Health Care Costs Increase 7.3 Percent In 1 Year

Tuesday, May 17th, 2011

Last week, Milliman released its annual Milliman Medical Index, and it shows that the average American family’s medical costs have doubled in less than nine years and increased 7.3 percent from 2010 to 2011. The results also show that hospital spending, which accounts for 48 percent of total health care spending, accounts for more than 60 percent of this year’s total increase. And, outpatient facility costs increased more than any other component. The medical index illustrates the complexity of the health care cost problem, while legislative remedies to date have focused principally on health plan rate review processes and medical loss ratio restrictions.

Interestingly, a new Yahoo Finance analysis of quarterly financial data shows that the health plan sector of the health care system ranked only 143rd out 215 in terms of profit margin.

Federal

In yet another political statement, a Republican-controlled House Committee last week approved legislation to repeal the maintenance of effort (MOE) requirements for the state Medicaid and CHIP programs. The requirements, which prohibit states from reducing Medicaid eligibility for adults until 2014 and for children until 2019, were passed as part of the Affordable Care Act (ACA) and the federal stimulus bill.  Republicans view the MOE provision as one more example of big government telling the states what to do for yet another entitlement program.  Repealing the provision would reduce Medicaid/CHIP enrollment and save $2.1 billion over 10 years, but it will likely not become law given the Democratic Senate and White House. Its only chance of adoption would be as part of a really big compromise deal on the budget and deficit later this year.

States

CONNECTICUT: State legislators plan to pass a consensus bill creating a Connecticut Health Insurance Exchange by the end of session on June 8. Three exchange bills have cleared committees and differ largely in the make up of their boards.  The Administration supports SB 921 which creates a governance framework for the Exchange, establishing a quasi-public authority with a 13 member board that includes industry representation. The board is charged with making recommendations to the Governor and legislature on Exchange policy issues by January 1, 2012.

The rate review bill is still active and if enacted would: require a lengthy notice timeline for proposed increase, and a public hearing for any increase over 10%; authorize the Healthcare Advocate and the Attorney General to be parties to any hearing; define “excessive” to include consideration of such factors as commissions, transfer of funds to holding or parent company, the rate of return on assets or profitability compared to similar filers, and a “reasonable” profit margin.  Due to the $2.3M annual cost to the state, it does not currently have the support of the Administration. However, a negotiated bill is likely to pass this session.

INDIANA: The legislature has adjourned, and its accomplishments this session include passing a bill that makes changes to eligibility levels in the Medicaid program and ACA-conforming Indiana health insurance law — including coverage of children to age 26, grievances, and rescissions.  The new law also prohibits any requirement that any state resident purchase coverage under a health plan, but it allows residents to delegate to their employers the authority to purchase or decline to purchase coverage under a health plan. The legislature also passed legislation that requires insurance reimbursement for certain services provided by a licensed athletic trainer under the athletic trainer’s scope of practice.  The law also prohibits an insurer from requesting a substitution of a treatment (drug, device or therapy) from an insured’s physician or contacting an insured concerning certain substitutions. The legislature also passed changes to the School Corporation Health Insurance Act that specify new requirements and recommendations for school corporation employee health insurance coverage programs.

KANSAS: The legislature adjourned last week after the Senate approved a budget late Thursday night and the House followed suit in the early hours of Friday morning. The two chambers also agreed to blend 12 health-related bills into a single measure, House Bill 2182. Of interest to Aetna and its customers, the new bill includes a statutory version of the Health Care Freedom Act, which states that no person, provider or employer can be forced to participate in any health care system or to purchase Kansas health insurance. Other provisions would require pharmacy auditors to give advance notice, adopt a (still unfunded) Health Information Technology Act, require changes to the DOI internal and external review procedures (consistent with ACA), require an increase in the high-risk pool’s cap and the addition of children as participants, and prohibit abortion coverage with a separate coverage rider.

MAINE: The Senate voted 24-10 to approve the Individual and Small Group Market Reform bill with several amendments. The bill now goes to the House for concurrence and possibly further amendments. The amended version would:

Expands and alters community rating bands over five years, allowing insurance policies to be more accurately priced according to various risk factors “to the extent permitted by the federal Affordable Care Act” (in amended version);
Establishes a reinsurance program for high cost individuals using existing funding sources, ACA funds as permitted, and a covered lives assessment (capped at $4 for the pool, and $2 for the pool’s net losses, if any, in the amended version);
Allows individuals to purchase insurance in four other states (NH, RI, CT and MA);
Conforms state loss ratios to federal standards;
Repeals the standardized State Health Plan;
Loosens the geographic access standards by allowing insurers to offer incentives to members to use providers based on cost and quality;
Provides a wellness tax credit for employers with 20 or fewer employees;
Permits the creation of captive health insurance associations, and allows smaller businesses (up to 50 employees) to band together purchase insurance.

NEW JERSEY: The legislative proposal put forth by Governor Chris Christie and Senate President Stephen Sweeney to change employee benefits by legislation rather than through collective bargaining continues to get a very cool reception in the Democratic-controlled legislature. The lack of support for the Senate President’s legislation by members of his own party severely limits the bill’s chances of success, given the Democrats’ advantage in both chambers. Reform of public sector health benefits is directly tied to the pending budget, so a resolution is anticipated by early June.

