The Senate Finance Committee wasted no time last week in wading through
a seemingly endless number of amendments to its proposed health care
reform legislation (see below). The committee turned aside a number of
amendments, including attempts to avert cuts to the Medicare Advantage
program to help pay for expanded coverage for the uninsured. But the
sparring that occurred over the issue is a good indication that
emotions are running high, and the dispute is bound to reappear when
the bill makes it to the Senate floor. Democrats and the Obama
administration last week sought to reassure seniors that health care
reform would not cost them their current levels of Medicare benefits,
but the head of the Congressional Budget Office, Douglas Elmendorf,
recently told Senators that seniors in Medicare Advantage could very
well see reduced benefits. The bill's momentum continues, but some
Democrats are now struggling to figure out how to vigorously support
health care reform without alienating many elderly voters.

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Federal

The Senate Finance Committee began its long-awaited mark-up of a health
care reform bill and by the end of last week had slogged its way
through about two dozen amendments, both in open session and as part of
after-hours talks dealing with Medicare, taxes, insurance and delivery
items. Of note are the proposed increase in the insurer tax and the
defeat of several Republican amendments to soften the burden on seniors
in Medicare Advantage. The individual coverage requirement is still
intact, but the dollar penalty for noncompliance has been lowered. And
the age rating limit of 5:1 has been reduced to 4:1, which would
increase the eventual rate shock for younger insureds. Additionally,
the Committee approved an amendment to dramatically increase
transparency by forcing PBMs to disclose certain pricing information to
government and plan sponsors. It seems likely that some member will
offer an amendment to add an employer mandate to the bill as well as an
amendment to replace the current co-op provision with a full-fledged
government plan. This mark-up process is expected to continue through
this week. It is likely that the Committee will finish by the end of
the week but probably not in time to meld its product with the HELP
Committee bill before the Columbus Day break.

The House Energy & Commerce Committee held a mark-up last week to
take up a handful of amendments left over from its mark-up of reform
legislation back in July. Two major items include: passage of a
provision to provide grants to large employers (not covered in the
original bill) for establishing wellness programs; and the defeat of a
provision that would have prohibited insurers from recovering insurance
payments through subrogation. Insurers and employers worked together to
help defeat this latter item. On a related House matter, it is becoming
increasingly clear that the compromise between the House leadership and
the Blue Dogs seems to be more tenuous than ever, which may well give
the Speaker the political "room" to beef up the existing public plan
provision in the House bill by adding back the government rate-setting
provision she favors.

States

CALIFORNIA Health Insurance
: Governor Arnold Schwarzenegger signed legislation that subjects
Medicaid (Medi-Cal) managed care plans to a tax to fund Medi-Cal and
the state's Children's Health Insurance Program (Healthy Families). The
tax, which is assessed on the plan's total operating revenue, is
effective for Medi-Cal managed care plans through January 1, 2011.
Approval of the measure will prevent more than 600,000 children from
losing access to Healthy Families coverage. In addition, this bill has
allowed the state to reopen Healthy Families enrollment and begin
processing the more than 80,000 applications that were placed on a wait
list. In other news, the California Privacy and Security Advisory Board
(CalPSAB) approved a "hybrid approach" to patient consent guidelines
for participation in a health insurance exchange. The approach,
outlined by CalPSAB, appears to be inconsistent with federal privacy
and security standards. CalPSAB is developing new privacy and security
standards to enable the adoption and application of health information
exchange in California.

NEW YORK: The State Insurance Department (DOI) is conducting public
hearings in Rochester, Newburgh and New York City to gather information
about limited benefits health insurance plans. The goal is to ascertain
how these policies are marketed by insurers and producers, assess what
disclosures are made regarding the services they cover, evaluate what
advantages these policies provide, and determine whether additional
oversight and regulation are needed. The DOI investigations have
revealed that some policies are sold through telemarketing firms using
unlicensed agents, which runs afoul of the New York Insurance Law and
that some insurers issue limited benefits health plan policies as group
coverage through invalid associations. Consumers must join the
association for an additional fee in order to be eligible to purchase
the coverage. The NYS Health Plan Association will be submitting
written testimony on behalf of its members who offer limited benefits
plans, to distinguish these legitimate products from the fraudulent
types of associations being investigated by the DOI.