The Patient Protection and Affordable Care Act (PPACA) may have done very little to curb rising health care costs, but the President's deficit commission may help change that. The group's proposals for cutting the deficit include far-reaching measures to cut health care costs, such as revamping Medicare's payment and cost-sharing systems, revamping federal employee health care coverage and even limiting jury awards in malpractice cases. With a number of groups lining up to oppose certain proposals, swift Congressional action is not expected. But deficit-cutting measures of some kind can't be too far off. America's Health Insurance Plans (AHIP) issued a statement of support that said "the Commission is absolutely correct that there is no path to long-term fiscal responsibility that does not include a comprehensive approach to reducing health care cost growth."
Federal
As expected, the House last week approved a Senate-passed bill to suspend a 23 percent cut in doctors' Medicare payment rates scheduled for December 1. Since this "fix" only lasts until the end of 2010, the lame duck session is expected to continue working on a permanent or 12-month fix to future cuts scheduled for Medicare reimbursement rates. End-of-year items currently before Congress are likely to be cobbled together in some final and single piece of legislation to be passed just before Christmas. Whether in the same bill or not, likely candidates for this package include: repeal of the onerous 1099 reporting requirement imposed on small businesses, a 12-month or longer Medicare "doc fix," the START treaty, resolution of the Bush-era tax cuts, and some agreement on the budget (probably in the form of a year-long Continuing Resolution).
As the Chairman of the Senate Commerce Committee, Senator Jay Rockefeller (D-WV) held a hearing last week on limited benefit health insurance products that showcased opponents of “mini-med” plans while failing to say much about the importance of this health benefits option to 1.4 million Americans. The hand-picked witnesses included four with personal agendas against mini-meds plans and only one witness (from McDonald's) who supports limited benefit plans as an important option for hourly workers who otherwise would have no coverage. One witness testified that his employer's mini-med plan (underwritten by Aetna) was inadequate to pay for his cancer treatments, but he failed to admit that the disclosures provided by both his employer and Aetna clearly pointed out the limits of coverage. Importantly, Health and Human Services (HHS) decided this fall to grant mini-med insurers and customers one-year waivers from PPACA’s annual limits restriction because of concerns that the lack of a limited benefits option would drive up costs and cause many employees to lose their coverage. In 2014 many Americans will have new health benefits subsidies and new coverage options through health insurance exchanges.
States
COLORADO: John Postolowski, Deputy Commissioner for Finance and Administration, has been named Interim Insurance Commissioner, replacing Marcy Morrison who officially retired on November 30. Governor-elect John Hickenlooper will appoint a new Commissioner sometime after his inauguration. The governor's transition team is currently vetting names. On the legislative front, no bill drafts have been circulated yet, but early indications are that the Colorado Medical Society (CMS) will generate a bit of activity in 2011. Informal inquiries are being made regarding the guidelines used by carriers for physician designation programs and credentialing of nurse practitioners. Aetna is in the process of scheduling a meeting with CMS to identify and possibly resolve specific concerns.
CONNECTICUT: The SustiNet board of directors has proposed that Connecticut state employees, HUSKY and Medicaid recipients and municipal workers could all share the same health plan within the next three years. Board members agreed SustiNet should begin by insuring state and municipal employees and Medicaid and HUSKY participants, while retaining the possibility of expanding to include small business employees and nonprofit employees. Or, SustiNet could sell coverage on the state’s insurance exchange. This recommendation is likely to get the attention of Governor-elect Dan Malloy. His running mate, current Comptroller Nancy Wyman, is the co-chair of the board. She will be the state’s next lieutenant governor. Kevin Lembo, the other co-chair and current state healthcare advocate, was elected last month to be the state’s next comptroller. SustiNet modeling done by the board’s consultants show the state saving money each year of the plan’s operation, but no one has estimated start-up costs yet. The base estimate for SustiNet enrollment is 620,000 without offering SustiNet beyond current state groups. Many of the state savings would be due to new federal dollars flowing under the health care reform law passed earlier this year. The most ambitious estimates have the state netting nearly $400 million in savings in a sample year.
The board also endorsed the Basic Health Plan, an optional federal program to expand Medicaid to people just above the current income limits. This option would add 30,000 to the SustiNet pool, while providing insurance for about 1,000 people previously uninsured. The board also agreed SustiNet should be a quasi-government agency, similar to the Connecticut Health and Educational Facilities Authority. The current SustiNet board would continue in place, with the possibility of expansion. The board also agreed to seek increases in Medicaid reimbursement rates right away. Combining Medicaid and health insurance state employees is not without complexity, despite being the first goal of SustiNet. At a minimum, the SustiNet Board would be mounting a challenge to existing union contracts, which do not contemplate a combined group. Their final, formal proposal is due at the end of the year.
FLORIDA: Insurance Commissioner Kevin McCarty has been named to head a new National Association of Insurance Commissioners (NAIC) task force assembled to help coordinate with HHS the role of brokers under the new health care reform law. A number of trade groups are advocating new legislation in Congress to exempt agents and brokers from the medical loss ratio formula under the new law. The task group is scheduled to begin meeting this month.
ILLINOIS: Concluding the second week of a veto session last week, the legislature formed two legislative subcommittees that have begun hearings to help develop recommendations for reforming Workers' Compensation and Medicaid by the end of the veto session. The session is expected to continue for another couple of weeks in January. During the session, the General Assembly approved the state becoming a member of the Interstate Insurance Product Regulation Commission, or what is known as "the interstate compact" for life, disability and annuity policies, effective Nov. 29, 2010.
