Current Health Insurance Reform Issues

No sooner had President Obama signed the last piece of the health care reform package on March 30 than he hit the road, traveling to a number of states to sell the public on the new health care law of the land. On their Easter/Passover recess break, many members of Congress were engaged in their own hearts and minds campaign on health reform back in their home districts. A new Gallup poll, however, seems to show that Democratic supporters of the bill have the tougher selling job. The poll shows that 47 percent of Americans believe it is a good thing that the bill passed while 50 percent believe it to be a bad thing. And, the results show that both opponents and proponents agree that the new law does not do nearly enough to address rising health care costs. Health plans, such as Aetna, have maintained that the success of health care reform will hinge on addressing health care costs, and we have pledged to continue working toward reforms that would achieve affordability.

Federal

Since Congress was in recess last week, there is no Federal report this week.

States

ARIZONA: After a lengthy debate in special session, the legislature voted along party lines to permit a lawsuit challenging the newly enacted federal health care reform law. It is unclear whether Governor Jan Brewer will join other states in the lawsuit filed in Florida, since the attorney general has advised that he will not participate in any litigation on this issue. Brewer had asked lawmakers for authority to go around the attorney general and sue on the state’s behalf.

COLORADO: A bill prohibiting the use of gender as an underwriting factor in setting rates for individual policies passed both chambers and will become effective with plans issued or renewed after January 1, 2011. The bill is part of Governor Ritter’s health reform package.

GEORGIA: A bill that originally would have imposed a tax on health plans – the language regarding a health plan tax was removed recently — was passed out of the Senate last week. However, whether the Governor will sign the bill in its current form is not clear.

IDAHO: The legislature adjourned a week early last week, but not before passing a number of items to close out the session. Governor Otter has signed a number of the bills, including the “Idaho Health Freedom Act”, reserving citizens’ right to choose or decline health care services without being penalized by the federal government and authorizing the state attorney general to seek legal recourse to uphold this policy. Also signed were bills regulating the relationship between third-party administrators and insurers, and establishing an immunization board to maintain a single distribution center for providers and determine an assessment on carriers to fund the program.  Another bill amends the duties of the Commission of Health Information Technology Planning to include monitoring the state’s health data exchange and recommending improvements to IT capabilities. Bills awaiting the governor’s signature include a proposed prohibition on a carrier’s ability to require a participating dentist from charging a member at a non-par rate for services that are not covered under the provider contract, and a proposed requirement that both the prescribing physician and patient be notified by the pharmacist of generic substitutions for epilepsy or seizure drugs. Defeated were mandates for oral chemotherapy parity and prosthetic limbs, an any-willing-provider requirement, and a bill permitting small employers to enroll in the state employees’ plan.

ILLINOIS: The House has unanimously passed the Illinois Health Information Exchange and Technology Act to establish a state authority to operate the Illinois Health Information Exchange. Expected to pass in the Senate, the bill supports the adoption of electronic health records among health care providers in Illinois, and building the infrastructure necessary to make HIE possible. Aetna was one of three insurers supporting the new act as part of a coalition of provider, consumer groups and unions. The HIE is designed to promote and facilitate the sharing of health information among health care providers within Illinois and in other states, and foster the widespread adoption of electronic health records. The bill also sets forth the Authority’s powers, with public and private representation, to facilitate the secure exchange of electronic health records to deliver better health care. No later than January 1, 2015, each state agency that implements, acquires, or upgrades health information technology systems shall use systems and products that meet minimum standards adopted by the Authority for accessing the HIE.

IOWA: The Iowa legislature ended its annual legislative session last week and passed bills that include a clinical trial mandate for cancer patients, a prohibition of dental fee schedules for non-covered services, and an increase in the amount the guaranty association will pay for hospital, med-surg and major med coverage. Also, an Insurance Department omnibus bill that passed includes several insurance reform amendments, including making rate increase applications public record and requiring an annual report from the Commissioner to include information from health plans on medical loss ratios, rate increase data, health care expenditures in Iowa and their effect on premiums, ranking and quantification of the factors that result in higher and lower costs, the plan’s current capital, surplus and reserves, any apparent medical trends affecting insurance costs, and any other data the commissioner might deem pertinent. Carriers now must also notify policyholders of any application for a rate increase exceeding the average annual health spending growth rate stated in the most recent national health expenditure projection published by CMS. Additional amendments included a mental health & substance abuse mandate for veterans, an expansion of IowaCare, the establishment of a health information clearinghouse/exchange, and prohibition of plans using genetic information to discriminate among patients. Bills of interest that died would have created mandate-light health benefit plans, a public access cost and quality transparency portal, mandated coverage for autism, and income tax deductions for section 125 health plans.

