The House is scheduled to leave town for summer recess on July 31, and
the Senate's current schedule sends them home a week later on August 7.
It will be next to impossible for the House to address individual health insurance
care reform on the floor in that timeframe, and the Senate Leadership
has already put off Senate floor action until September. The focal
point in the Senate, the Finance Committee has three options: work out
a deal and go to mark-up before the break; put out paper but no mark-up
before the break; do nothing now and put it all off until fall. The
last option seems to be gaining favor daily and may soon become the
choice by default. In the House, the conservative Blue Dog Coalition
has the numbers to keep a bill from emerging from the Energy &
Commerce Committee, which while not fatal is certainly a wake-up call
to Democrats that Congress may be moving too fast on health care reform
with little or no real focus on health care costs. The
on-again/off-again talks between Blue Dogs and E & C Chairman
Waxman broke off at the end of last week with conflicting reports on
whether they will resume this week. Technically, House Leadership can
proceed to the House floor with approval from only two of the three
Committees with jurisdiction. But this would send a very bad signal to
the public and could portend even more fireworks on the House floor.
The bottom line is that neither chamber of Congress is likely to do
anything official before the break, but there could well be a years'
worth of policy and political activity in these last two weeks.

States
CALIFORNIA: The budget plan, which requires a two-thirds vote in the
state Assembly and Senate, includes about $15 billion in cuts and some
gimmicks to generate revenue in the 2009-10 fiscal year. Next to
education, health and welfare programs will absorb some of the largest
cuts with $1.3 billion coming out of Medicaid funding and $124 million
from Healthy Families, a program that provides health insurance for
930,000 low-income children. The plan borrows about $2 billion from
local governments' property tax revenue, captures $1 billion in
redevelopment money from local governments, and temporarily redirects
to state coffers $1 billion in transportation funding. Local government
groups have told legislators and the media that they will sue the state
if these transfers occur. Meanwhile, hospitals are divided over a
non-budget related tax proposal designed at drawing down additional
federal Medicaid funds. If the proposed two-year fees help generate $2
billion in state funds, California could qualify for an additional $3.2
billion in federal funding. Facilities that either don't treat Medi-Cal
patients or do so on a very limited scale are opposing the measure.
Gov. Arnold Schwarzenegger has said in the past that he supports using
hospital fees to boost funding for health programs but is non-committal
about this bill.

CONNECTICUT: In a special "veto session" held last week, the General
Assembly failed to override Governor M. Jodi Rell's veto of the
controversial health care pooling bill but it did succeed in overriding
her veto of the SustiNet plan. The pooling bill would have required the
comptroller to offer employee and retiree coverage under the state
benefit plan to: non-state public employers beginning January 1, 2010;
municipal-related and nonprofit employers beginning July 1, 2010; and
small employers beginning January 1, 2011. The SustiNet legislation
establishes a nine-member Board of Directors to make recommendations to
the Assembly by January 1, 2010 for the creation of a SustiNet
universal coverage plan by January 1, 2012. The legislature and the
governor will have to agree on the issue of self-insurance. SustiNet
proposes to make the state liable for all insurance claims, though it
is unclear how the revenue would be generated. Estimating the cost of
SustiNet at $1.1 billion in 2012, the Governor and Republican
legislators said the SustiNet program is simply too expensive, with a
projected $8.85 billion deficit looming. Aetna will continue to work
with all boards, councils and commissions for real health care reform
that improves quality, reduces costs and expands access to insurance.

MARYLAND: The Insurance Administration circulated a draft regulation
that would impact payments to non-participating providers under a PPO
policy. The proposed regulation would require parity between a member's
in-network and out-of-network cost-sharing responsibility for services
provided as 1) emergency care, 2) through a referral, and 3) by a
hospital-based physician in a preferred facility. The Commissioner's
position is antithetical to the controlling statutory requirement and
his own public statements that insureds are not protected from balance
billing in a PPO environment. In addition, the Health Care
Reimbursement Task Force, in which the Commissioner participated,
considered this issue earlier and decided to make no recommendations
regarding PPOs.

MISSOURI: A group of orthopedic surgeons in Springfield has initiated
the state-required legal process to achieve an "any willing provider"
statute through the 2010 general election ballot. These physicians and
possibly other advocates are calling themselves Missourians United for
Choice in Health and have reportedly amassed $1.5 million to start the
initiative petition process. A coalition of opponents is forming. Aetna
is evaluating whether it should be a member of the opposition effort.

NEW YORK: In just two days recently, the Senate passed hundreds of
bills previously passed by the Assembly over several months before it
adjourned. Health insurance legislation that has gone to Governor
Paterson for his signature include bills expanding dependent coverage
to age 29, extending COBRA eligibility to 36 months and opening the
Family Health Plus program to voluntary employee benefits associations
(VEBAs). The Managed Care Reform Act also passed. It would require that
a provider be given notice of an adverse reimbursement change to a
provider contract and an opportunity to cancel the contract; extend
overpayment recovery limitations to all health care providers and
permits them to challenge such recoveries; require that providers
moving to New York be provisionally credentialed until the final
credentialing determination is made; shorten utilization review
timeframes for post-hospital home health care services; allow providers
to appeal concurrent adverse determinations through the external appeal
process; and establish a new external appeal standard for rare disease
treatments. The bill also would authorize the Superintendent of
Insurance to require that mandated submissions be filed electronically
and lower the prompt-payment-of-claims threshold to 98 percent, rather
than the current zero-tolerance policy. Bills that failed to pass
include prior approval of claims and 85 percent medical loss ratio
legislation.

NEW JERSEY: Neil Jasey has was named interim commissioner for the
Department of Banking and Insurance. This was a surprising development
given the indeterminate nature of the post, due to the upcoming
gubernatorial election. Mr. Jasey spent more than 25 years with
Prudential serving as general counsel prior to his retirement in 2004.
His wife is a current assemblywoman running for reelection.

NORTH CAROLINA: The Governor has rejected a budget compromise that did
not include an increased premium tax increase. So it is back to the
drawing board and, in all likelihood, another extension of the
legislative session. Last month, the Budget Committee of the
legislature introduced a proposal to increase the premium tax across
all lines of business from 1.9 percent to 2.25 percent effective
January 1, 2011. Strong opposition to the tax increase helped take it
off the table, but things could change as legislators search for a new
budget solution.

OHIO Health Insurance : The state's budget crisis concluded with
Governor Strickland signing a compromise bill that includes a provision
placing the contentious and heavily partisan video lottery terminal
issue on the November ballot. Bill provisions affecting health care
plans include: extending coverage to dependent children up to age 28;
transferring oversight of health plans' network adequacy from the
Department of Health to the Department of Insurance; expanding the open
enrollment program for individuals with a more gradual reduction in the
rate cap; requiring a health insurer to cover a service if the Director
determines it is a covered service; requiring a carrier to conduct an
external review automatically upon notification by the Director that
determination of coverage involves a medical issue; requiring
electronic payment of electronically submitted provider claims;
submission to the Director of an annual report detailing components of
administrative expenses by line of business; requiring filing of small
employer premium rates; and requiring employers of 10 or more to offer
Section 125 plans. An autism mandate was removed.