In other legislative news, the Senate advanced legislation to avert an anticipated $300 per employee unemployment insurance tax on employers. This employer tax would be triggered this summer due to the insolvency of the state Unemployment Insurance Fund.  The bill making its way through the legislature would incrementally increase the tax over three years to lessen the immediate financial impact on employers. Also, Commissioner Tom Considine, Department of Banking & Insurance (DOBI), last week expressed the Department’s continuing concern over the implementation of ACA.  He specifically cited the timeline for establishing a state health insurance exchange as a concern.

NEW YORK:  The Senate Insurance Committee and the Senate Banking Committee Chairs each announced that their committees will be considering the nomination of Governor Cuomo’s Chief of Staff Ben Lawsky to be the Superintendent of the newly merged entity for Banking and Insurance to be known as the Department of Financial Services. Prior to joining the Cuomo Administration, Lawsky was a federal prosecutor and special assistant in then-Attorney General Cuomo’s office. He is also a former judiciary counsel to Senator Chuck Schumer. Mr. Lawsky is expected to be confirmed by both Committees. The merged entity would then have a separate Deputy Superintendent for Banking and one for Insurance serving under Lawsky. Those would be appointed positions and do not require Senate confirmation.

With only 16 session days left, there is speculation that the state will not pass enabling legislation for a health insurance exchange. New York can apply for a five-year grant under ACA to create an exchange but only if it has passed key state legislation. Setting up the exchange will be expensive, which is why consumer advocacy groups want New York to be able to access the federal grant money. According to an April 20 state document on planning the exchange, New York anticipates spending at least $52.7 million on planning the exchange between fiscal years 2011 and 2014. The state received a $27.4 million federal Early Innovator Grant award and anticipates receipt of at least another $11.7 million through enhanced federal Medicaid matching funds. The Department of Insurance (DOI) announced it will hold a series of public forums throughout the state in the next two weeks to allow New Yorkers to present their ideas on the design of an exchange.

NORTH CAROLINA: A North Carolina health insurance exchange bill has been accepted and found favorable by first the House Insurance Committee and then the House Appropriations Committee. Committee changes include adding another board member. The bill now also would prohibit the Exchange Authority from imposing penalties and other fees on individuals who cancel enrollment because they become eligible for other coverage options.

OKLAHOMA: The Department of Insurance’s newly created Oklahoma health insurance Exchange Workgroups on Enrollment/Eligibility and Funding both met last week. The Funding group discussed sustainability models and recommendations, as well as the NAIC White Papers on exchange funding. Aetna presented feedback, specifically noting that funding for insurance exchanges should not be limited to insurance assessments and instead should be as broad-based as possible. Exchanges should evaluate all available funding sources to support continuing administrative and operational expenses, including available grants, fees, assessments and taxes. The groups also discussed pending legislation that would create the framework for an exchange, which is still making its way through the legislative process. The session is scheduled to adjourn by May 27, and many now assume an exchange will not be created legislatively until the next legislative session in the spring of 2012.

PENNSYLVANIA: The Senate has unanimously confirmed Governor Tom Corbett’s nomination of Michael Consedine for the post of Pennsylvania health Insurance Commissioner. The vote followed the Senate Banking and Insurance Committee’s unanimous approval of the nomination.  Consedine, who has headed the Insurance Department as Acting Insurance Commissioner since January, previously served as a partner at the law firm of Saul Ewing, where he was Vice Chair of its Insurance Practice Group.  Prior to joining Saul Ewing 12 years ago, Commissioner Consedine served as Insurance Department Counsel.

TEXAS: The House of Representatives gave final approval last week to legislation that extends the life of the Texas Department of Insurance and sets tighter guidelines for the review of rate increases. One key amendment is a page of language that would provide the state some flexibility to proceed on planning for a Texas health insurance exchange. The measure was amended during debate to allow 3-Share programs to be considered qualified health plans even though ACA does not appear to allow for that. The bill now moves to the Senate for Committee debate and floor approval prior to the scheduled adjournment date of May 30.

Governor Rick Perry signed legislation last week that the state’s largest physician organization promoted as a bill that will help rural communities recruit physicians. Sponsored by Sen. Robert Duncan and by Rep. Garnet Coleman in the House, the bill was approved in the House last week and was then signed almost immediately by Governor Perry. The new law will allow critical access hospitals, sole community hospitals, and hospitals in counties of 50,000 or fewer to employ physicians. Most of these hospitals are run by local governments. Texas is one of the first states to statutorily pass clinical protections for physicians who choose employment.

WASHINGTON: Governor Chris Gregoire signed the Health Benefit Exchange bill creating the exchange as a public-private partnership, with operations set to begin in January 2014. The exchange governing board will include nine members recommended by each legislative caucus and appointed by the Governor. Board members will include those with actuarial expertise and representatives of small business, consumer advocacy and identified areas of the health care system. Health insurer representation is not excluded nor specifically required but would be included on a technical advisory committee.

The new law requires the Washington Health Care Authority and the Legislative Joint Select Committee on Health Reform Implementation to apply for federal grants, develop an operational budget, and devise a plan to achieve financial sustainability by 2015.  A work plan and report on operational considerations are both required, addressing topics such as the role of the exchange in aggregating funds, whether to implement a basic health plan option, whether to merge risk pools, certification of and standards for participating plans, and implementation of effective risk management methods.

