Current Health Insurance Reform Issues

No sooner had President Obama signed the last piece of the health insurance
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 health insurance
: 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 $27 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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