Individual Health Insurance Reform Weekly EasyToInsureME

Week of October 19, 2009

Inside-the-Beltway politics were in full swing last week as the insurance industry came under heavy fire from some members of Congress and the media for releasing a PricewaterhouseCoopers report prior to the Senate Finance Committee's scheduled vote on its health care reform proposal. The report found that the Committee's reform package would drive up the cost of private insurance coverage for individuals, families and businesses. As a result, the industry was openly accused of trying to scuttle health care reform, even though America's Health Insurance Plans (AHIP) stated clearly in a press release and a letter to key Senate leaders that the industry was simply fulfilling its responsibility to bring to light serious flaws in the bill. The industry still intends to work toward bipartisan reform. By the time the furor died down, no one had seriously refuted the substance of the report. In fact, just a day later a new report from Oliver Wyman arrived at very similar conclusions. Regardless of these reports, Aetna has consistently warned that meaningful health care reform must address rising costs and that insurance market reforms must be linked with a strong individual coverage requirement to work effectively. Aetna will continue to deliver this message and help others understand how the market works.

Quoting & Saving just got easier...EasyToInsureME Health Insurance

Individual health insurance
Health insurance quotes

Federal

While there was some drama, the actual outcome of the Senate Finance Committee's vote to approve its health care reform bill was never really in doubt. By a vote of 14 to 9, the Committee approved the bill with all Democrats and one Republican, Olympia Snowe of Maine, saying yes. The drama was two-fold: a) would Snowe agree or hold her powder dry until the floor debate to improve her ability to bargain for changes; and b) would Ron Wyden (D-OR) and/or Jay Rockefeller (D-WV) vote no or hold their vote to protest the absence of the public plan. Neither possibility materialized, but the "drama" could merely have shifted from the Committee to the Senate floor. The Finance Committee approval of health reform set in motion the next step in the process, as the Senate Democratic leadership began the process of melding the Finance and HELP Committee bills. Majority Leader Harry Reid is working with Finance Chairman Max Baucus, HELP Vice-Chairman Christopher Dodd and Chairman Harkin to hammer out a single bill, and three issues appear the most contentious: the Finance Committee's weak individual mandate vs. HELP's stronger one; a HELP public plan vs. the co-op approach from Finance; and the HELP employer mandate vs. no mandate from Finance.There are hundreds of subordinate issues as well, all of which translates into a contentious merging process that will likely delay debate on the floor to late October/early November.

Senate Democrats, led by Senator Stabenow (D-MI), will likely vote this week on a stand-alone bill to eliminate a scheduled 21 percent cut in physician Medicare reimbursement on a permanent basis. The one-year cost of this doctor "fix" in the current Senate Finance Committee bill is $10.9 billion; the permanent fix (buried in the House reform bill) would cost upwards of $250 billion. The idea behind this maneuver is to pull out a costly item from the health reform bill, which is supposed to be deficit-neutral, in order to free up more money to spend on other items or to reduce the total cost of health reform, e.g., the House Democrats want to get their bill under $1 trillion. While most agree that the payment level for physicians should be much more aligned to quality and performance, the debate will likely turn on whether Democrats can shift to the deficit another $250 billion in money for doctors without stirring up the American public.

States

COLORADO: The Colorado Division of Insurance adopted amendments revising the state's early intervention services (EIS) benefit mandate in accordance with newly adopted legislation. Individual and group policies or contracts that include dependent coverage are required to cover EIS delivered by qualified providers to eligible children through age 3. The new law modifies this mandate by requiring, among other things, an increase in the reimbursement rate for EIS by carriers, if the base rate for state-funded EIS increases by more than the cost-of-living adjustment. The amended rule was effective October 1. The DOI also adopted amendments establishing standards for the sale of limited benefit plans by HMOs. This legislation allows HMOs to offer access to basic health care services through limited benefit plans to employer groups that have not offered health coverage to their employees for the previous 12 months and to individuals who have been uninsured for the previous 12 months. HMOs are prohibited from offering limited health benefit plans in Colorado counties with a population of more than 25,000 people.

ILLINOIS: The Department of Insurance (DOI) has taken the position that carriers cannot require, in their contracts, that claims for proceeds on a life insurance policy be made “in writing.” The insurance industry has requested that the DOI reconsider its position. The DOI maintains that the only required documents for a life insurance claim are the insured’s death certificate and a copy of the claim check. The insurance industry believes that this interpretation of the law runs contrary to generally accepted claim procedures that were put in place to confirm that coverage was in force, that a covered loss occurred, and that there are no exclusions or limitations that affect the claim payment. Illinois statute directs a life insurer to settle a death claim within two months of the receipt of due proof of the insured’s death and places no limit on what an insurer may reasonably require during the statutory period to assure proper verification of the insured’s death, as well as verification that claim proceeds are being correctly paid to the proper claimant.