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Health Insurance Exchange & Reform Updates

Wednesday, May 4th, 2011

Congress returns from a two-week recess Monday, and the federal budget is again expected to quickly become the focus of attention. Just prior to recess, the House passed a budget resolution that proposes to cut the deficit with significant changes to Medicare and Medicare. The latter would essentially be transformed into a voucher program, and some members of the House have gotten an earful from constituents about the proposal during the break. President Obama has come up with his own deficit-reduction proposal, but critics say it does not go far enough. Congress can also look forward to a heated debate over raising the debt ceiling. Some are hoping the so-called “gang of six” will provide a bipartisan answer to deficit reduction, but overcoming the deep political divide within Congress remains a steep uphill climb.

Federal

With Congress on recess last week, there is no Federal report for this week.

States

ARIZONA: Governor Jan Brewer has vetoed a bill that would have authorized cross-border sales of Arizona health insurance in the state. In the weeks since the bill passed out of the legislature, her office was bombarded by both opponents and proponents of the bill, including state Senator Nancy Barto, the bill sponsor and chairman of the Banking and Insurance Committee, whose op-ed on the legislation ran in the Arizona Republic last week. While acknowledging the need for a competitive and vigorous insurance market in Arizona, the governor cited two reasons for the veto: First, a concern that the Department of Insurance would have limited jurisdiction over foreign carriers, potentially putting the state’s citizens at risk; and second, discomfort over the fact that foreign insurers would be able to sell policies free of the mandated benefits legislators had determined should be afforded to consumers.

CALIFORNIA: The Assembly’s Health Committee voted 12-7, along party lines, to approve Assembly Member Mike Feuer’s bill that would allow state officials to reject California health insurance rate hikes deemed “excessive” in the individual, small or large group business segments. The measure would allow state regulators to deny, approve or modify proposed increases in health insurance premiums, deductibles or copayments. In addition, the bill would allow any consumer to intervene in a regulator’s decision by filing a civil lawsuit.  Intervener fees would be paid by the insurer submitting the rate increase proposal. The bill secured the 12 votes it needed to move out of the health committee and will be debated by the full Assembly before the end of June. Similar legislation passed the Assembly last year but was defeated in the Senate. Hospitals, physician groups and business organizations have joined health insurers in opposing the bill.

COLORADO:  After a rocky start, the Colorado health insurance exchange bill passed the Senate by a vote along party lines. It is now in the Republican-controlled House where it has yet to be placed on the hearing calendar. House co-sponsor Amy Stephens is expected to seek non-substantive amendments aimed at reframing the legislative declaration portion of the bill. Rep. Stephens has publically stated her support of an exchange mechanism in the absence of a federal requirement. The goal of the amendments is to provide her with some political cover in the face of expected opposition by fellow Republicans, and the Tea Party in particular, who are opposed to any federal health reform implementation. Also, after circulating late-in-the-session drafts of legislation to bring state law into conformity with the ACA concerning preventive care and adverse determinations and appeals, the Division of Insurance has decided not to file the bills.

CONNECTICUT: Under a legislative agreement with Governor Dannel Malloy announced last week, the Connecticut health insurance SustiNet bill is going to be amended from a broad public option to a more limited version of the Connecticut Healthcare Partnership pooling bill. The compromise removes two pieces of the SustiNet proposal: opening the state employee pool to small businesses and individuals, and offering state-run insurance to the public (the public option). The compromise bill would allow municipalities and nonprofits to enter the state employee plan but not small business or individuals. It also would create a new SustiNet board that would serve in an advisory capacity to the governor on health reform efforts in the state. SustiNet supporters last week held a rally to try to revive their original bill. But the governor is unlikely to agree to a public option, given its very significant costs to the state. When the SustiNet concept was created, federal health reform had not yet passed.  Now that it has, the governor is looking toward ACA as a way to increase access to health care affordably.

MAINE: The Republican Chairs of the Insurance Committee have introduced sweeping health care reform legislation designed to increase consumer options by attracting more carriers to the state and allowing more flexibility in products. The bill would expand rating bands in the small group and individual markets, repeal the geographic access provision that requires plans to contract with virtually every provider in the state, repeal the rule mandating certain standardized benefit plans, return to a file-and-use rate review process, allow captive insurers in Maine, allow cross-border selling in Maine, and create an Individual market reinsurance mechanism to be known as the “Maine Guaranteed Access Plan.” The new reinsurance fund would levy an assessment on all covered lives to fund a portion of the premiums for high-cost claimants. The new assessment would be capped at $4 per covered life. The bill was voted “Ought to Pass” out of the Insurance Committee along party lines.

MONTANA:  Both legislative chambers passed a joint resolution that calls for an interim study on establishing a health insurance exchange. Citing the wide ranging potential implications of not creating an exchange, the resolution requests a legislative council to direct an interim joint committee to consider the feasibility of creating an exchange or participating in a regional exchange. Issues for study include: options being considered in other states; variations on exchange functions; the scope of services to be offered by the exchange; potential for an exchange to facilitate cross-border sales; impact of including an application for a Medicaid waiver to allow premium assistance inside the exchange; whether the exchange should define levels of contributions and plan criteria; feasibility of premium aggregation; and interactions with producers and effect on compensation.  The interim committee would also be charged with studying potential cost savings and the provisions that would be needed to neutralize the cost of state employees participating in the exchange. Following the study,    recommendations will be made to the legislature regarding whether the state should proceed with establishing its own exchange or joining a multi-state exchange.  Stakeholders, including health insurer representatives, will be included in the deliberations.

