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.