MAINE: The legislature passed legislation that would prohibit health plans from imposing annual, lifetime or other caps on the amount they will pay for covered medical services. If signed by Governor John Baldacci as expected, the bill would take effect January 1, 2011. The legislation defines “health plan” as a plan offered or administered by a carrier that provides for the financing or delivery of health care services to persons enrolled in the plan (other than a plan that provides only accidental injury, specified disease, hospital indemnity, Medicare supplement, disability income, long-term care or other limited benefit coverage). A similar provision in the federal health care reform legislation recently enacted by Congress abolishes lifetime or annual dollar limits on essential health benefits. The federal reform law allows health plans to establish restricted annual limits on essential health benefits prior to January 2014 and to place limits on benefits that are considered non-essential health benefits.

MASSACHUSETTS: The Massachusetts Division of Insurance (DOI) has rejected 235 of 274 rate increases filed for small businesses, using 90-day emergency regulations that require HMOs to file any proposed increases to small group rates or changes to small group rating factors at least 30 days in advance of their effective dates. The emergency regulations also require HMOs to provide a significant amount of additional information when filing any proposed small group rate increases or rate changes. The DOI sent letters to carriers outlining the reasons for its actions, including: the disapproved rate filings failed to illustrate how the carriers pay similarly situated providers differing rates of reimbursement based solely on quality of care, mix of patients, intensity of services, and geographic location at which care is provided; the disapproved rate filings failed to demonstrate that carriers have renegotiated provider reimbursement rates; and the disapproved rate filings were significantly above the medical consumer price index without an adequate explanation for the wide difference.

MICHIGAN: Pulling attention away from the legislature’s individual market reform bills, Governor Jennifer Granholm implemented an executive order that would put into motion a cabinet level workgroup titled “Health Insurance Reform Coordinating Council” on federal health care reform issues to be implemented in Michigan. Her goal is to identify steps that must be taken to ensure that Michigan citizens reap the full benefits outlined in the federal reform bill, including benefits for dependents to age 26, tax credits for small business, Medicaid expansion beginning in 2014, insurance reforms (e.g., eliminating pre-existing condition exclusions and rescissions),a health insurance exchange, preventative services without co-pays, and changes in the Medicare donut hole. Office of Financial and Insurance Regulation Director Ken Ross will be part of the overall implementation. His immediate assignment is to create a health insurance ombudsman office, begin the framework for the health insurance exchange, as well as have ongoing communication with Health and Human Services and NAIC on the overall rules.

SOUTH DAKOTA: As the legislature adjourned last week, Governor Mike Rounds vetoed a subrogation bill that would have prevented insurers from any subrogation rights until the injured party was first “made whole.” The Senate tried but failed to overturn the veto.  Legislation that was signed by the Governor included a bill prohibiting contracts between an insurer and a dentist that require the use of a fee schedule for non-covered services, a bill changing the premium rate-setting procedure for the high-risk pool,and a Joint Resolution opposing the federal health care reform proposals passed in the U.S. Senate and House. Several significant bills that died included a provision to allow South Dakota to opt out of federal health reform and a bill repealing premium and annuity taxes for insurers.

TEXAS: Last week, the Senate Committee on State Affairs held a joint hearing with the Senate Committee on Health & Human Services to discuss the impact of federal health care reform on the state. The committee heard from Health & Human Services Commissioner Tom Suehs, Texas Department of Insurance Commissioner Mike Geeslin and Special Projects Director Dianne Longley, and the Employees Retirement System. Suehs estimated the cost to the State would total billion over 10 years. When asked why his estimate was so much higher than that of the CBO, Suehs stated that “I know that I’ve got a higher population of uninsured than most states have total population.” Commissioner Geeslin focused his opening comments on the massive scope of the bill and how much change it will bring to consumers. In response to a question, Geeslin said that a new rate review authority could respond to a rate increase they deemed unjustified not with an enforcement action but only to inform the public that the rate increase was deemed unjustified. He also pointed out that the state can opt out in 2017 if it can demonstrate that it could provide similar coverage. He clarified that the exchange function could be outsourced but not to a Medicaid agency or a private insurer. Both agency heads confirmed that their need to add staff to implement the law will be substantial. The Committee members were in agreement that many future hearings would be required to keep up with the pace of reform implementation. Aetna will continue to monitor these hearings.

WASHINGTON: Partisan debate over federal health care reform is moving from the nation’s Capitol to the states. Several states, including Washington, are challenging its individual mandate in federal court. Governor Chris Gregoire, a supporter of the health-care overhaul, is threatening to file a lawsuit against Attorney General Rob McKenna in an effort to block his participation in the suit organized and funded through the Florida Attorney General’s office. At the same time, the Democrat-controlled legislature may try to block McKenna’s participation by cutting funding to the Attorney General’s Office, or requiring that McKenna receive approval from the Governor prior to continued participation. Fourteen states are now participating in the lawsuit.

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