NEVADA: A bill that would create the Silver State Nevada Health Insurance Exchange has been referred to the Commerce, Labor and Energy Committee but is not yet scheduled for its first hearing. Concurrently, Commissioner Brett Barratt continues to host stakeholder informational meetings across the state. The vast majority of the attendees at the five meetings held to date have been brokers. On another ACA issue, the state was advised that its application for a one-year medical loss ratio (MLR) waiver has been deemed “complete” by HHS. In other business, the Speaker’s rate review bill has passed in the House and is now in the Senate. In its current form, the bill would require prior approval of rates and forms with a 30-day deemer; transparency with completed filings published on the DOI website and all of a carrier’s policies, certificates of coverage and medical loss ratio data published on its own website; public hearings at the request of consumers or insurers; and the establishment of a Consumer Advocate position to represent the public.

NEW YORK: Senate Insurance Chair Jim Seward and Senate Health Chair Kemp Hannon held a roundtable discussion on insurance exchanges last week. About 10 representatives of stakeholder organizations invited to participate and generally urged caution and called for maintaining consumer choice, not creating a new regulatory bureaucracy, including all state mandates, and not incurring additional regulatory burdens and duplications of authority.  The Senate is expected to introduce a fairly lean exchange bill, with the goal of creating a governance framework for 2011. This could take the form of a public benefit corporation or a quasi-public authority, but not a new agency or nonprofit corporation.

NORTH DAKOTA:  The legislature has passed an insurance exchange bill that is expected to be signed by Governor Jack Dalrymple.  This would be the first exchange bill to be passed by a Republican legislature and signed by a Republican governor. The purpose of the bill is to establish a framework for developing more specific policy positions and eventually an implementation plan for the exchange in North Dakota.

OKLAHOMA: A Senate bill that would create an Oklahoma health insurance exchange was filed last week shortly after Oklahoma’s Governor, Speaker of the House and President of the Senate announced an agreement to move forward on the issue. The bill would create the Health Insurance Private Enterprise Network, which would fulfill the stated purposes and functions of a federal exchange under ACA. The bill is short on details but would create a seven-member Board of Directors, including three   gubernatorial appointees (one representing carriers, one representing employers, and one representing providers). The board would also include a consumer representative (appointed by the Speaker of the House, an agent/broker (appointed by the Senate Pro Tem), the Insurance Commissioner (who also serves as Chair), and the Secretary of HHS. The Board will also appoint an executive director. The bill would require as-yet unspecified “public and private funding”, not to include the $54 million early innovator grant from the federal government. The stated goals of the Network are to promote/encourage portability of coverage; promote a competitive, market-based system that includes an aggregate premium system/defined-contribution insurance alternative; encourage carriers and providers to work together to provide quality, cost effective care; and establish a fair and impartial producer referral network for individuals and small employers. The Network would not have regulatory authority, discriminate against any qualified plan, or replace the outside market. Proponents of the bill will attempt passage before the legislature adjourns May 27.

TEXAS:  The Senate unanimously approved Sen. Jane Nelson’s bill to find extensive cost savings in Texas health insurance Medicaid program, the primary health care provider for children, the disabled and the very poor. The measure would expand Medicaid managed care into South Texas, where it has long been carved out. The move is expected to save the state $290 million over the biennium. Pulling prescription drug sales into the managed care program, the changes would require most Medicaid patients to use medicines on a state preferred drug list at a projected savings of $51 million a biennium. And, it would ensure people with disabilities receiving attendant care services at home are using a Medicaid contractor, saving an estimated $28 million a biennium. The measure also directs the comptroller to continue to collect a $5 per-person fee on patrons of strip clubs — a proposal that’s been tied up in court — until a final legal judgment has been reached. The projected cost savings have already been worked into the budget proposal Senate lawmakers are trying to bring to a vote.

VERMONT: The Senate voted 21-9 to approve an amended version of the single-payer legislation that previously passed the House on March 24. The bill will now go to a conference committee. As passed by the House, the bill would establish an exchange by 2014 that would eventually become the foundation for a single-payer system. The single-payer system, Green Mountain Care, would begin in 2017, the year when the ACA allows states to request waivers to opt out of certain requirements as long as an alternative approach would achieve the same coverage goals. The bill would permit earlier implementation of the system, upon receipt of federal approval. Other provisions include new rate review requirements. For rate increases that cumulatively would be 5 percent or greater during the plan year, health insurers would be required to submit a summary that includes a brief justification of requested rate increases, additional information for rate increases of over 10 percent, and any other information required by the insurance commissioner. Senate amendments, however, include a series of requirements that would have to be met before the Green Mountain System can be established, including a demonstration that the system would slow the growth of medical costs. Governor Peter Shumlin has indicated that he will sign either form of the legislation.

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States Resisting Health Insurance Overhaul

Wednesday, April 20th, 2011

ARIZONA:

A bill that would require Arizona health insurance carriers to provide written claim reports to plan sponsors up to twice a year, upon request, has been favorably amended in the House to make compliance less onerous. Modeled after a Texas law enacted in 2007, the bill originally required the reports to be provided within 30 days of a request. The type of information that can be requested includes aggregate claims and premium by month, the number of employees covered and pending claims.

