By any measure, last week was a big one for the future of individual health insurance reform. It started with a federal judge in Florida ruling the Patient Protection and Affordable Care Act (PPACA) unconstitutional. Just two days later the U.S. Senate, unlike the House, voted down an effort to repeal the not-quite-one-year-old law. But a vote in the North Carolina House last week illustrates that the states will be just as important a battleground for health care reform over the next couple of years. North Carolina House members voted to try to block the requirement that citizens buy health insurance coverage. And, Florida has announced it will cease implementation of the health care law until the lawsuits are decided — likely by the U.S. Supreme Court. The process of refining or even reshaping federal health care reform is likely to go on for years.
A federal district court judge has ruled that the individual mandate provision of the health reform law was an unconstitutional exercise of regulatory power by the federal government under the Commerce Clause and that the rest of the PPACA was not “severable” from the mandate provision and, therefore, the whole law could not survive under the Constitution. This is but one case among many around the country focused on the constitutionality of the law, but it is the most prominent because 26 states from all over the country are plaintiffs. However, the decision is conclusive of little. First, the jurisdiction of this federal district court is limited to a handful of counties in Florida. Second, no Circuit Court has yet ruled on this or any other case either in support or against the mandate or other provisions of the law, and the Supreme Court is down the road. Third, it is not yet clear how the insurance provisions will fare in the higher courts should the mandate itself not survive. This key subordinate issue is expected to be clarified first in the May 2011 oral arguments in the 4th Circuit (the Virginia case) where the Department of Justice will reportedly “embrace” the notion that the mandate and the insurance access provisions are linked and not severable. If the cases out there are not fast-tracked to the Supreme Court (right now, quick action is favored by the states and other plaintiffs but opposed by the DOJ and the Administration) we will likely not see a decision until mid-2012 or just before the November elections that year.
The Senate last week handily (81 to 17) passed a bill to repeal outright the PPACA provision that imposes on business a burdensome and costly 1099 reporting requirement for any payment to any payee of $600 or more. While the House of Representatives has to agree (quite likely) to the repeal and the President is expected to sign it if it gets to his desk, it is unclear when and how this item will proceed through the Congress and whether it becomes a legislative vehicle for other “fixes” to the health reform act. During the same floor debate, the Senate considered and defeated a Republican amendment to repeal the entire PPACA. This vote got only 47 votes; it needed 60. It is unclear whether the Senate Republican leadership will force the Senate to vote yet again on total repeal at a later date.
The Senate Judiciary Committee held a hearing last week on the constitutionality of PPACA with three witnesses testifying that the act is constitutional and two saying it is not. Rather than settle the issue, the hearing can be seen to have energized each side to rally around its position. It is still going to take Congressional action or (more likely) a Supreme Court opinion to settle this issue.
Connecticut health insurance The Joint Committee on Insurance and Real Estate held a hearing on a number of insurance bills, including legislation that would require the insurance commissioner to hold a symposium for public comment prior to approving any individual or group long-term care policy rate filing. The Connecticut Association of Health Plans (CTAHP) testified in opposition to the bill as being unlikely to be of any practical assistance to the Department of Insurance’s rate review process. Requiring symposiums with every rate increase would tax the limited resources of the DOI and delay the rate review process. The Committee also heard testimony on two bills re-introduced from last session that would prohibit the offset of retirement benefits under disability income policies and prohibit the offset of SSDI dependent benefits under disability income policies. Both bills would increase the cost of disability premiums for employers.
Governor Dannel P. Malloy announced the appointment of Thomas B. Leonardi to serve as the new commissioner of the state Department of Insurance. Currently, Leonardi is Chairman and CEO of Northington Partners, Inc, an insurance specialty venture capital and investment banking firm founded in 1989 and based in Avon, CT. Leonardi was quoted as saying the job “requires a balanced approach, which includes efficient and timely responses to consumer complaints, making sure that products are clearly marketed and suitable for those people to whom they are sold, and, importantly, making sure that insurers in Connecticut are financially sound and able to pay policyholders’ claims as they come due.” He noted that the insurance industry has been a key part of Connecticut’s economy but that insurance jobs have been in decline. “Connecticut’s families need affordable and reliable health insurance coverage and they need good jobs. My goal as Insurance Commissioner will be to do everything within my power to make sure they get both.”
