Week of November 2, 2009

That the bill going to the floor of
the House contains a government plan option is no surprise. But Senate
leadership's decision to pursue a government plan option in defiance of
the Senate Finance Committee's preference is something of a surprise
(see below), given it was perhaps the most bitterly argued reform issue
of the summer's town hall meetings. The path ahead in the Senate will
not be an easy one, as Connecticut Senator Joseph Lieberman's
opposition makes clear. Lieberman is a former Democrat who still
caucuses with Senate Democrats and had been counted among a potential
60 filibuster-proof majority. As the issue heats up, expect more debate
and media attention on the real ramifications of this controversial
provision.

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Federal

Several
discrete events occurred this past week that have bearing on the health
care reform (HCR) debate. First, Majority Leader Harry Reid boldly
moved where he was not expected to go: He announced that a relatively
strong form of the public plan, the "opt-out" version, would be in the
bill he brings to the Senate floor. Most observers thought Reid would
pick a "lighter" form of public plan. However, he clearly wants to keep
the Democratic left on board while he works to secure votes on the
right, rather than the other way around. Second, within 24 hours,
Senator Joseph Lieberman (I-CT) broke ranks publicly and stated
flat-out that he would filibuster against Reid's bill because of the
government plan option. The Senate is expected to take a week longer to
merge its two Committee bills and secure a score from the Congressional
Budget Office, which is likely fine with Reid who probably does not
have the 60 votes needed to bring the bill to the floor or end a
filibuster. The Senate Floor debate is likely to begin around Veteran's
Day. On the House side, Speaker Nancy Pelosi has unveiled the merged
House bill (1990 pages, $894 billion in costs and rising), setting the
stage for an expected vote -- with no real debate and no amendments
allowed -- on the House floor late this week. The Speaker likely would
not let the bill come to the floor unless she knows she has the votes
or she believes can get them.

On related fronts, in order to
get the HCR bill below the $1 trillion mark, the Speaker purged it of a
$200+ billion item by deleting the Medicare physician reimbursement fix
provision and introducing this as a freestanding bill, which has no
"pay fors," i.e., it would add to the federal deficit. The Senate has
already rejected this freestanding bill approach, which means Congress
still has no solution for the impending slashing of 21 percent in
doctor Medicare fees in 2010. Separately, Congressman McDermott (D-WA)
has introduced a bill to neutralize ERISA's preemption protection by
allowing state law causes of action for claims disputes to be processed
under state liability law. Aetna would oppose either measure should it
gain traction.

States

COLORADO: Governor Bill
Ritter has unveiled another plan to shore up the state’s ever-widening
budget shortfall by using federal stimulus dollars as a short-term stop
gap. Although $1 billion has been trimmed from the budget since last
year, a deficit of $271 million remains. Additional revenue through tax
increases is being discussed, but health insurers have not been a part
of the discussion.

FLORIDA: The Senate Health Committee and
Senator Gaetz have asked the health insurance industry to sign a
voluntary compact regarding coverage for cancer clinical trials. The
compact would be similar to those signed in Georgia and New Jersey, to
which Aetna was a signatory. A preliminary meeting was held last week
at which concerns were raised. Aetna will continue to be engaged in
these discussions.

KANSAS: Four state lawmakers announced last
week that they are co-sponsoring a "Health Care Freedom Amendment" in
the form of a Senate concurrent resolution that would add a new article
to the Kansas Constitution to "preserve the right and freedom of
Kansans to provide for their health care." Essentially the resolution
is the first step toward trying to opt out of any potential federal
health care legislation. The co-sponsors expressed opposition to a
federal health care plan, stating that Washington is ill suited to
manage health care. If passed, the resolution will be on the ballot in
the fall of 2010. The legislators expressed confidence that they have
the votes to pass the measure, but they conceded that many members had
yet to be contacted.

MICHIGAN: As the state's budget crisis
continues, legislators and engaged groups at the capitol are actively
looking for ways to find revenue. Legislators and the Michigan Hospital
Association have raised the issue of a 1.8 percent tax on all insurance
claims paid, including disability and workers' compensation. There have
also been discussions about taking the life, health, and property &
casualty guarantee fund(s) reserves, but no concrete proposal has been
floated to date. In addition, Public Employee Health Care Reform
Committee hearings continue regarding the consolidation of purchasing
benefits for public employees in Michigan. To date, over 30
organizations have asked to make public comments. The Speaker said that
the proposal is still evolving but that he expects it to expand to
include vision, dental and disability/workers' compensation benefits.
Approximately $900 million in savings have been projected from
administrative savings, economies of scale, "better benefits" and lower
costs.

MISSOURI: The Missouri Speaker of the House, Ron
Richards, has appointed an Interim Committee on autism spectrum
disorders. The Committee will evaluate the impact autism spectrum
disorders are having on families in the state. The committee's goal is
to identify a solution that considers medical, educational and
insurance changes to improve the lives of families dealing with autism.
Aetna was very involved with last session's debate over an autism
mandate and will continue to have a voice in this interim committee's
work. The next Missouri legislative session begins in January 2010.

OHIO:
Two bills concerning physician/insurer relationships are moving in the
Ohio legislature. A bill that passed out of the House on October 21
specifies that a material amendment to a health care contract does not
become part of the contract unless agreed upon by both parties. A
different bill passed the House Health Committee on October 14, and its
companion bill had sponsor testimony on October 27 in the Senate
Insurance, Commerce & Labor Committee. The bill would place various
requirements on health insurers that operate a system for physician
designations to assign a grade or rating for certain physicians. This
bill includes what must be considered in the evaluations, disclosure
requirements, appeal rights and legal remedies against an insurer if a
provider is adversely affected by a violation of the requirements. It
is sponsored by the Ohio State Medical Association. Aetna opposes both
measures and continues to discuss what may be agreeable language for
physician designation programs.

WISCONSIN: The Office of the
Insurance Commissioner (OCI) is working on several regulations and
bulletins regarding recently passed laws. The OCI has issued a revised
bulletin summarizing the provisions of the 2009-2011 state budget that
impact insurance, including: establishing a uniform application for
individual major medical policies; expanding independent review rights
to adverse findings regarding coverage denial determinations, including
preexisting condition exclusion denials and rescissions; requiring an
insurer to provide coverage for an unmarried child dependent who is not
eligible for other group coverage and is under age 27 or a full-time
student regardless of age; and requiring coverage for autism spectrum
disorders and contraceptives. Related to implementation of the budget
bill, OCI published an emergency rule on September 30, 2009 related to
the coverage of treatment for autism spectrum disorders that is
effective on Nov. 1, 2009.On issues unrelated to the budget bill, OCI
has issued two regulations. First, OCI issued emergency rules providing
for eligibility for continuation of coverage under the American
Recovery and Reinvestment Act of 2009 (ARRA) for individuals whose
group coverage is terminated. Second, the OCI recently issued a
proposed rule intended to expand the eligibility requirements for
guarantee issue of Medicare supplemental policies and bring Wisconsin
rules more closely in line with the NAIC Medicare Supplement Model
Regulation. The proposed regulations establish two new categories of
eligible individuals for Medigap guaranteed issue; modify current
regulations pertaining to Wisconsin's "Plan M and N" look-alike plans
to more closely follow corresponding NAIC model regulations; and
reintroduce a high-deductible Medigap option.