Republican-sponsored legislation that would permit cross-border sales of individual health insurance remains in play despite strong opposition by the business community and consumer advocates. The bill would require that out-of-state insurers be subject to the jurisdiction of another state’s department of insurance; maintain reserves not less than the amount required in Arizona; register with the Arizona Department of Insurance (DOI); and that the coverage offered meet, at a minimum, the benefit requirements of the state where the company holds a certificate. The DOI would have authority to revoke the foreign insurer’s registration for reasons that include: inadequate reserves; failure to comply with the unfair practices and fraud statute; and violation of the prompt-pay law. The bill was amended in the House and now goes back to the Senate.

COLORADO:

As the deadline for filing legislation approaches, the Division of Colorado health Insurance released drafts of two bills aimed at bringing the state’s preventive coverage and adverse determination appeal requirements into conformity with the federal health reform law. Health insurers will have a small window of opportunity to provide comments before the bills are formally introduced. Also, a bill was filed to reclassify any product containing pseudoephedrine or ephedrine as a prescription drug to help prevent access to the drug by people illegally manufacturing methamphetamines. The bill has raised strong concerns because it would require a prescription for frequently used allergy medicines and drastically increase medical costs. The sponsor has introduced a joint memorial to Congress requesting the federal government address the issue.

CONNECTICUT:

The fiscal note for the Connecticut health insurance Healthcare Partnership bill, which would allow voluntary municipal and small employer pooling with the state employees’ health plan, has been released and indicates the legislation would be costly to the State. Known costs (those concerning the administration of the program) would be hundreds of thousands of dollars. Other costs that could not be precisely determined include those associated with the public option (similar to the SustiNet legislation but on a much smaller scale) and lost tax revenue from the premium tax.

In other action, the Judiciary Committee passed the Cooperative Health Care Agreements bill out of committee. The legislation would permit health care providers to enter into cooperative arrangements that would not be subject to certain antitrust laws, after approval by the Attorney General. In past years, health insurance plans have successfully argued against action on the bill despite support from the committee’s membership, including both Democrats and Republicans. However, this year the new Chairs have brought the bill forward for a vote. It will now go to the House floor where it will assessed for a fiscal note. The bill still has a long road to travel, including through the Insurance Committee.

FLORIDA and GEORGIA:

The Florida Office of Insurance Regulation and Georgia Department of Insurance have both asked health plans for additional information to help support their requests to HHS for a waiver from MLR regulations under ACA. The requests were prompted by an initial response from HHS asking for the additional information.

GEORGIA:

A bill that includes a prompt-pay provision that would
require third-party administrators to pay for service claims in the same timely fashion as primary insurers, or face penalties, has been passed by both chambers. The bill is opposed by the Georgia Chamber of Commerce, as it would erode current employer protections under the federal Employee Retirement Security Income Act (ERISA). The Georgia Chamber will ask Governor Deal to veto this legislation.

MARYLAND:

Governor Martin O’Malley signed several bills into law last week that will impact Aetna insurance and its customers. The Health Benefit Exchange Act of 2011 establishes the Maryland Health Benefit Exchange as a public corporation and an independent unit of state government. The law sets the purposes, powers and duties of the insurance exchange, establishing the Board of Trustees and providing for the qualifications, appointments, terms, and removal of members of the Board. It requires the board to appoint an executive director of the Maryland health insurance exchange, with the approval of the Governor, and determine the executive director’s compensation. The effective date is June 1, 2011. Another law alters the circumstances under which a person has the right to a hearing and to an appeal from an action of the Maryland Insurance Commissioner. The law provides that provisions of federal law apply to specified health insurance coverage issued or delivered by insurers, non-profit health service plans, and HMOs; authorizing the Commissioner to enforce specified provisions of law. The effective date is July 1, 2011.

MICHIGAN:

Newly elected Governor Rick Snyder continues to push for a 1 percent tax on all Michigan health insurance claims, which would require insurers and third-party administrators to pay $400 million in order to generate $1.2 billion in revenue for Medicaid. The tax would replace the existing 6 percent tax on all products among the 14 Medicaid HMOs. The $400 million tax would trigger $800 million in matching funds from the federal government, thereby generating $1.2 billion in total. Should the tax be passed, the Governor promised no cuts to Medicaid reimbursement rates, services or eligibility. The claims tax is the same type being phased out in Maine that was used to fund the Dirigo Health Plan.

MISSOURI:

The attorney general, a Democrat, broke with his party last week and urged a federal judge to invalidate the central provision of the new Missouri health insurance law. The filing of the brief by Attorney General Chris Koster, a onetime Republican state legislator who switched parties in 2007, underscores ACA’s political tenuousness in a critical Midwestern swing state. Koster’s action followed months of pressure from state Republicans that he join attorneys general from other states who are challenging the constitutionality of the law. Instead, Mr. Koster chose to file a “friend of the court” brief in the U.S. Court of Appeals for the 11th Circuit. In Missouri, a ballot referendum aimed at nullifying the law was approved by nearly three to one last year, and the legislature recently passed resolutions urging Koster to join the legal challenges. In a letter to the Republican leaders of the legislature announcing his decision to oppose the law, Koster acknowledged that the legislative resolutions, though nonbinding, were impactful as they give voice to the political will of state residents. His central argument echoed those made by plaintiffs in a number of the lawsuits.

