Individual Health Insurance Reform Weekly : EasyToInsureME : July 23, 2009

Last week will go down as a truly significant week in health care reform.
The House leadership unveiled its 1,000+ page bill and announced that
the three committees of jurisdiction would immediately begin mark-up
sessions designed to get a composite bill to the House floor by the end
of July. Late last week the House Ways and Means Committee approved the House bill 23 to 18 -- all of the Republicans and three Democrats on the committee voted against. The House Education and Labor Committee did likewise
a short time later. Roughly $544 billion in funding is to come from tax
increases on families making more than $350,000. On a straight party
line vote (13-10), the Senate HELP Committee reported out its health care reform bill,
which includes both individual and employer coverage mandates, gateways
(aka exchanges) to provide a place to find and acquire health coverage,
a public plan backed by the federal government and a number of quality,
prevention and wellness provisions. The bill is estimated to cost $645
billion, though not all the pieces have been scored (e.g., the Medicaid
expansion provision). The focus now turns to the Senate Finance
Committee to see whether Chairman Baucus can forge the bipartisan
compromise he has been seeking. All of this activity was thrown into
high gear by President Obama who on several occasions last week
promoted health care reform and publicly lit a fire under Congress to
get it done by the August break.

States
CALIFORNIA Health Insurance
: Governor Arnold Schwarzenegger and legislative leaders are expected
to announce a budget deal aimed at closing the state’s $26 billion
budget shortfall. The deal appears to include no new taxes
beyond those that were passed in February but will rely on more cuts to
health care services and general government expenditures. Reports
indicate the state will limit enrollment for Healthy Families – the
state’s Children's Health Insurance Program -- but not eliminate the
program entirely. Additional cuts to Medi-Cal have been rejected,
partially due to mandatory requirements under federal law. The budget
plan also is expected to shift more Medi-Cal beneficiaries into systems
of care or managed care programs. This proposal has been recommended by
the Governor before but rejected by legislators and consumer advocates.
The Governor is recommending creating a centralized Internet-based
system to manage eligibility for state-funded health care and other
public assistance programs. The push to include the consolidated system
is likely to require significant start-up costs but ultimately would
reduce state spending by $500 million annually.

CONNECTICUT Health Insurance :
The House of Representatives has scheduled a veto session for this week
to possibly take up some of the bills vetoed by Gov. M. Jodi Rell this
year. The Governor has vetoed 19 bills to date and can be
overridden by a two-thirds vote in both chambers of the General
Assembly. The Senate also is expected to come in today. Aetna supports
the Governor’s vetoes of four health care bills: the SustiNet bill, the
pooling bill, the mega-mandate bill and the anti-rescission bill. The
SustiNet and the Healthcare Partnership bills would have expanded the
government bureaucracy but ultimately would do little to improve health
care and costs. In the case of SustiNet, full implementation would cost
the state about $1 billion a year. In addition, creating an expensive
framework for a state government-run health plan without the benefit of
the fast-moving federal health care reforms could require the state to
dismantle and overhaul any actions taken prematurely. Connecticut
members of the Aetna Citizen Action Network mobilized in support of the
Governor's vetoes, contacting 188 legislators with over 1,900 letters
and numerous phone calls. The 7-mandate package would raise health care
costs by significantly adding to Connecticut’s already long list of
mandated health care benefits, and the anti-rescission bill would
increase the likelihood of insurance fraud, raising costs for everyone.

KENTUCKY Health Insurance :
Democratic Governor Beshear is making a couple of appointments that
could be aimed at changing the balance of power in the
Republican-controlled State Senate. He announced the
appointment of Senator Charlie Borders to the Public Service Commission
and is expected to appoint Senator Dan Kelly, the Republican Majority
Leader, to an open judgeship. Coupled with the retirement of Senator
Gary Tapp, these appointments could potentially shift the Senate from a
Republican majority to a slight Democratic majority. The gains on the
Democratic side are not necessarily a given, as the open seats would be
filled by special election. The Governor is trying to remove roadblocks
to the implementation of the administration's plan to add slots at
racetracks.

ILLINOIS Health Insurance : The General Assembly has adjourned after sending Governor Pat Quinn a budget very similar to an earlier version.
The Governor was able to gain a higher percentage of funding for social
services (from 50 percent to over 80 percent of the 2008 allotment),
and he received authority to spend an additional $1 billion at his
discretion. The legislature will take 12 unpaid furlough days, which is
the equivalent of a 5 percent reduction in pay. Tax issues will be
taken up in the fall or in January 2010.

