Week of October 26, 2009

While Aetna and the rest of the
insurance industry continue to focus on important health care reform
issues, some members of Congress and The White House appear unwilling
to stop or even slow the political attacks against insurers. Even as
yet another analysis released last week showed real concerns persist
that current proposals will worsen, rather than alleviate, rising
health care costs, the House Judiciary Committee used its powers last
week to try to punish the industry for speaking out (see below).
Actually, the industry remains committed to seeing meaningful health
care reform passed this year, a view made clear in a Washington Post
op-ed authored by the President of America's Health Insurance Plans.
The reactions on the Hill continue to largely side-step the specific
cost concerns raised in the past two weeks. But Aetna remains hopeful
that the dialogue may yet return to substantive issues before bills are
brought to the floor of the House and Senate in the next several weeks.

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To
ease the burden of a scheduled 21-percent pay cut for Medicare doctors
in 2010, Senate Democrats tried to pass a stand-alone bill that would
have wiped out both next year's cut and all future cuts. Eliminating
the cut for one year would cost $10.9 billion -- such a provision is in
the Finance Committee version of health care reform and would be fully
funded. To totally wipe out the fee cuts for all years would cost $245
billion. Without a "pay for" such a bill would add close to a
quarter-trillion dollars to the deficit. This is precisely the bill
Majority Leader Harry Reid brought forth. Senator Reid needed 60 votes;
he got 47 as all Republicans and 13 Democrats voted against cutting off
debate. Senate Democrats had hoped to gain physician support for health
care reform by providing relief from the cuts. But the results should
serve as a "wake-up" call to the Democratic leadership that health
reform will not be a walk in the park. The strong vote could also
embolden moderate Democrats to band together and make "hard votes" on
health care reform as well.

In the House, legislative activity
for the week came down to passage in the Judiciary Committee of a bill
that Democratic sponsors describe as repeal of the health insurer
antitrust immunity known as the McCarran-Ferguson Act. The bill more
accurately can be described as codifying various court interpretations
of the Act, all of which the industry lives with day in and day out.
The bill specifically says health insurers (and MedMal insurers) can't
hide behind McCarran-Ferguson to price-fix, bid-rig or engage in market
allocations with competitors. Insurers can't do that now. Thus, the
bill is much more of a vehicle for some in Congress to further demonize
a well thought-out piece of legislation with positive policy
underpinnings. Whether this item gets added to a health care reform
bill or progresses on its own remains to be seen.

The timing
for floor debate on health care reform will likely ebb and flow for
several weeks, but the current thinking is that this process may take
all of 2009 and possibly into 2010 to complete. The House merging
process is all but done along with the CBO review of the House bill.
The House bill could be released this week, go to the Rules Committee
on Thursday/Friday and on to the House floor the first week of
November. This schedule requires that everything fall into place and
that the Speaker be willing to begin floor debate before the Senate,
which seems to be the case. On the Senate side, merging the HELP and
Finance Committee bills seems to be picking up speed, particularly with
reports of an emerging public plan compromise. But the process will not
be finished until later this week, which would bring the bill to the
floor the week of November 2 at the earliest. There is a real chance
that too many variables will get in the way and neither Chamber will
get to the floor until December, which, if true, would translate into a
January Conference.

States

COLORADO: The
Colorado Health Care Task Force has voted several bills out of
committee, including: a prohibition on the use of gender in developing
rates for individual policies; a maternity coverage requirement in
individual policies; and a requirement that the Department of Insurance
develop standardized formats for such things as policy forms and
explanations of benefits. Aetna will provide comments.

GEORGIA:
Commissioner Oxendine signed the regulation allowing health insurers to
utilize health status at renewal when underwriting small groups (2-50).
Aetna has worked with the Georgia Association of Health Plans for some
time to help enact this regulation. The Commissioner has also scheduled
a meeting with health plan representatives to discuss his 2010
legislative agenda, which will include a bill similar to one defeated
this year that would have regulated rates for individual policies.

ILLINOIS:
The legislature last week completed the first week of a two-week veto
session and took on two insurance-related issues. One bill would create
external review requirements for all commercial insurance products,
rather than just HMOs, effective July 1, 2010. The bill also would
establish committees to create a uniform small-employer, group-health
status questionnaire and an individual health statement for use
beginning January 1, 2011. Lastly, the bill would require insurers to
semi-annually prepare and provide the Department of Insurance a
statement on aggregate administrative expenses and other information.
Surprisingly, Chairman of the Executive Committee Mary Flowers stated
that she was not going to allow the bill to be called for a vote until
she had an opportunity to question the sponsor. Thus, no vote was
taken, even though there was no opposition. It appears the bill will be
moved for a vote this week in a different committee. Also, negotiations
have begun on an insurance mandate bill for prosthetics and orthotics.
The General Assembly has indicated that when they adjourn late this
week, they will not return again until January.

PENNSYLVANIA:
Governor Ed Rendell signed spending, revenue and fiscal code bills
earlier this month, ending the 101-day budget standoff. But
negotiations continue over the unresolved issue of expanding legalized
gambling to include table games. Of primary interest, one bill signed
into law embraces an extension of the 5.9 percent gross receipts tax on
Medicaid MCOs as an alternative to the Administration’s proposed 2
percent health insurance tax as the basis for federal matching Medicaid
funds. The final bill also dropped the proposed “trigger provision,”
which would have authorized the Department of Public Welfare to
abrogate its Medicaid MCO contracts if the Centers for Medicare &
Medicaid Services were to disapprove the GRT approach for fund matching.

UTAH:
The Health Reform Task Force has drafted two proposals to recommend to
the 2010 legislature. The first, under the guise of administrative
simplification, would establish procedures to be followed for
coordination of benefits for dependents subsequent to a divorce,
superseding the provisions in the applicable insurance contract. The
second proposal would require the DOI to develop standards for the use
and electronic exchange of uniform claim forms, billing and claim
codes, eligibility and coverage information and coordination of
benefits.