NORTH CAROLINA:

Legislation was introduced last week prohibiting most favored nation clauses in North Carolina health insurance contracts. The Insurance Committee in the House has already held one hearing on the bill.

OKLAHOMA:

Governor Mary Fallin last week joined other state leaders in announcing that Oklahoma will establish an Oklahoma Health Insurance Private Enterprise Network to prevent the establishment of a federal health care exchange in Oklahoma. To address concerns expressed by some, state leaders added specific safeguards into legislation to prevent the implementation of a federal health care exchange, while creating an Oklahoma-based health insurance network.  The Health Insurance Private Enterprise Network, based on a concept by the conservative Heritage Foundation and legislation passed by the legislature in 2009, would increase access to portable, private, affordable health insurance plans through a market-based network featuring competition and offering choice to consumers. The network would be governed by a board made up mostly of private sector members and chaired by the Insurance Commissioner.  The network would be funded through state or private resources. The state will not accept the federal $54 million Early Innovator Grant. The legislation is expected to be amended onto a pending bill and make its way through the legislative process. which is scheduled to end May 27, 2011.

TEXAS:

A bill designed to squeeze savings out of social programs won unanimous approval from a Senate budget subpanel last week. The bill includes about 10 ideas for greater economies – primarily in Medicaid but some in food stamps and the Children’s Texas Health Insurance Program. The biggest single savings — $290 million over the next two years — would come from eliminating a South Texas “island” of fee-for-service payments under Medicaid. Since 2003, Cameron, Hidalgo and Maverick counties have been exempt from the managed care trend at work elsewhere in Texas. The bill also would save $51 million by carving prescription drugs into Texas Medicaid managed care programs and requiring most Medicaid patients to use medicines on a state preferred drug list; save $15.9 million by moving children from the State Kids Insurance Program to the Children’s Health Insurance Program; and save $28 million by requiring Texans with disabilities who receive in-home attendant care services to use a Medicaid state program first at a lower cost to the state. The measure now heads to the full Senate Finance Committee, which is crafting its version of the much-reduced budget for 2012-13.

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Posted in HHS, MLR, aetna health insurance, affordable health insurance, arizona health insurance, colorado health insurance, connecticut health insurance, florida health insurance, georgia health insurance, health care overhaul, health insurance exchange, health insurance plans, individual health insurance, maryland health insurance, michigan health insurance, missouri health insurance, north carolina health insurance, oklahoma health insurance, texas health insurance | No Comments »

Health Care Overhaul & Deficit Reductions

Wednesday, April 20th, 2011

Just one week after House Republicans unveiled their deficit-reduction plan, President Obama last week unveiled his own plan for cutting $4 trillion from the federal budget deficit. The two plans propose much different routes to deficit reduction, and among the differences likely to draw the most attention in the upcoming campaign season are how each would cut Medicare and Medicaid costs. The President’s framework would largely preserve Medicare and Medicaid in their existing forms while the Republican plan would essentially convert Medicare into a voucher program and Medicaid into a block grant program giving states a lot more latitude to make changes in benefits. President Obama says his more modest changes and other measures would save $290 billion in medical spending, though critics have charged it may not be possible to clamp down significantly on health care spending without broader changes.

Democrats in the Senate last week defeated legislation approved by the Republican-led House, in largely symbolic fashion, to bar spending government funds on the health-care overhaul law. The House had voted to deny funding for the Affordable Care Act (ACA), but the Senate rejected the measure 53-47 on a straight party-line vote. The votes in both chambers were held last week just days after an 11th hour budget agreement was reached preventing a government shutdown and continuing the financing of government operations through the end of the 2011 fiscal year. The separate budget measure cleared both chambers. The outcome of the de-funding vote was never in doubt, but Republicans pursued the effort as a nod to voters who overwhelmingly elected Republicans to Congress last fall and to force Democrats to be on the record as supporting ACA. The House in January passed a measure to repeal the health care reform law, but that measure failed to advance as well in the Senate. Also, the House on Friday approved, largely along party lines, a budget resolution that proposes $5.8 trillion in spending reductions over the next 10 years (relative to current law). This was the last major issue on the legislative agenda before Congress recessed for a two-week Easter/Passover break that is scheduled to run through May 1.

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Health Insurance Reform State Changes April

Wednesday, April 13th, 2011

Governor Jan Brewer has signed a state budget that includes $1.1 billion in spending cuts and the elimination of programs that Democratic legislators say will have a disproportionate impact on the poor and children of the state. The budget eliminates $385 million from the Arizona Health Insurance Cost Containment System (Medicaid), effectively rolling back the coverage expansion to childless adults that voters approved in 2000. A legal challenge is expected by some because the program changes were not put to a public vote.

A medical loss ratio (MLR) bill sponsored by the California Health Insurance Commissioner was unveiled last week. In short, the legislation would require health insurers to comply with the federal minimum MLR standards and provide an annual rebate to insureds if the amount expended by the issuer on medical-related costs is less than a certain percentage of total revenue. It appears that the author’s intent is to exceed the requirements outlined in ACA and HHS regulations in three possible ways; 1) Federal regulation sets the process and requirements for rebates to consumers, if necessary, but the new bill could permit the state to modify those requirements; 2) the legislation fails to take into account MLR waivers that have been approved by HHS; and 3) the bill continues the misconception that rates filed must meet the federally defined MLR thresholds rather than the plan’s claim experience over the previous year. The bill also would authorize the Director of the Department of Managed Health Care and the Insurance Commissioner to issue guidance and promulgate regulations to implement requirements relating to MLR.

