Individual Health Insurance Reform EasyToInsureME

Week of November 16, 2009

The Business Roundtable released a report late last week that found key components of existing health care reform legislation could slow the growth of health care costs and offer real savings for companies and their employees. The results were immediately welcomed by the White House. Yet, the report goes on to warn that certain provisions within the legislation could actually accelerate costs. "The report also shows that reform done wrong won't work and could make a bad situation much worse," said Antonio M. Perez, Chair of Business Roundtable's Consumer Health and Retirement Initiative. Aetna, a supporter of bipartisan health care reform, has expressed similar concerns. Specifically, the report notes changes that threaten to increase health care spending include failure to implement a strong individual mandate, increases in the cost of health care to individuals from changes to consumer spending accounts, and increased cost shifting to the private sector from reduced reimbursements to providers and the public plan option.

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Federal

The Democratic leadership continues to play an "inch-by-inch" game on health care reform. In the House, Speaker Pelosi is fully aware of the fact that the very bill she managed through the House would very likely not pass a second time because of the abortion issue. But she succeeded in inching the bill forward, which was the plan all along. In the Senate, Majority Leader Harry Reid continues weaving policy substance with political reality in order to create a mosaic that can inch forward to the next milestone, which is getting the 60 votes needed to allow the Senate to proceed to debate. He has yet to release the final "merged" bill; Senator Reid is going one-on-one with the Senate to sort out the combination of provisions that will allow him to get past the next hurdle. The abortion issue is the latest stumbling block, as at least one Senator is saying "no" to proceeding without this very provision. To jump start the process, Senator Reid is using the first of myriad procedural tactics to get the bill to the Senate floor. But if Republicans stand their ground, Senator Reid probably can't get to that next step (the "motion to proceed") until Friday. That would leave only enough time to make a few introductory speeches and go home for Thanksgiving.

On Thursday, the House is expected to proceed to debate and possibly pass a permanent "fix" to the perennial problem of what to do about scheduled cuts to physician reimbursement in Medicare. The House leadership wants to spend $210 billion (with no good funding source) to eliminate the upcoming 21 percent cut in 2010, along with all future cuts. The Speaker needs to make the gesture, given the AMA's support for her health care reform bill. It is unclear whether this measure will pass in the House; however, it is clear that such a measure will have a more difficult time in the Senate. For one, the Finance Committee reform bill already contains a one-year "fix" costing $10.9 billion, which is the best Chairman Max Baucus thinks is currently possible. The Senate already tried two weeks ago to pass a permanent fix, and Senator Reid was soundly rebuffed in the effort.

States

ILLINOIS: A leader in the Senate has prefiled a bill to amend Illinois' HIPAA law with a proposal that group and individual health insurance carriers be prohibited from imposing any pre-existing condition exclusions. Current limitations imposed by state law would be deleted. While the issue is being discussed on the federal level, this issue has had a lot of traction with both House and Senate Insurance Committee members for the past six months. As amended, the current proposal may not meet current federal HIPAA requirements. The bill will not be considered until January 2010.

MICHIGAN: The Office of Financial and Insurance Regulation (OFIR) has scheduled a hearing on November 23 to review Blue Care Network's proposal to buy Physicians Health Plan. In late September, Blue Care Network, a Michigan nonprofit HMO, filed a statement with OFIR regarding its intention to acquire control or merge with Physicians Health Plan of Mid-Michigan-Family Care and PHPMM Insurance Company. OFIR has 90 days to review the statement. Various parties have requested that OFIR conduct public hearings before making a decision on the sale, due to concerns raised regarding the size of the Blue Cross Blue Shield of Michigan.

NEW JERSEY: The governor has directed state departments and agencies to collectively cut $400 million from the state budget due to state revenue collection falling well short of budget projections. Furthermore, the Governor requested that the legislature not pass any spending bills during the upcoming "lame duck" session. This nearly half-a-billion dollar shortfall, coupled with a projected $8 billion budget deficit for next fiscal year, puts the state in dire fiscal straits. With options limited for making up the lost revenue, businesses operating in the state will be closely monitoring this developing situation.

NEW YORK: The legislature has passed a bill that prohibits all subrogation (collateral source or third party) recoveries by an insurer for medical expenses. The former collateral source rule eliminated the potential windfall of double recoveries by plaintiffs who receive medical benefits and win recoveries from defendant payments. The old rule of law allowed insurance companies to offset potential premium increases to consumers by authorizing them to recover medical costs from payments made to an injured plaintiff from a jury award or settlement. With that option no longer available, insurance premiums in New York will be further stressed. In addition, Governor Paterson and the hospital sector are proposing that the current Patient Services Assessment (PSA) of 9.63 percent be increased by 0.25 percent to generate an additional $54 million as part of the Governor's second Deficit Reduction plan (DRP) for 2009. The hospitals are advocating for this insurance tax increase to offset some of the governor’s proposed Medicaid cuts on hospitals. The $800 in insurance taxes adopted this year already includes an increase in the PSA, and the new proposal would make the latest increase retroactive to November 1, clearly not included in premium increases for 2010. The legislature is set to return to the Capitol for two more special session days to address the DRP.

OKLAHOMA: Two Republican State Senators are sounding the alarm bell regarding both U.S. House and Senate versions of health care reform, charging that either would devastate at least one new health care facility in Oklahoma City and cost Oklahoma County and surrounding environs more than 500 jobs. State Sen. Jim Reynolds and Sen. Harry Coates say both bills would financially devastate many top-quality health care facilities, including Oklahoma Heart Hospital’s $98 million South Campus, which is set to open soon. The bills would financially undermine the facility by denying the facility federal reimbursement for services such as Medicare and Medicaid. A joint venture of Mercy Hospital, Midwest City Regional and a group of local physicians, the facility will serve much of southeast Oklahoma County along with hundreds of active-duty military and veterans. Both Sen. Coates and Sen. Reynolds say they will ask Gov. Brad Henry to intercede quickly to remove the onerous provisions.

UTAH: The Department of Insurance is circulating a draft bill to amend the state's uniform electronic standards law to require insurers to provide coverage eligibility and detailed coordination of benefits information to physicians. Aetna will be submitting comments, including the fact that an insurer is not the repository of each member's applicable insurance coverage information and that a July 1, 2010, effective date does not allow sufficient time for implementation.