This motion was offered by House Republican Whip Eric Cantor (R-VA).
Now that the House has passed its bill, all eyes will be focused on the Senate. The schedule for the Senate floor debate is highly uncertain, as senators are still waiting for Congressional Budget Office (CBO) to complete its scoring of the bill it received from Senate Majority Leader Harry Reid (D-NV) early last week. The Senate is scheduled to be in session just two days this week, Monday and Tuesday, before leaving for the Veterans Day recess. If CBO sends a score to Leader Reid next week, the Senate floor debate potentially could begin during the week of November 16. However, there also is a possibility that the Senate debate may not begin until after Thanksgiving.
Once the Senate acts, then the House and Senate go to a Conference Committee to reconcile the two bills before each has to pass the final bill again. Then – the President gets a bill to sign. All these actions may push us into early next year given the Congressional calendar and the issues remaining to be resolved.
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Dunamis Observation:
There are 2 things that we are concerned about primarily regarding this reform. First mandatory health care for all Americans could bankrupt or place a burden on those families which may be required to secure a plan under the reform. To require health care similar to requiring insurance on an automobile is not a wise thing or in the best interest of those currently uninsured unless there is a way made for them to receive coverage. MNost uninsured individuals are uninsured for finanical reason primarily and health reasons secondarily. This shifts a burden onto the backs of the group that this reform is targeting to help.
That leads to point two. Eliminating pre-existing illness clauses from individual insurance plans is a sure fire way to bankrupt the companies especially when it is combined with the first observation regarding mandatory insurance. under this construct the fall back is BOUND to be on the Government and ultimately the tax-payer. This is a dangerous brew and conctail that is cooking no matter how it’s looked at. The idea behind reform would be to make a more competitive landscape, what will actually happen is that businesses will exit the market making it less diverse and less competitive allowing only the largest and most well connected companies to thrive almost like an induced form of corporate selection which could ultimately also violate anti-trust laws if we’re not careful.
WE remain skeptical
Dunamis represents Aetna as one of it’s carriers. Call or email dunamis1@netzero.com for a quote.
The Senate last week barely moved forward on health care reform. Although the Senate focused on health care issues the entire week, there were no votes past Tuesday and the key amendment of the week (reimportation of cheaper drugs from Canada and overseas) is in limbo though the amendment clearly has majority support. Off the floor the action is more intense and meaningful. Earlier in the week Majority Leader Harry Reid announced a “deal” on the public plan. As it turned out the deal was among 10 Democrats only, and no details of any consequence were released. Reid himself was closed-mouthed claiming everyone had to wait until the CBO had a chance to “score” this newest iteration of health reform. The deal is in three parts: 1) use of the Federal Employee Health Benefit Plan model in which a federal agency would administer a national plan with private carriers in the mix; 2) triggering a true public plan if too few carriers participate in this national plan; and 3) allowing seniors 55 to 64 years old to buy in to Medicare. Even before the CBO score is back we already know that Senator Joseph Lieberman (D-CT) is opposed to the Medicare piece alone, if not the rest, and would filibuster the overall bill; Senator Ben Nelson (D-NE) is not far behind. And, if the score is bad and turns away additional moderate Democrats, Reid may have to go back to the drawing board for yet another twist to the never-ending saga of health care reform.