The non-partisan Office of Fiscal Analysis (OFA) has issued the fiscal note for the SustiNet legislation, and their analysis shows that the cost of the plan will be significant. OFA concludes that SustiNet could cost the state up to $483 million annually in new expenditures. This finding comes at a time when the Malloy administration and the General Assembly are trying to balance a budget $3.3 billion or more in deficit. The governor also is concerned about SustiNet’s proposed structure, which would hand decision-making responsibility for the state’s $8 billion-dollar Connecticut health insurance care obligations to a quasi-public authority that has almost no accountability to taxpayers.

Also, the fiscal notes for the health benefit mandates show that all but one of the bills would have to go to the Appropriations Committee. The costs to the state include: $300,000 per year for a bill prohibiting copayments for preventive care services; up to $12,000 per person, per year for eliminating the age cap for health insurance coverage for specialized formula; and at least $2.38 million in FY 2012 and $4.76 million in FY 2013 for a bill concerning out-of-pocket expenses for non-preferred brand name drugs ). In addition, last year’s bill imposing the combined unitary tax was re-introduced. This proposal increases uncertainty and adds to the administrative burdens of businesses and the state by imposing mandatory unitary combined reporting of corporate taxes.

Despite a looming budget crisis in Kansas, the legislature adjourned the major part of the 2010 session on March 31 without approving a spending plan for the next fiscal year. Having used up 75 days of a 90-day session, legislative leaders decided it would be best to wait until for more up-to-date revenue projections before attempting to fashion a spending plan. Legislators will return for the wrap-up session on April 28, when they will try to write a budget with the new estimates. They face a nearly $500 million revenue shortfall despite nearly $1 billion in cuts in the past year from the $6.4 billion budget.

Current bills of interest include legislation that would prohibit Kansas health insurance plans from covering elective abortions, unless offered as a rider and applicable only when the mother’s life is at risk, Another bill would allow children to participate in the high-risk pool and would raise the lifetime limit from $2 million to $3 million. Also, House Bill 2182 has been amended to include seven different pieces of legislation, including the Health Care Freedom Act (anti-federal health reform), the Health Information Technology Act, and agreed-to language from the Pharmacy Audit Integrity Act. All of these topics remain on the table for the legislature when it returns in late April.

The 2011 legislative session concluded with Governor Susana Martinez taking action on two New Mexico health insurance reform bills. She vetoed a bill that would have established a health insurance exchange as an active purchaser and allowed the board of directors to limit the number of qualified health plans that could be offered in the exchange. While noting her support for creating a framework for an exchange, the governor expressed concern that the legislation was premature because of the litigation challenging federal health reform.

Keeping in mind negative consumer reaction to Blue Cross/Blue Shield’s 21 percent average rate request last year, Governor Martinez signed into law legislation giving the superintendent authority to approve rates. Approval will be based on five grounds: 1) compliance with federal law and the Insurance Code; 2) does not contain, or incorporate by reference, any inconsistent, ambiguous or misleading provisions that encourage misrepresentation of the policy or its benefits; 3) the rate is actuarially sound and supported by the actuarial memorandum ; 4) the proposed rate is reasonable, not excessive or inadequate and not unfairly discriminatory; and 5) the proposed rate is based on administrative expenses that are permitted by federal and state law. The Division of Insurance is required to post online plain language explanations of the basis for any rate increase and the company’s supporting financial information, and provide a 30-day public comment period. The decision of the superintendent could be appealed to the Public Regulation Commission and the state Supreme Court.

As Texas health insurance was the main issue, The House of Representatives started with a $164.5 billion budget and ended with the same total. But lawmakers spent the better part of a recent weekend making changes inside the 2012-13 budget before giving it their approval on a largely party-line vote of 98 to 49. The essentials remained the same, leaving public education and health and human services spending short of what it would take to maintain current services. The proposed budget requires none of the remaining $6 billion in the state’s Rainy Day Fund or any new taxes — though it does include $100 million in new fees. Conservatives successfully raided family planning funds in the budget, stripping money from those programs and diverting it to others that include autism, mental health services for kids and trauma care. The budget now heads to a Senate that’s on track to spend more money — about $10 billion more. If they can’t find middle ground, the legislature could go into special sessions after the regular session ends on Memorial Day.

A new report by Texas Comptroller Susan Combs examines why costs are soaring and analyzes various cost-saving proposals under consideration in the legislature. In fiscal 2009, Texas state government spent about $30.2 billion on health care, a 36.1 percent increase from fiscal 2005.  “Health care accounts for more than 34 percent of all Texas government spending from state, federal and other funds,” Combs said. “The state cannot afford to let cost increases consume more and more of our budget.”  The largest share of health care spending is for programs such as Medicaid for the poor, disabled and elderly; mental health services; medical benefits for state employees and retirees, and health care for prisoners. Some of the health care cost drivers identified by the report include costly new drugs; a shortage of health care professionals; an aging population; lifestyle choices such as smoking, increasing Medicaid enrollment; and uncompensated care for the uninsured.  Some of the cost-saving proposals examined in the report include expanding the use of managed care in the Medicaid program; instituting a statewide smoking ban; requiring state employees who use tobacco to pay more for health insurance; and requiring state employees and retirees to pay a greater share of their health insurance benefit costs.

