I have decided to place the most recent news at the beginning and the oldest news at the end of the segment. One of the most hotly debated undertakings of the American Gov’t is about to occur.
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.