Florida health insurance After the Florida Court ruling regarding the PPACA, Governor Rick Scott announced the state would not pursue any further health care reform activity. Governor Scott stated, “We are not going to spend a lot of time and money with regard to trying to get ready to implement that until we know exactly what is going to happen, I hope and I believe that either it will be declared unconstitutional or it will be repealed.” In addition, the Commissioner of Insurance announced the state would be returning the grant received from HHS for rate review and would no longer be seeking a waiver of the medical loss ratio requirements.
Georgia health insurance Aetna health insurance is awaiting direction from the Governor’s office regarding possible legislation related to health insurance exchanges. We have been informed the health underwriters will be asking legislators to file a bill closely following the NAIC model legislation, but nothing has been filed yet. We are continuing a dialogue with the new Commissioner of the Department of Community Health regarding the Managed Medicaid Program, a potential RFP and expansion of the program.
Michigan health insurance The Republican-controlled 95th General Assembly convened for its two-year legislative session in mid-January. The assembly is scheduled to recess on December 31, 2011, but remaining legislation at that time carries forward to 2012. Newly elected Governor Rick Snyder gave his first state-of-the-state address, identifying his top priority as the state’s $1.6 billion budget deficit for fiscal year 2012. Cuts to state programs are likely, and the governor and legislature will consider swapping the Michigan Business Tax with a flat corporate tax. Industry-related issues include granting the insurance commissioner the statutory authority to implement PPACA, development of an insurance exchange, rate review requirements, individual market reforms, and benefit pooling of public employees.
Texas health insurance The Speaker of the House is expected to appoint committee members this week, and they can look forward to consideration of a number of bills of interest to Aetna health insurance and its customers. These bills include a mandate for emergency or other medical, hospital, or surgical expenses incurred as a result of intoxication or influence of any narcotic; expansion of the autism mandate to all state employees and individual plans; a requirement that health care providers make good faith efforts to collect copayments or deductibles unless the enrollee demonstrates special financial need or hardship; creation of a state-based health insurance exchange; a requirement to elect the Commissioner of Insurance; an HIV-testing mandate, prohibition of abortion through an exchange; and a mammography mandate that also provides for supplemental breast cancer screening if a physician finds the enrollee has dense breast tissue and additional risk factors.
Additionally, the Senate State Affairs Committee released its official interim report this week. Outlining steps already taken by the Employee Retirement System, Teachers Retirement System and Medicaid, the interim report recommends that state-funded health plans continue to pursue evidence-based payment reform as well as monitor developments on accountable care organizations. The report discusses the new Healthy Texas program and reports there are now 17 groups with 31 total enrollees. On the topic of value-based insurance design, the report cautions that the savings achieved accrue over time and short-term pressures may make VBID less feasible than originally hoped. Finally, the report reviews the current landscape for hospital billing and collection practices. The Committee encourages the DOI’s current efforts to collect reimbursement data on this topic and provide consumers with rate information on an aggregated basis.
Wisconsin health insurance Newly elected Governor Scott Walker signed his first bill into law that was part of the “Wisconsin is Open for Business Special Session.” The special session was called to take up a package of pro-business legislation. As part of Walker’s pro-business legislative package, Act 1 eliminates state taxes on Health Savings Accounts (HSAs). Under the new law individuals may claim a nonrefundable income tax credit for 6.5 percent of the allowable amount that they claim as federal tax deductions for their HSA contributions, or claim 6.5 percent of the federal tax−exempt earnings relating to an HSA, or both.