Also, a bill concerning balance billing by out-of-network providers has advanced and now moves to the Governor for his consideration. Last year, the DOI issued rules that enrollees will be held harmless for balance billing over and above an insurer's participating physician rate. Non-participating providers subsequently have been demanding changes from Illinois insurers relying on the DOI position. To alleviate the situation, Aetna formed a coalition of unions, consumer groups, employer groups and insurers and proposed legislative language. The bill provides that when an insured patient uses a participating network hospital or ambulatory surgery center and services are provided by a non-participating physician or provider (such as an anesthesiologist), the patient's out-of-pocket liability will be no more than for a participating provider but that binding arbitration will be available to settle billing disputes between the insurer and physician.
NEW YORK: Governor David Paterson convened a special session of the legislature last week to address New York's remaining $315 million budget deficit for 2010. Both the Senate and the Assembly passed a few non-essential bills, but neither chamber addressed the Governor's deficit reduction package, including his proposed 6.7 percent cut in Medicaid reimbursements to providers. Governor Paterson could call them back into session again before the year is out. Governor-elect Cuomo scolded legislators in the press, but they have little incentive to work together until the new legislature meets in 2011. Although these results may be contested further, the Senate elections were judicially certified with Republicans holding 32 seats and the Democrats 30. The new Republican majority will select a new Senate president and new chairs for all committees. It is likely that Senator Dean Skelos will be president pro tem again after two years in the minority, with Senators Seward and Hannon back to leading the Insurance and Health Committees respectively.
OHIO: Recently, the Ohio Department of Insurance (ODI) issued new emergency rules creating a new open enrollment period for carriers offering child-only coverage in the individual health insurance market. The new rules are expected to take effect Dec. 26, 2010. Among several items negotiated with the insurance industry, ODI issued a survey to carriers in November in the individual market asking whether companies in the state would commit to offering child-only policies beginning on March 1, 2011 under the new emergency rules. The survey found that the top five carriers writing coverage in Ohio’s individual market, which together comprise about 79 percent of Ohio’s individual market business by premium volume, would agree to offer child-only policies under the new rules and that an additional seven carriers also would agree.
OKLAHOMA: Last week, Insurance Commissioner-elect John Doak announced his new leadership team at the DOI, to begin Jan. 10, 2011. They include Owen Laughlin, Mike Rhodes, Mike Thompson, Randy Brogdon and Denise Engell. Collectively, the group includes two former state senators, a prior Republican co-floor leader, a former state representative and Congressional candidate, and a retired Blue Cross executive who will head up the Health Insurance Division. This experienced group of Republicans naturally will be supportive of Doak's conservative view of health care reform and the implementation of PPACA. They also are skilled in dealing with the Republican-led state legislature and have connections to the current leadership. The legislature will begin its next session on January 4, 2011.
TEXAS: The Senate Committees on Health & Human Services and State Affairs recently held a joint interim hearing examining the impact of federal health care reform on Texas. The public testimony came principally from three areas: state agencies, stakeholders, and a large group of "tea party" activists wearing "repeal and replace" t-shirts who packed the hearing room. The Commissioner of Insurance as well as the Health & Human Services Commission discussed the details of creating an insurance exchange, the ramifications of failing to do so, and the financial realities of withdrawing from the federal Medicaid system. Insurance Commissioner Mike Geeslin was also asked about the implementation of MLRs in Texas, the Department's plans to create a rate review system, and whether Texas Governor Rick Perry has the authority to create an exchange himself, if the legislature fails to do so. It was clear Committee members were not in complete agreement as to the best course for Texas with regard to implementing PPACA. Aetna will continue to follow this conversation and be involved when the legislature convenes in January 2011.
WASHINGTON: Though a month has elapsed since the mid-term elections, three state legislative races are so close they are headed for recounts. The races include Pierce County’s 25th District race, where GOP challenger Hans Zeiger leads incumbent Rep. Dawn Morrell, D-Puyallup, by 47 votes. Republican challenger Steve Litzow leads incumbent Sen. Randy Gordon, D-Bellevue, by 194 votes in King County’s 41st District, and GOP challenger Vincent Buys leads Democratic incumbent Rep. Kelli Linville by 154 votes in Whatcom County’s 42nd District. Regardless of the outcomes, Democrats will retain control of both houses of the Legislature.
With regard to health care, Insurance Commissioner Mike Kreidler is asking state lawmakers to expand his authority to scrutinize health insurance rates by allowing him—for the first time—to consider some insurers’ "surpluses" when reviewing rate filing proposals. The surplus proposal would only apply to non-profit health insurers, which account for most of the health insurance business in the state. Under current law, surpluses—including investment income—cannot be taken into account when considering a company’s rate request. The commissioner also will seek authority to give consumers a fuller picture of health insurance rate proposals by requiring public access to the percentage of rates going toward profit, medical costs and administrative costs. Meanwhile, Governor Chris Gregoire last week proposed deep budget cuts, including the elimination of the state's health insurance program for the poor in response to the state’s budget crisis. Marty Brown, director of the Office of Financial Management, says the state needs to cut $901 million in spending. Legislators likely will face a special session to deal with the state’s budget gap prior to the regular session in January. Given voters' rejection of tax increases passed by the legislature in May, new taxes are not being considered by the Governor’s office or policymakers.
Transforming Health Care in America
America's Health Insurance Plans
Aetna 2009 Annual Report