KENTUCKY: Last week the Department of Insurance held a public meeting at which it briefly discussed its proposed 2010 legislative package, approved by the Governor's office, for the upcoming session. The proposals include updating state laws to incorporate federal changes with respect to mental health parity, Michelle's law, HIPAA clarifications; updates to the limits under the life and health guaranty model; and uniformity changes to the producer licensing law. Also discussed was the possible elimination of the requirement that insurers offer a standard benefit plan under the Kentucky Access law.

MASSACHUSETTS: The Commonwealth Health Insurance Connector Authority is proposing amendments to the Minimum Credible Coverage (MCC) regulations, with a public hearing on the matter scheduled for Nov. 17. The MCC regulations set the standard for minimum benefits Massachusetts residents must carry in order to be considered insured and avoid penalties. The proposed regulation changes were approved by the Connector Board and filed with the Secretary of State. They would: make prescription drugs one of the categories of services/benefits that are considered “core services” under minimum creditable coverage, thus prohibiting the imposition of dollar caps on its prescription drug benefit; require a health benefit plan covering dependents to provide coverage to all “broad range of medical benefits” as provided to subscribers in order to ensure that maternity benefits are extended to pregnant dependents; and allow employer groups to pair a high-deductible health plan with a Health Reimbursement Arrangement (HRA), as an alternative to a Health Savings Account (HSA). There likely will be some push back on the additions to the MCC standard. However, some version of the amendments is expected to pass. If enacted, the prescription and dependent benefits amendments would be effective in 2011; the HDHP/HRA amendment would take effect on 1/1/2010.

NEW JERSEY: The state has launched a database designed to track autism cases and direct affected families to health care and other services. The New Jersey Autism Registry requires psychiatrists, psychologists, neurologists and medical professionals to register children diagnosed with autism and birth defects such as Down's Syndrome, cleft palate, and heart or muscular defects. The registry is confidential and will be used to enable officials to better assist New Jersey's families with autism and other special needs. Access to the database is restricted to medical professionals.

NEW YORK: Governor David Paterson last week proposed a new two-year, $5 billion deficit-reduction package (DRP) that will fill the $3 billion (and growing) gap in the 2009-2010 spending plan and have a recurring impact of $2 billion in 2010-11. The new proposal does not include new taxes or assessments, a reflection of the extraordinarily high taxes already imposed on health plans in the main '09-'10 budget. The Governor's new DRP focuses on across-the-board Medicaid cuts, a $14.7 million cut in the managed long-term care program, a $14 million reduction in the Child Health Plus program, and a $7 million reduction in section 332 assessment sub-allocation, which includes both the Healthy New York and Timothy's Law programs. The budget announcement was sharply criticized by the hospital industry and hospital workers' union SEIU/1199. Assembly Democrats have already scheduled two hearings on the Governor's proposed DRP for Wednesday, October 21st, in Albany and Friday, October 23rd in Syracuse.

OREGON: The state Insurance Department has issued a second bulletin regarding legislation that established a premium assessment on health insurers. The primary purpose of the new bulletin is to provide information about the approved manner of calculating premium increases to offset the cost of the new assessment. The bulletin states that the law limits the amount carriers are allowed to increase premiums, as a result of the assessment, to one percent. The amount derived from dividing premiums by .99 is greater than one percent and is therefore illegal. Any insurers that calculated the increase in the .99 manner and have already collected premiums are required to issue refunds.

TEXAS: The Department of Insurance held a stakeholder meeting last week to discuss implementation of the new "Healthy Texas" program, legislation that passed in May. The program is modeled after Healthy New York and will offer state re-insurance for up to 80 percent of the claims corridor of $5,000-$75,000 for an insurance product, which can be sold only to small groups that have been uninsured for at least a year and have at least 30 percent of their employees' salaries at a maximum of 300 percent of the federal poverty level. The employer must agree to pay at least 50 percent of the premiums, and at least 60 percent of the employees must enroll. The legislature provided $17.5 million dollars annually to fund the program for the next 2 years. TDI and the Texas HHSC have been awarded almost $5 million a year for the next five years in HRSA grant money to assist with costs of actuarial contracts, marketing contracts and additional staff to help fully implement the program. They have posted informal rules to implement the program and plan to adopt a formal rule by the end of 2009. They would like to see members enrolled in qualifying plans by June 1, 2010, at the latest. Aetna has been involved with the drafting of legislation for this program from the beginning and will continue to be involved throughout the rulemaking process.

WASHINGTON: The state Office of the Insurance Commissioner has released its legislative agenda for 2010. The OIC proposals include; 1) new and extended grace periods for individuals to take up conversion coverage -- 31 days after a person has received notice of termination of coverage; 2) a revised definition of emergency services and the elimination of a requirement that the covered health care services are provided in a hospital emergency department; and 3) a health care reform proposal that would cover catastrophic medical costs over $10,000 per year and limited preventive care for all state residents. The catastrophic health plan was also proposed in 2009 but failed to gather much attention in the legislature.