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Posted in HHS, MLR, arizona health insurance, blue cross, blue shield, california health insurance, connecticut health insurance, health insurance exchange, kansas health insurance, new mexico health insurance, qualified health insurance plans, texas health insurance | No Comments »

Health Care Reform Repeal Small Business 1099

Wednesday, April 13th, 2011

While the possibility of a government shutdown grabbed most of the headlines last week, many analysts and media focused on particulars of the new House Republican budget plan unveiled by Rep. Paul Ryan (R-WI). Reactions to the plan were widely split, but few would disagree that the plan would have a dramatic impact on health care if enacted. The proposal would allow states more control over Medicaid but cut the amounts states receive from the federal government over a decade; significant changes to Medicare would restructure the fee-for-service system to a premium-support model while gradually increasing the age of eligibility to 67; and it proposes $1.4 trillion in deficit reduction while de-funding the Affordable Care Act (ACA). The Congressional Budget Office (CBO) weighed in with its own analysis by the end of the week, finding that seniors and people with disabilities would face significant increases in their out-of-pocket costs under the Ryan proposal. As for Medicaid, the CBO found that federal funding under a new block grant approach would be more predictable, but it would lead to greater uncertainty for states as to whether the federal contribution would be sufficient during periods of economic weakness.

By a vote of 87 to 12, the Senate last week approved legislation to repeal the widely unpopular 1099 reporting requirement buried in last year’s health reform law. The requirement would have driven up costs and created administrative hassles for small businesses, and Aetna insurance argued for the repeal. The bill also would repeal a similar 1099 reporting requirement related to rental property. The legislation was approved by the House in early March, which means it goes to the President for his certain signature.  Although Senator Menendez (D-NJ) tried to amend the bill (to nullify the Republican “pay for” provision), the effort fell short. No further floor drama surfaced, and the bill passed easily. An additional takeaway is the fact that Republicans and Democrats cooperated legislatively to actually amend ACA.

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Texas Health Insurance Exchange

Wednesday, April 6th, 2011

Rep. John Zerwas, the Republican legislator who has filed legislation to implement a key element of federal health care reform, said his bill may be permanently stuck. Zerwas proposed establishing a Texas health insurance exchange not because he approves of federal health reform but because he fears the federal government will do it for Texas. But Zerwas said he’s been told Gov. Rick Perry’s does not support the measure, though Perry’s office didn’t say whether the governor would veto the bill. The legislation was heard in a House committee but has been left pending. Zerwas said it would be voted out only if there’s movement in Congress or in the courts that makes it necessary.

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Pennsylvania Health Insurance Individual Mandate

Wednesday, April 6th, 2011

On March 23, Republican Congressman Joe Pitts, Chairman of the Health Subcommittee of the House Energy and Commerce Committee, held a public hearing in Harrisburg to mark the one-year anniversary of PPACA. In testimony before the Committee, Governor Tom Corbett, who as Attorney General joined Pennsylvania in the multi-state suit against the law, reiterated his belief that the law’s Pennsylvania health insurance individual mandate is unconstitutional. He further noted he has joined 27 other governors in petitioning the Obama Administration to call for expedited Supreme Court review of suits challenging the law. Acting Insurance Commissioner Michael Consedine and Acting Department of Public Welfare Secretary Gary Alexander discussed the regulatory and financial burdens imposed by the law. Specifically, Commissioner Consedine claimed the law’s initial reforms have already resulted in premium increases of up to 9 percent. Secretary Alexander said the law’s scheduled expansion of Medicaid will result in 891,000 additional state enrollees by 2019.

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Oklahoma Health Insurance Exchange

Wednesday, April 6th, 2011

Gov. Mary Fallin is defending her efforts to create an Oklahoma health insurance exchange for uninsured Oklahoma residents, explaining that if the state does not have an exchange in place by 2013 the federal government will step in and create its own. Fallin discussed her support for legislation to help create the exchange just four days after a dozen demonstrators carrying signs and American flags protested her appearance before the Tulsa Health Underwriters Association. Her appearance came on the heels of her decision to accept a $54 million federal grant to implement a health insurance exchange. Opponents say creating an insurance exchange is a step toward implementing an unpopular federal health care overhaul law. The House has passed a measure to create an advisory board to help implement an insurance information exchange originally created by lawmakers in 2009. Part of the state’s Insure Oklahoma program to reduce the number of uninsured Oklahomans, the board would identify health insurance plans, what they cover and how much they cost.

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Ohio Health Insurance Transformation

Wednesday, April 6th, 2011

Lt. Gov. Mary Taylor, who also serves as the Director of the Department of Insurance, has disbanded the Ohio Health insurance Care Coverage and Quality Council, saying the Department needs to focus on implementing federal health care reform. She noted, however, that two council subgroups, the Payment Reform Task Force and Enhanced Primary Care Medical Home Task Force, will serve as advisory bodies for the Governor’s Office of Health Transformation. In addition, Governor Kasich unveiled his biennial budget proposal, which includes a new Public Employees Health Care Program to develop a health insurance pooling program for local governments, higher education institutions and school districts that choose to enroll their employees.

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