MASSACHUSETTS Health Insurance :
A coalition of small business associations, chambers of commerce and
the Massachusetts Association of Health Plans (MAHP) have proposed the
Affordable Health Plan – a product designed for small businesses and
individuals that they project would decrease premiums by up to 22
percent. The proponents admit that this proposal does not
address the over utilization of services that is responsible, in part,
for ever-increasing medical costs. A Massachusetts state panel is in
the process of developing a long-term reform of the health care payment
system. However, their recommendations, when final, may take up to five
years to implement. The Affordable Health Plan approach is supported by
State Senator Richard T. Moore and State Representative Harriett L.
Stanley, co-chairs of the Legislature's Joint Committee on Health Care
Financing. The Affordable Health Plan would create a new product with
benefits actuarially equivalent to Commonwealth Choice Bronze Level
coverage, be available to all small employers (50 or fewer) and
individuals, be purchased through or outside the Connector, establish a
statutory rate cap on reimbursements to all providers at no more than
110 percent of Medicare for all covered services for this product other
than outpatient pharmacy benefits, and establish a minimum medical loss
ratio of 85 percent.

MICHIGAN Health Insurance :
Speaker of the House Andy Dillon has unveiled a plan to cut public
employee health care costs and estimates it would save the state
between $800 and $900 million dollars a year. Speaker Dillon
is urging immediate action to help address the state's projected $1.7
billion deficit for 2010. The plan calls for consolidation of more than
2,000 plans that are scattered across the state to one state plan for
public school employees, all units of government, state police, and the
legislature -- affecting an estimated 400,000 people. Beyond
consolidation of health plan delivery and administration, the plan
calls for quality and cost reduction measures and for standardization
of benefit plan designs. The proposal would impact current employees
and retirees. The plan is drawing mixed reactions and a neutral
reception from the Speaker's own Democratic caucus and the Democratic
governor. The state's largest teacher's union, the Michigan Education
Association announced immediate opposition to the plan. Mike Cox, the
Michigan Attorney General, issued a press release indicating the
proposal deserves serious consideration. The collateral issue of how
this would affect the work being done in both chambers on individual
market reform and how this proposal may align with pending federal
reform are just some of the questions being raised.

NEW JERSEY Health Insurance : The resignation of New Jersey Department of Banking & Insurance Commissioner, Steven Goldman, became effective last week.
Governor Corzine is not expected to name an acting commissioner prior
to the November election. In the absence of a designated commissioner,
Division of Insurance Director Douglas Wheeler will act as commissioner
on insurance matters, and Division of Banking Director Terry McEwen
will have oversight of banking matters.

OHIO Health Insurance : The state's budget crisis is nearing resolution as Governor Strickland received a new budget proposal on July 14.
Movement in the negotiations was achieved through the Governor's
willingness to place the contentious video lottery terminal issue on
the November ballot. The conference committee report includes the
following recommendations: extend coverage to dependent children up to
age 28; expand the open enrollment program for individuals with a more
gradual reduction in the rate cap; require a health insurer to cover a
service if the Director determines it is a covered service; require a
carrier to conduct an external review automatically upon notification
by the Director that determination of coverage involves a medical
issue; require electronic payment of electronically submitted provider
claims and prohibit providers from refusing to accept electronic
payments; submission to the Director of an annual report detailing
components of administrative expenses by line of business; require
filing of small employer premium rates; and require employers of 10 or
more to offer Section 125 plans. The autism mandate that was part of
the House version of the budget was removed.

PENNSYLVANIA Health Insurance
: Last week the House Appropriations Committee amended and passed, on
straight party lines, a bill that sets forth the House Democrats’
spending portion of the budget. As expected, it incorporates revenues
based on a 2 percent tax on all managed care products. As the
budget impasse continues, Aetna continues to make the case that the
administration’s tax is inequitable. In other news, an oral oncology
coverage bill was introduced last week. The bill is backed by the
American Cancer Society in conjunction with Glaxo SmithKline, which
wants enhanced coverage of its oral chemotherapy drug.

WISCONSIN Health Insurance : Governor Jim Doyle has signed the 2009-11 state budget, and it includes various industry-related provisions:
An autism mandate with minimum benefit limits of $50,000 per year for
intensive services for a minimum of four years and $25,000 per year for
non-intensive services; all commercial health insurance policies and
all self-insured government health plans must offer coverage for an
adult, unmarried child less than 27 years old or a full-time student,
regardless of age; a mandate to cover outpatient health care services,
preventive care and coverage for drugs or devices approved by the FDA
that are prescribed by a health care provider to prevent pregnancy;
outpatient consultations, examinations, procedures and medical services
that are necessary to prescribe, administer, maintain or remove the
contraceptives must also be covered. Small group and individual
insurance market reforms include: a mandatory uniform application for
individual health insurance; limit the “look back” period for
pre-existing condition exclusions to 12 months before the effective
date of coverage for individual health insurance policies; a reduction
of the pre-existing condition exclusion period from a maximum of two
years to a maximum of 12 months; and requirements for insurers to
establish an independent review for rescissions and pre-existing
condition denial determinations, in addition to adverse determinations
or experimental treatment denial determinations.